Wednesday, June 30, 2010

Caterpillar (NYSE:CAT) Adding New Plant in Brazil

Caterpillar (NYSE:CAT) announced Tuesday it will be building a new manufacturing facility in Brazil, as growing demand for mining and construction equipment in Latin America continues to surge.

Although this is a long-term strategy for Caterpillar, Latin America has experienced a fairly strong economic recovery over the last 12 months, and that should continue on for some time, especially in the mining sector, which promises to be robust around the world over the next decade or so.

Even so, sales of equipment to Latin America in May had dropped by 2 percent, highlighting resistance to spending on new equipment by businesses.

Global sales on the other hand made a nice upward move for Caterpillar, increasing by 11 percent in May, although we'll have to wait and see if that's sustainable, as economic conditions are perceived to be worsening rather than getting better.

Products assembled at the new plant will be small wheel loaders and backhoe loaders.

Construction on the new site, which hasn't been chosen yet, is scheduled for some time in the early part of 2011.

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