It's a good deal for MG Rover, which will make much more money on parts. This can only help the troubled group. But it's an even better move for Caterpillar, taking another step to establish itself as a major force in automotive logistics.
Caterpillar Logistics Services, the logistics division of industrial group Caterpillar, is set to take over from Unipart as the car parts distribution partner of MG Rover, the UK-based auto manufacturer formerly part of the BMW Group. The new contract will start in March 2002, when the contract with present logistics partner, Unipart, comes to an end. Unipart has been Rover's car parts partner since the mid-1980s.
Under the new agreement, Cat Logistics' warehousing facilities in the UK, Spain, Italy and France will be dedicated to the fulfillment of car parts to customers worldwide. The partnership should generate substantial revenues for MG Rover - it is estimated that over 10 years, the contract could yield GBP2.5 billion.
To Cat Logistics, the contract is another notch in an already strong automotive client base. DaimlerChrysler, Hyundai, Land Rover and Peugeot all provide Cat Logistics with a powerful presence in the automotive sector. Knowledge and specialization are essential to winning key contracts in the logistics industry, and focusing on individual industries has been one of the most common trends in recent years in the logistics market.
This strategy, combined with its global presence, is sure to result in Cat's further growth in the car industry, establishing contracts with other leading manufacturers. The way the company has been adding value to its service portfolio by introducing marketing and customer service operations is also a sure-fire step in the right direction.