Caterpillar to expand research, production in China

Caterpillar, Inc. (www.caterpillar.com), citing China's "remarkable economic growth," said it intends to establish a new research-and-development center at the site of its rapidly growing manufacturing campus in Wuxi, China.

The Peoria heavy-equipment maker also said it will expand wheel-loader production capacity at another Chinese site. The company didn't provide information on how much it intends to spend on the expansion effort.

While many U.S. manufacturers use China as a low-cost manufacturing platform for producing goods that will be sold in North America, Caterpillar's Asian production plants primarily manufacture goods for sale in Asian markets.

China's surging industrial growth has fueled a burst of infrastructure projects -- harbors, railroads, highways and the like -- not only in China but in nearby Asia/Pacific countries. Such projects, as well as the continuing growth of factories and mines in the region, are driving demand for Caterpillar's bulldozers, mining vehicles and diesel-powered electricity-generating gear.

China's ascendancy as a marketplace for Caterpillar's goods was underscored in late 2006 when the company announced plans to move the headquarters of its Asia Pacific operations group to Beijing from Tokyo.

Caterpillar disclosed plans for a new small-diesel manufacturing facility at the Wuxi campus in Jiangsu province. It said it might create an R&D operation at the Wuxi site, which would be in addition to a research center in Shandong Province and a design center in Xuzhou.

The Wuxi plant began producing Caterpillar components in mid-2006 and the engine facility is slated to begin production late this year, the company noted. Caterpillar, in what an official called evidence of its "long-term commitment to China," said it intends to expand capacity at its planned wheel-loader production facility in Shandong.

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