CAT establishes global EPG organization - Caterpillar Inc; electrical power generation

Diesel Progress North American Edition, Sept, 1999 by Mike Osenga

Full-line philosophy at work again, as new market-based business unit includes sets from 8 kW to megawatt. sized systems; and turbines too

As it did with earthmoving equipment and as it did with industrial engines, Caterpillar Inc., has put together nearly a complete power generation product line that spans smaller kilowatt rated sets up to large megawatt-sized prime power systems.

While Cat is still known primarily as a manufacturer of off-highway equipment and diesel and natural gas engines, there is little question the Peoria, Ill., company sees the markets for electrical power generation as a major global growth area and is investing significant resources into those markets.

Toward that end, Caterpillar has established a dedicated electrical power generation (EPG) business unit within the company's Mossville, Ill.-based Engine Division. The formation of the EPG group is part of a recent reorganization within the division that has seen the creation of five, market-based business units: EPG, Marine, Petroleum, Industrial & Locomotive, and Truck. James Parker is director of the EPG unit.

Power generation is certainly not a new market for Caterpillar. Cat and its dealers have long packaged diesel and gas engine generator sets worldwide, using mostly its own engines, resulting in a line of Cat-branded generator sets that today ranges from about 100 kW to 17MW.

Through the mid-1970s, Cat dealers did most of the gen-set packaging themselves. By the late 1970s however, most generator set packaging being done by engine manufacturers was moving back to the factory.

Today, with most generator set buyers looking more and more for complete systems, Parker said virtually all of Cat's gen-sets are factory packages. The dealers however, Parker said, remain the key points of contact worldwide between the power generation users and Caterpillar for all the company's diesel and natural gas sets. "The dealers are our sales force for power generation."

While Cat has a long history of engine generator set packaging and sales there is little doubt that EPG has achieved higher status within the company. In fact many of its recent corporate ventures have been done with power generation as the driving force.

In 1992, Caterpillar made its first foray into smaller sets, as well as volume packaged gen-sets, with the launch of the Olympian range which today spans 8 to 230 kW in standby use.

In April 1998, Caterpillar acquired Kato Engineering, a manufacturer of larger sized generators from Rockwell Automation. The Kato acquisition underscored Cat's interest in large power systems and provided an in-house source of supply for the second most expensive component in a generator set.

In February 1999, Caterpillar, in essence, "swapped" Kato as part of a deal to acquire gen-set packager F.G. Wilson (Engineering) Ltd., Larne, Northern Ireland from Emerson Electric. As part of that agreement Cat signed a long-term supply agreement with Emerson for the Kato generators.

Cat had originally taken an equity position in F.G. Wilson as a joint venture partner with Emerson in 1996. The acquisition of F.G. Wilson to the Cat EPG product line adds a range of gen-sets from 8 to 2000 kW, as well as a European packaging source.

Parker said F.G. Wilson, now a wholly-owned subsidiary, will continue to market and develop its "Blue" gensets as a separate product line and will continue distributing the sets through the F.G. Wilson network.

F.G. Wilson is now also the exclusive packager of the Olympian gen-set line, as well as a contract packager of Cat's own gen-sets for the European, Scandinavian and Pacific Rim markets. And, of course, with its purchase of Perkins, Cat owns the primary engine supplier to F.G. Wilson as well.

On the larger gen-set side, Solar Turbines Inc., a wholly-owned subsidiary, has sold gas turbine systems into power generation for many years, especially to independent power producers. Solar has single turbines from 1 to 14.5 MW and are at the top end of what Caterpillar offers to the EPG markets.

Solar does not officially fall under the new EPG umbrella and continues to operate as an independent corporate entity, but Parker said the two organizations continue to watch for power generation opportunities for all product lines.

On the recip engine side, Caterpillar's 1998 purchase of MaK, Kiel, Germany, had implications in a number of markets, especially EPG and marine. For EPG, the acquisition added a line of medium-speed, heavy fuel diesels with outputs from 1250 to 22,000 hp and extended the top end of Cat's generator drive line beyond the 3600 series engines, which tops out at about 8000 hp.

While the 3500 and 3600 series engines got Caterpillar started in turnkey power plant markets, the addition of the MaK engines made Cat a full line player in this very critical international market.

To focus on the larger power plant business, the company founded Caterpillar International Power Systems (CIPS) early last year. With the large power plant markets evolving into an integrated power solution business, the Mossville-based group is providing total power station services including financing, design, construction, installation, operation and maintenance. The focus for CIPS is Cat's 3600 diesel and natural gas engines as well as selected models from the former MaK range.