Caterpillar (NYSE:CAT) Adding to Brazil Manufacturing Operations

Caterpillar (NYSE:CAT) said it will spend close to $180 million in order to expand its Brazilian manufacturing capacity to meet the increasing demand in the largest South American market, as well as the rest of Latin America.

Spending will target its Piracicaba plant in Brazil - which is already operational - for expansion, while acquiring another plant in Campo Largo.

Campo Largo wil produce small-wheel loaders and backhoes used by construction companies. Production there will start in 2011.

The Piracicaba expenditure and expansion will proceed over a two year period.

Shares in Caterpillar soared today by over 5 percent, being pulled up with the broader market.

Morgan Stanley (NYSE:MS) Raises Brazil Outlook

With the Brazil economy expanding at a larger-than-expected pace, Morgan Stanley (NYSE:MS) raised its outlook for the country in 2010.

The last 2010 projections by Morgan Stanley for Brazil were a growth rate of 6.8 percent, which has now been upwardly revised to 7.9 percent.

“The math changes, although our view ahead does not: Brazil’s economy is booming,” said Marcelo Carvalho, Morgan Stanley’s chief economist in Sao Paulo.

With China slowing down as a result of tackling inflation problems in their urban real estate markets, this puts Brazil in very close competition with the Chinese, who are expected to grow at a similar pace, down from the approximate 12 percent they had been growing at.