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West Central MN | Those are ancillary benefits to the business case of vertical integration.
The truck OEMs realized they and their competitors were just bolting together the same parts from the same suppliers such as Caterpillar, Cummins, Eaton, Allison, Rockwell, Meritor,...This meant they had very little differentation besides the design and layout of the cab. And even with the cab, they were sourcing many of the same parts from the same suppliers.
Using KW at the peak as an example, another driving force was after building nearly every single truck with a Cat engine, when the customer needed parts or service a day or ten years later after selling the truck, Caterpillar was making all the money, not KW. The only real opportunity KW had for profit was on the initial sale of the new truck and that's a dog-eat-dog razor thin margin business. Especially when the customer can go down the road to the other brand, and buy the exact same powertrain with a different shaped cab for less money.
Summary -- The truck OEMs wanted that eternal parts and service revenue/profit stream to stay in-house. No different than the strategy by major ag machinery manufacturers to use their own engines wherever possible. | |
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Part II - The Secret That Made Caterpillar Unstoppable
