Joy Global, Inc. (NASDAQ: JOY) manufactures mining equipment used to extract coal, copper, and iron ore. Commodity prices directly impact the demand for Joy Global's products and services. When prices are high, mining companies turn to Joy Global for equipment and expand their operations. The company primarily sells two types of mining equipment - underground and surface - of which the former makes up half of the company's net revenue. Joy is a multinational firm - half of the firm's sales are international - but its portfolio is dominated by the coal industry, which accounts for three-quarters of revenues. Nonetheless the rise in natural gas and crude oil have helped JOY, as it has led to increased demand for coal as a substitute source of energy. The company earned $3.6 billion in revenue and $454 million in net income in 2009.
Joy Global's business is divided into two segments - Underground Mining Machinery and Surface Mining Equipment:
Joy is the world’s largest producer of high productivity underground mining machinery for the extraction of coal and other bedded materials. It has facilities in Australia, South Africa, the United Kingdom, China, and the United States. The company's products include:
Joy Global is the world's largest producer of electric mining shovels and also makes rotary blasthole drills and walking draglines. The company has facilities in Australia, Brazil, Canada, Chile, China, and South Africa. The products in this segment include:
Joy Global competes with its peers on the basis of price, quality, delivery, and service. Most of Joy Global's customers are large mining companies that can exert significant purchasing power. As such, these customers can demand productivity and service clauses more easily than a smaller miner could when purchasing equipment. A local equipment service center mutually appeals to Joy Global and their customers - repairs can be made quickly and expenses are lower due to the close proximity. As a result, customers prefer to buy from equipment manufacturers with service centers not too distance from their mining operations.
Joy Global offers a wide range of mining products. Some of its equipment has few competitors offering direct substitutes. For instance, Bucyrus International (BUCY) offers the only electric mining shovels and draglines that compete with Joy Global's; however, such products compete with alternatives like hydraulic excavators.
In addition to competing with large global manufacturers such as Caterpillar (CAT), Bucyrus International (BUCY), and Terex (TEX), Joy Global faces pressure from emerging local companies. The competitive pressure from small companies tends to be more for repair service than new equipment.