Javier Irucuta has used Caterpillar heavy equipment in his job as a rancher for the past 26 years. In that time, he has seen several of the technological advances and digital additions to the company’s iconic yellow machinery which have allowed it to remain an industrial giant.
Whether it is in agriculture, energy and transportation, or construction, one of Caterpillar’s main draws has become autonomous or semi-autonomous machines, meaning equipment that does not necessarily need a person to operate.
“I use their Challenger MT835 to prepare terrain for growing strawberries,” said Irucuta, who works at Ruby Farms Inc. in California, “It has a GPS system that facilitates any job. Before, we had to drive these machines like a car, but with the digital features, they run alone; you just have to worry about turning the tractor around when it reaches the end of the field.”
This year, Caterpillar is expanding autonomous innovation beyond its own equipment with plans to also turn competitor equipment into self-operating machines.
The first commercial installation of CAT Command for hauling, a feature within its MineStar system typically used for autonomous operation in mining, was announced in October and materialized in November.
During an event with the mining company Fortescue Metals Group, in West Australia, Caterpillar retrofitted its MineStar technology for the first time in order to work within a Japanese competing brand’s haul truck, the Komatsu 930E.
Falling in line with the company’s usual push for industrial modernization and autonomous equipment, MineStar’s new reach may also help ease some of Caterpillar’s stock losses. Down -3.95 percent in the last month at $125.61, company shares have had a significant drop of -20.71 percent in 2018 as investors grow wary due to the United State’s trade war with China.
In an ongoing back and forth with China, the U.S. imposed a 25 percent tariff on Chinese steel imports back in March, which sent Caterpillar stock, along with other world markets, into a dip. Because the Illinois-based company’s construction segment heavily relies on steel prices, it has become quite vulnerable to the tariffs.
Caterpillar’s manufacturing costs have already risen by $205 million because of the higher material as well as freight costs, although the figure could shift as the tension of the trade war takes a pause. In early December, U.S. president Donald Trump and China’s Xi Jinping agreed to a 90-day halt on new tariffs during a summit in Argentina.
“The stock could have an upside if certain events occur that partially or fully reverse the current market sentiment,” Andrew Casey, a Senior Analyst at Wells Fargo said as far as stock, citing an increased China stimulus, partial or full rollback of tariffs, or the passage of an infrastructure bill as possible solutions.
Despite the tariffs, Caterpillar is projected to have earned $54 billion in revenue for 2018, deriving mostly from their mining and earthmoving machinery, which makes up 56 percent of their overall sales. The billion dollar figure would be a 19 percent increase from sales and revenue in 2017.
And autonomous operations as well as other innovations in large machinery have allowed “Cat” to become the reigning company within construction and at a global level throughout its 93 year history.
“We’ve got 168 autonomous trucks deployed around the world right now,” said Craig Watkins, Global Mining Sales Representative for Caterpillar, adding that a semi-autonomous dozer system and a semi-autonomous drill system went into production very recently.
With 403 patents in 2018 alone, more than other U.S.-based competitors like John Deere and Case, Caterpillar is often the starting point of how heavy machinery develops within the industry.
During the company’s last earnings call, Caterpillar CEO James Umpleby pointed out that autonomous solutions are meant to improve productivity levels for its customers. Even when the company has now begun implementing those solutions within other brands, it believes that will still drive up sales and build confidence in its own machines.
“Once we have proved to [the customer] that we’re providing value to their business and then it comes time to replace those trucks, we will have proved ourselves enough that they will buy Caterpillar trucks,” Watkins said about the strategy behind commercial installation of CAT Command.
Other aspects of Caterpillar’s technology have to do with facilitating the maintenance of such large equipment.
“Their tech. development has a lot to do with sensors. Every single piece of equipment now has CAT Connect, which generates tons of data that is fed back to a company. It predicts when machines will need overhauls, parts replaced, and things like that,” said Matthew Buedel, a representative for AutonomouStuff, a company that specializes in the advancement of robotics and autonomy.
As Caterpillar continues to add new components to its products, and now those of competitors, it is the familiarity of the “Cat” brand which often means customers and those employed within its different segments prefer it over other names, before even getting into the tech.
“I feel more comfortable with Caterpillar,” said Irucuta, the rancher in California’s central coast, explaining that even with the basics, like horse-power, it fares better than other brands he has worked with such as “John Deere or Ford or Volvo.”
While Irucuta programs the steps to complete his tasks on the strawberry farm into his tractor, he credits his Caterpillar Challenger with showing him what to do at work every day.