JLG to build Caterpillar-branded telehandlers

JLG and Caterpillar announced Oct. 27 they have signed definitive agreements for JLG to design and produce a full line of Caterpillar-branded telehandlers. Caterpillar will stop manufacturing telehandlers, which it currently produces at a plant in Leicester, England.

The companies say the alliance is a strategic fit for both – giving JLG better access to global distribution channels and providing Caterpillar dealers and customers with a broad product line.

JLG currently builds four brands of telehandlers — Skytrak, Gradall, Lull and JLG.

The terms of the 20-year agreement call for JLG to provide Cat-branded telehandlers exclusively to Caterpillar dealers. Under additional agreements, JLG will acquire certain equipment, tooling and intellectual property from Caterpillar’s telehandler group. The purchase price for those assets is $51.4 million, with JLG to pay $46.4 million at the deal’s closing – expected before the end of the year – and the remaining $5 million when Cat-branded telehandler sales transition to JLG. The companies anticipate that happening in about one year.

Bill Lasky, JLG’s president, chairman and chief executive, said the alliance is consistent with the company’s goals of growing in its core products and diversifying its revenue streams through multiple channels to market.

JLG will support North American and Latin American markets from its McConnellsburg, Pa., headquarters, and markets in Europe and the rest of the world from its Maasmechelen, Belgium, facility. The company says it plans to invest $30 million in the project during the fiscal year 2006 transition period. The money will be spent on development of the North American product line and capacity improvements in Belgium and Pennsylvania.

Caterpillar will retain responsibility for warranties and service of B-Series and earlier telehandler models it manufactured and sold prior to the production transfer to JLG.

As telehandler production is shifted from Caterpillar’s Leicester Building Construction Products plant, which will continue to manufacture backhoe loaders, small wheel loaders, compact wheel loaders and mini hydraulic excavators, the company’s European BCP operations will undergo a restructuring.

“The actions we’re taking with our telehandler product group are important to revitalizing our Leicester operations,” said Ed Rapp, vice president of Caterpillar’s BCP division. “These changes will strengthen our operations and keep us in a position to be competitive and profitable.”