Caterpillar (CAT) is a tell for the health of the global economy
Check out the scope of the increases being planned here.
Caterpillar Inc. (NYSE: CAT) is announcing a series of investments that, over the next four years, will significantly enhance the company’s position as the leading manufacturer of products and solutions for the global mining industry. The company will produce a full range of mining shovels, ranging from a 125-ton model through an 800-ton model.
Caterpillar has selected its manufacturing facility in Aurora, Ill., for initial production of the new product range and is conducting a study of additional production sources in other parts of the world. In early 2011, Caterpillar will begin pilot production of the new 125-ton class shovel. The first commercial shovels produced in Aurora are expected to be available later in 2011. The larger shovels are planned for commercial availability beginning in 2013 and through 2014.
This range will give customers a direct match for loading Caterpillar’s industry leading mining trucks–from the 100-ton class 777F through the 400-ton class 797F. The Aurora facility also produces Caterpillar’s largest wheel loaders, which are an alternative method for loading mining trucks.
“As we discuss solutions with our global mining customers, it’s clear they want a complete line of Caterpillar shovels to best match the full range of Caterpillar trucks operating at their mines,” said Chris Curfman, president of Caterpillar Global Mining.
Increasing Truck Capacity
The company is also accelerating previously announced capacity expansion plans for trucks in Decatur, Ill., with additional capacity expected to come on line beginning in 2011. The expansion in Decatur will increase truck capacity at the facility by nearly 30 percent. Decatur produces Caterpillar’s largest mining trucks, including the flagship 797F series truck, which has a maximum capacity of 400 tons.
In addition, Caterpillar plans to increase capacity for 60 and 100-ton trucks at its existing manufacturing facility near Chennai, India. The capacity expansion would more than double truck production capabilities in India. The expansion for its 100-ton 777D and 60-ton 773E trucks in India should be completed by early 2012.
“The increased production in India and Decatur will better position the company to serve our mining customers in every region of the world, with a particular focus on the growing demand and customer base in the emerging markets of Asia and in Russia,” Curfman added.
Combined, the long-term shovel development program and added truck capacity represent investments of nearly $700 million in Caterpillar mining products through 2014. Caterpillar is also updating the status of its new electric-drive mining trucks. The company currently has pilot units of its 345-ton 795F AC truck at customer sites for final evaluation, with commercial production set to begin in late 2010. Initial interest in the new Cat 795F AC trucks has been strong, and the company has increased its planned build rate for 2011 by more than 40 percent to meet demand in all major mining markets throughout the world.
In early 2012, the company also plans to produce pilot units of the 793F AC truck with a 240-ton payload. Both the 793F AC and 795F AC will complement Caterpillar’s full range of mechanical drive trucks. “For generations, customers have relied on Caterpillar products, along with the service support of our global dealer network, to give them the lowest owning and operating costs over the life of a machine,” said Caterpillar Chief Executive Officer-Elect Doug Oberhelman. “In today’s globally competitive environment, our customers are counting on that level of reliability, durability and support more than ever. This investment of nearly $700 million demonstrates our commitment to Caterpillar mining customers around the world.
It also is a great example of the job-creation benefits of global trade, as well over 60 percent of the large mining products made at our Illinois facilities are exported outside of the United States,” Oberhelman added.
This is the main reason for us liking global companies like Dow Chemical (DOW) and ProLogis (PLD) as well as out recent purchase of Oil (USL). All will be heavy beneficiaries of global growth. What is really important here is the scale of this expansion, 30% to 100% in areas. A company like CAT will not make this type of investment unless the demand they expect is there and they anticipate is continuing.
The is good news globally…
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