Caterpillar sees growth opportunities in US and Japan

The heavy machinery maker is strengthening its product portfolio in the 2 countries to meet high demand.

By Trefis Feb 9, 2012 3:13PM
Image: Construction (© Photodisc Green/Getty Images)Caterpillar (CAT) is looking to increase sales in Japan and North America by strengthening its product offerings in industries that are expected to drive growth.

In Japan, Caterpillar is ramping up production capacity to meet higher demand from the rebuilding efforts following last year's earthquake. In North America, the company is sharpening its focus on the waste management industry with its recent alliance with Exodus Machines. 

Caterpillar Japan increasing its production capacity

Caterpillar Japan has decided to boost its production of excavators by 25% in the coming year to service the demand arising from infrastructure rebuilding after the devastating earthquake that hit the country last year. There will also be an increase of 15% in the production of wheel loaders and bulldozers.

According to a presentation by Tokyo-based construction equipment major, Komatsu, the sale of construction machinery makers went up by 32% in the fourth quarter of last year. Caterpillar, along with other players in this industry, are expecting to cash in on this boom. According to the Nikkei newspaper, Caterpillar Japan will reconfigure three production lines at the Akashi plant to increase its monthly excavator capacity from 1,500 to 2,000 units. The plant is operated by a joint venture between Caterpillar and Mitsubishi Heavy Industries.

Caterpillar signs agreement with Exodus in North America

Caterpillar has signed an exclusive agreement with Exodus Machines to design and supply their wheel and track material handlers through Caterpillar's dealers. Although initially their machines will be sold under the Exodus brand, they are expected to transition to the Cat brand by the end of 2013. These machines will be available for sale immediately in North America and are expected to complement Caterpillar's own range of material handlers above 25 tons.

Caterpillar Share of Global Machinery Market

This alliance will follow Caterpillar's formation of a new strategic business unit, called Caterpillar Industrial and Waste Group. As the name implies, it will serve customers globally in the waste material handling industry. Caterpillar will use Exodus's designs along with its own distribution network and support capabilities to make a significant impact in this sector. Caterpillar has also picked up a minority equity stake in Exodus's new entity, Exodus Machines LLC, which is looking to expand manufacturing in the Superior, Wis. area.

(See our full analysis of Caterpillar stock here.)

Tags: CAT


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