Industrial equipment makers expand global production

Caterpillar, Deere and GM plan manufacturing capacity expansions

By Dave Hannon -- Purchasing, 8/28/2008 8:43:00 AM

Demand for industrial and agricultural equipment remains strong in many parts of the world, driving equipment makers to expand manufacturing capacity in various regions.

John Deere today said it plans to invest $80 million in its agricultural manufacturing and parts distribution operations in Brazil to increase its manufacturing capacity at two plants there by 35%. According to a statement, “The funds will improve manufacturing flexibility, optimize the use of assets and improve aspects of the factory layout and assembly lines. Investments will also assist suppliers to improve capacity and logistics.”

Bloomberg reported earlier this month that Deere expects the farm equipment sector in South America to expand as much as 40%.

John Deere also announced this week it was investing up to $97 million in its U.S. manufacturing capacity in Waterloo, Iowa, which exports tractors to more than 130 countries. Deere announced a host of price increases in early August in an effort to offset its expected $475 million increase in materials costs this year.

Caterpillar also announced this week it was investing $100 million to triple its manufacturing capacity in China, where the company expects sales to reach $2 billion this year, and to double by 2010. Caterpillar will also invest $20 million in a China-based research and development facility support China and the Asia Pacific region.

"Pretty much our manufacturing operations here and in Asia to support the China market have been running at capacity," CEO Jim Owens told reporters this week.

Also today, General Motors announced it will invest $200 million into an engine plant in India next to its planned $300 million automotive plant. Bloomberg reports building the engine plant will reduce the costs of importing engines.