Equipment maker Caterpillar eyeing new factory in US
By Corinna Petry
Published: March 12, 2010
Global heavy equipment manufacturer Caterpillar Inc. has kicked off a study that it said could lead to construction of a new hydraulic excavator factory in the United States.
Such a move could triple Caterpillar's current capacity of hydraulic excavators now produced domestically and significantly boost job creation linked directly to higher excavator production, Peoria, Ill.-based Caterpillar said.
If the plan is implemented, it would further leverage excavator production in Japan to serve increasing demand in China and across Asia, the company added.
"The study is based on the current analysis of where the global excavator market is heading and how Caterpillar should position itself for continued leadership in the excavator industry," Gary Stampanato, vice president of Caterpillar's excavation division, said.
The equipment maker produces only two excavator models at its Aurora, Ill., factory, which also makes wheel loaders, soil and landfill compactors, wheel dozers and components. The company also makes excavators in Belgium, Brazil, China, France, Indonesia, Japan and Russia.
If the decision goes forward, a new U.S. factory would manufacture the two models now made in Aurora, along with several additional models now produced in Japan and exported back to the United States, the company said.
Calling the excavator business highly competitive on a global level, Stampanato said "it is imperative for Caterpillar to refine its excavator manufacturing strategy so it can provide customers with equipment that will make them more productive and profitable."
A new U.S. factory would be the primary North American source for excavators, he said, while Caterpillar's Akashi, Japan, excavator facility would have capacity freed up to fill increased orders from customers in the rapidly growing Asia-Pacific region. That region's growth is strong enough to consider boosting capacity at the Japanese plant as well, he added.
Caterpillar didn't indicate when it would make a final decision based on the study, nor did it identify any sites it is considering to locate a new U.S. plant.
The company recorded a profit of $895 million in 2009, down 74.8 percent from $3.56 billion in 2008 on revenue that fell 36.9 percent to $32.4 billion from $51.32 billion.
Caterpillar projected its 2010 revenue would rise 10 to 25 percent from 2009, based in part on a marked increase in demand for mining equipment, the result of "continued strong commodity prices and growing confidence in economic recovery," Jim Owens, chairman and chief executive officer, said in late January.
"We're encouraged by signs of improving demand. Dealer sales to end-users are up, order rates are up, dealer inventories came down in 2009, and we're seeing stronger service parts sales," he said, adding that the company began increasing production levels in the first quarter and recalled more than 500 previously laid-off production workers.