Lovat strategy - TunnelTalk
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Tough competition for TBM manufacturers Apr 2010
Erika Hinze, Freelance Journalist
Greater capacity, expanded product line, wider global reach, and great commitment to on-time delivery of machines - these are mainstays of Lovat's development as a Caterpillar Group Company. President Richard Cooper and Marketing and Sales Director Marco Giorelli speak to TunnelTalk of the plans.
It has been just over two years since the world's largest manufacturer of construction and mining equipment acquired Lovat Inc.
Caterpillar bought Lovat (now Lovat a Caterpillar Company) in April 2008 to stake a position in the growing tunnel boring machine industry. Up until now, little has been said about the take-over, but Lovat's President Richard Cooper has opened up to TunnelTalk about the changing face of the company.
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Cooper, who is also the General Manager of Caterpillar's Global Mining Operations, said the most striking benefit associated with the acquisition is the financial stability Caterpillar brings to the table, coupled with a commitment to help the business grow.
"The corporation wants to be in the tunneling business and has the investment capital that the Lovat family didn't have."
Most recently, a new 220,000ft2 facility was opened about 4kms from the existing manufacturing plant near Pearson International Airport in Toronto, Ontario. The new Manufacturing and Logistics Centre will be used for light manufacturing, warehousing and additional office space. Cooper said the new facility will free up space on the existing shop floor and provide room to expand. He said the building is now being outfitted with millions of dollars of equipment and expects it to be occupied in the next couple of months.
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The Lovat team with a new 10.6m TBM in March 2010

Lovat is also taking advantage of Caterpillar's research and development capabilities. "We are the world's largest manufacturer of construction and mining equipment and engines of various types, so we have many engineers on staff all over the place. [Lovat] is the beneficiary of tapping into that expertise as required and as we try to improve the products we make," said Cooper.
In terms of product improvement, Lovat has ambitious goals for the future and according to Cooper, with Caterpillar's assistance they intend to compete on every battle front.
"We have the aspiration to have a complete line of TBMs, including the hard rock machines, the slurry machines and every type of tunneling system that is offered."
One of the company's goals is to build larger diameter TBMs. Right now their biggest machine is just smaller than 11m diameter, but they have designed and proposed equipment up to 15m diameter for different customers and projects.
Lovat also plans to pursue the development of microtunneling equipment despite having a branch dedicated to that facet of the business fail a few years ago. According to Marco Giorelli, Vice President Sales and Marketing, there is more interest in larger diameter machines than microtunneling equipment right now and that will be Lovat's priority for the near future.
In addition to expanding the product line, Lovat hopes to expand its global footprint. "Caterpillar has a huge manufacturing infrastructure around the world and whether or not we can employ any of those facilities for the construction of TBMs is an open question," said Cooper. But he said Lovat would like to take advantage of Caterpillar's presence in China where the TBM industry is booming.
He said the product that is most commonly sold in China is also manufactured there, and although Lovat has no permanent manufacturing facility in the country, Caterpillar does and on an impressive scale.
"We are looking for ways to leverage that presence to get a foot on the ground in China so that we can compete more effectively for the opportunities that exist there."
Cooper said Lovat also wants to set some new standards for the industry. He said they are particularly interested in improving machine quality, ensuring their products are reliable and easy to commission right from the beginning of each job. Lovat also intends to produce all machines on time, something Cooper said does not usually happen among TBM manufacturing companies.
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Lovat's new facility in Toronto

"Clients require us to produce our products and deliver them to the job sites on time so that is one of our commitments to ourselves and to our clients."
One of the ways Lovat is working towards this is by outsourcing some of the work. While the company has a history of making almost everything itself, Cooper said part of their manufacturing strategy is to establish some strategic partnerships.
One of the company's most significant partners is Valiant Machine and Tool Inc. based in Windsor, Ontario. Cooper said the long-time manufacturer and supplier to the automotive industry is making a considerable number of parts and doing a lot of the structural work on the back-ups for Lovat's TBMs.
"We have key suppliers, a new facility, and a more organized main manufacturing location and those things are all conspiring to improve our operational performance."
Cooper admits that the tunneling industry is under some stress as a result of the financial crisis around the globe. But, he said the long-term prognosis for the industry is very good, as the world seems to be building its infrastructure underground as a greener and more sustainable way of development.
This is precisely why Caterpillar is committed to building on this acquisition and to grow the business, because "we think it has a great long-term future." The significance for the other TBM manufacturers is that the largest construction equipment manufacturing company in the world has decided to go into competition with them, said Cooper.
"I don't know... maybe they aren't worried about that. If I were them, I would be."
References
A powerful partner for pushing forward - TunnelTalk, April 2008
New leadership at LOVAT - TunnelTalk, July 2009
Lovat A Caterpillar Company

           

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