More acquisition news

Recently, I am hearing more and more acquisition news in remanufacturing industry. For instance CAT Reman has acquired Progress Rail and very recently Franklin Power Products (FPP) and International Fuel Systems. Yesterday Detroit Diesel Remanufacturing Corp. (part of DaimlerChrysler Truck) announced they are acquiring DMR Electronics. The main motive (announced by DDR) in this deal is increasing electronics content in capital goods, and company's desire to collect this competence in-house.

Let's look at the acquisition history of CAT Reman closely. The recent acquisition by CAT Reman resulted in increasing competencies in diesel engine remanufacturing. It seems that the big companies in reman, instead of focusing on a core competence, try to expand their competence range as much as possible. The "core competence" notion was introduced by Pralahad and Hamel in 1990 (in HBR). The basic premise: core competencies are the source of competitive advantage. What is the core competency of CAT Reman, is it excelling in diesel remanufacturing, or improving and competing in remanufacturing of locomotives? Cat Reman's current strategy is diversified growth, developing core competencies on a range of products. However, given the core competencies and competitive advantage relation, in time one can expect moving on to core competence by creating spin-offs from some competencies, outsourcing some not-value-adding operations. I look at the merger and acquisition trend as a cycle, first buy-merge then, simplify, create spin-offs, independent business divisions, outsource, then start over again, buy-merge...

It is interesting to look at remanufacturing from a strategic management perspective, I think there should be more (academic and professional) work on extending the basic tenets of management theory to remanufacturing operations.