Tags: Caterpillar | CEO | Hurry | Meet | Growing | Demand

Caterpillar CEO ‘in a Hurry’ to Meet Growing Demand

Thursday, 24 March 2011 07:46 AM

Caterpillar Inc., the world’s largest maker of construction equipment, is “in a hurry” to expand its product range and meet growing demand, Chief Executive Officer Doug Oberhelman said.

“Business is booming outside the U.S.,” he said in a presentation at the CONEXPO-CON/AGG conference in Las Vegas. The CEO said he sees a “slow, steady increase” in North American demand.

Caterpillar is betting on higher mining-equipment sales with its $8.6 billion acquisition of Bucyrus International Inc. as Asian demand drives up commodity prices. The Bucyrus deal is expected to be complete in mid-2011. Caterpillar also bought U.S. locomotive maker Electro-Motive Diesel in August and agreed in October to purchase German engine producer MWM Holding GmbH.

Caterpillar plans to expand its manufacturing in Asia. The Peoria, Illinois-based company, which has capacity to make 180,000 units a year globally, aims to boost Asian capacity alone to that level in 2015, Group President Rich Lavin said at the conference.

The company is trying to better understand the needs of customers in China and is working to tailor products for the market, Chief Technology Officer Tana Utley said in an interview. Some Chinese customers are focused more on price rather than durability, she said. Caterpillar is hiring local engineers, who now number in the hundreds, Utley said.

Logistics Unit

“We need engineers to talk to Chinese customers,” she said.

Oberhelman acknowledged that the company’s market share in China has slipped in the last couple of years for equipment such as wheel loaders because “the market has grown faster than we’ve grown capacity.” He said the company is planning to step up investment in the country.

Caterpillar is examining options for its third-party logistics business including a possible sale, the company said in a statement earlier today. The business, part of Caterpillar Logistics Services Inc., could also be restructured as an independent unit. Bank of America Merrill Lynch and Robert W. Baird & Co. are advising the company and a decision is expected by the end of the year, Caterpillar said.

Oberhelman also reaffirmed the company’s earnings forecast of almost $6 a share in 2011 and $8 to $10 in 2012. He also confirmed a target compound annual growth rate in earnings per share of 15 to 20 percent for 2008 through 2015.

Caterpillar dropped 3 cents to $106.76 in composite trading Wednesday on the New York Stock Exchange. The shares have climbed 14 percent this year.

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Caterpillar Inc., the world s largest maker of construction equipment, is in a hurry to expand its product range and meet growing demand, Chief Executive Officer Doug Oberhelman said. Business is booming outside the U.S., he said in a presentation at the...
Thursday, 24 March 2011 07:46 AM
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