Down and out: caterpillar tunneling

4 June 2013

There is no escaping the big story this month. The company that was going to change the way we buy TBMs and ultimately the way we design tunnels has abandoned the industry. Caterpillar last month announced the closure of it's Toronto-based TBM manufacturing business Caterpillar Tunnelling Coporation Canada (CTCC) and exited the TBM market.

Caterpillar bought manufacturer Lovat for CAD 49M in 2008 and was much rumored to have plans to standardize and mass produce TBMs. The vision was to take the Caterpillar model of assembly line style machine production, with a catalogue of machines, many shared components and large numbers of order. Leaving aside the mega projects, Caterpillars method was aimed at cutting costs and dominating the medium bore market.

However, in an industry accustomed to bespoke equipment the idea was not well received.

While investing some CAD 50M in factory expansions and the purchase of machinery (greatly increasing the plants capacity) the company reinvented its approach. Custom-built TBMs were back on the cards. The guts of the machines were largely standardized but the package was set to meet the demands one project at a time. It made improvements to the offering too, such as remolding the cutting tools so that rippers, for example, would be made out of a single piece of metal, prolonging its wear life.

Caterpillar had bought one of the pioneering _ rms in TBM technology. With a 40 year history in the industry, Lovat had built a reputation for robust medium diameter EBPs and had built up a strong export business tunnelling in London, Hong Kong, Singapore, Beijing and large amount in Russia. The company produced more than 250 TBMs and excavated more than 2,500km of tunnel on some 700 tunnelling projects.

But last month Caterpillar decided to walk away. The big projects in Toronto (Spadina, LRT) that _ ooded Lovat's order books and drove a need for growth have dried up. The 330 people at the plant are being put out of work. The company will cease operations next year and end support and parts in 2016.

The business has taken such a turn for the worse that Caterpillar believes there is no resale option. After paying some CAD 50M for Lovat and investing the same again in factory developments the company is shutting up shop.

The news was announced to staff on 2 May and hours later it was announced publically. The headquarters and machine factory on the corner of Disco Road and Carlingview Drive were quickly picketed by journalists.

The one employee arriving at lunchtime having missed the morning meeting was told of the company's fate by local reporters, he said "Oh well. I can't do anything about it. I don't let this stuff (bother me)," and he went home to look for another job. Expect to hear more on this