New Blog Post - 15/05, page-58

Your answer is some what correct. Both CAT and Deere have a foundry (Mapleton and Waterloo) for casting larger machine components and engine blocks. The remainder of the frames they do not buy, they buy sheet steel and cut out pieces with laser/plasma cutters and then weld frames. A significant amount of the remaining parts are purchased components that are assembled in sub assembly lines that feed a main assembly line. Both company use their economies of scale and knowledge of manufacturing to estimate total costs of a components and what a realistic pieces would be depending on material and manufacturing processes used. They also share suppliers for components like seats, filters, hydraulic components,etc.