Is Cat Turning the Screws on Suppliers?

September 9, 2013

In addition to Caterpillar shuttering factories, laying off workers, and cutting inventory due to slower business conditions, particularly in mining, an article in Crain's Chicago Business is wondering whether the company is now turning the screws on its suppliers for more favorable terms.

Cat has apparently been asking for price concessions, yet demanding the same exacting service. Much of the impetus may come from customers. “More recently Caterpillar's mining customers have been more demanding of price concessions,” says Lawrence de Maria, an analyst at Chicago-based William Blair & Co. “If they are successful, it's logical that Caterpillar's suppliers will also be asked to participate.”