Riverside, CA (PressExposure) May 14, 2012 -- During the recession of the late-2000s, OEMs like Caterpillar and Sauer Danfoss resorted to cutbacks in inventory and drastic personnel layoffs. At the same time, Western Hydrostatics aggressively invested in both inventory and experienced personnel. Accurately forecasting the current surge in demand for hydraulic parts and hydraulic repairs has enabled the company to grow at the rate of seventeen percent per year over the past two years.
Factors underpinning some of Western Hydrostatics' growth are a lack of financing for new equipment and the production backlogs facing OEMs. Caterpillar, Bosch Rexroth, Sauer Danfoss, Eaton and Parker have been unable to keep up with the surge in demand with most OEMs quoting delivery times from as short as six or eight weeks to more than fifty weeks and in some cases even more than a year. For businesses that are solely reliant on OEMs for their hydraulic parts, lagging lead times pose a serious threat to production capacity requiring an immediate alternative to normal distribution lines. Having stockpiled millions of dollars of hard to find hydraulic components, Western Hydrostatics is now at the top of the list of hydraulic suppliers. Oil and gas, mining, construction, and farming companies who are looking for a single source provider for all their hydraulic parts, replacement pumps and motors and hydraulic power units are finding that Western Hydrostatics is exactly what they need.
But Western Hydrostatics (http://www.weshyd.com) isn't the only one betting on American manufacturing. Over the past 24 months, Caterpillar has seen enough of an uptick in the U.S. economy that it has brought 15 factories along with thousands of workers and over $2 billion in capital investments back to U.S. soil.4 Such bold moves prove that Caterpillar is strategically positioning itself to take advantage of the current business cycle. Business cycles in the hydraulics industry typically last four to six years with production backlogs that last 2 to 3 years due to the steep increase in demand at the beginning of the cycle. As the OEMs catch up with demand, the cycle begins to level off.
The danger for domestic OEMs is that extensive production backlogs and long lead times at the peak of the business cycle opens their marketplace to offshore competition. Over the past ten years, while business was steady and domestic suppliers like Bosch Rexroth and Sauer Danfoss had products warehoused, OEMs were able to fill orders in a timely manner and offshore competition didn't fare as well. Now, offshore hydraulic suppliers are emerging to fill supply gaps quickly with products of increasing quality that on average are 35% cheaper than U.S. counterparts.
Offshore competition is a serious threat to U.S. manufacturing and employment, especially when American companies who compete in a global environment are forced to funnel dollars into foreign OEMs in order to keep their equipment operational and to meet their deadlines. And that's why Western Hydrostatics decided to double down when betting on the U.S. position in the world economy for the sake of American global competitiveness.
1. Starke Scott, Western Hydrostatic, April 12, 2012 2. Nathan Bomey "Oil and Natural Gas Exploration Benefits Pickup Sales", Detroit Free Press, (April 10, 2012) 3. Reuters, "Caterpillars Big Bet on the U.S. Economy", Financial Post, (April 9, 2012) 4. Timothy R. Homan, "Manufacturing in US cools after Biggest Surge in Three Decades" Bloomberg News, (April 17, 2012)