Caterpillar to steam ahead with China expansion plans

PUBLISHED : Saturday, 28 January, 2012, 12:00am
UPDATED : Saturday, 28 January, 2012, 12:00am


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Caterpillar, the world's largest manufacturer of construction and mining equipment, expects to ratchet up its expansion plans and post stronger sales on the mainland on the back of the domestic economy's steady growth.

The US-based company, which yesterday reported record global revenue of US$60.14 billion last year, forecasts the mainland economy to be on track to grow at about 8.5 per cent this year and for the government to continue easing bank lending policies.

That outlook meant improved demand on the mainland - the world's biggest construction equipment market - and greater opportunity for Caterpillar to be competitive during the critical selling season that follows the Lunar New Year holiday.

'We're expecting 2012 to be another year of good growth and continued focus on executing our strategy,' Caterpillar's chairman and chief executive Doug Oberhelman said.

'While we have much to do in 2012, we'll be particularly focused on four things: continuing to improve quality, our investment in product development, integrating our acquisitions and adding production capacity.'

Caterpillar has lined up an expansion programme in Jiangsu province that includes building a larger research and development centre in Wuxi, a so-called 'proving ground' and a large wheel loader manufacturing base in Tongzhou, and a new factory that will produce undercarriage components for hydraulic excavators in Xuzhou.

The company, which has around 8,000 employees and 16 plants, logistics centres and offices on the mainland, offered in November to acquire ERA Mining Machinery in a deal that valued the Hong Kong-listed firm at between HK$4.49 billion and HK$6.89 billion.

ERA, through its wholly-owned subsidiary Zhengzhou Siwei Mechanical & Electrical Equipment Manufacturing, produces hydraulic roof supports for longwall coal mining on the mainland.

'In China, we are going after market share in a big way,' Caterpillar's president and chief financial officer Edward Rapp said yesterday.

'We are installing a base of dealers that will sell our broad array of products and services.'

Between Caterpillar and its independent dealer network, more than 20,000 people work on the mainland to support Caterpillar's customers. It also makes diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.


Caterpillar's increase in sales and revenue last year compared to 2010

- Profits were up 83 per cent