Manufacturing News

Caterpillar Inc Set to Expand in China

This investment will provide engineering and technical support for Caterpillar's China based operations, including the recently announced investment in Shandong SEM Machinery Co., Ltd.

Caterpillar Inc. (NYSE: CAT) subsidiaries in China have signed three non-binding memoranda of understanding (MOUs) with an industrial park development company affiliated with the Shanghai Municipal Government.

The MOUs demonstrate Caterpillar's continued commitment to customer service and growth in this critical market.

The following three MOUs involve the Shanghai Lingang Economic Development Co., Ltd. (Lingang Group), which is currently developing the world's largest industrial park:

- Lingang Group and Caterpillar reaffirmed their commitment to the success of Caterpillar's China Distribution Center in the Lingang Industrial Area and to the establishment of a regulatory system that facilitates trade and investment in the region.

- Caterpillar Remanufacturing Services will use its proven record in the area of remanufacturing to establish the Lingang Industrial Area as the premier remanufacturing center in China to support Caterpillar customers and dealers in China and the Asia Pacific region.

- A proposed service consortium alliance between Caterpillar Logistics Services and Lingang Group would establish a one-stop service center to attract investors and clients to the Lingang Industrial Area, leveraging the strengths of Caterpillar's service companies.

"I have visited China regularly over the last 20 years and have witnessed the nation's extraordinary economic growth and development during that time," said Caterpillar Chairman and CEO Jim Owens.

"Caterpillar has also grown during that time, and these initiatives are tangible examples of our plans for future growth across all lines of Caterpillar's business in China."

Owens noted that Caterpillar's Board of Directors recently held its first ever meeting in China, as the company's executive leadership team outlined for the board Caterpillar's plan to implement its global business model in China.

Caterpillar has a long history in China. The company sold its first products there in 1975 and opened an office in Beijing in 1978. Beijing is home to Caterpillar's marketing headquarters for China, and it is also the headquarters for Cat China Financial Leasing.

In the 1980s, Caterpillar launched technology transfer agreements with Chinese manufacturers who began building Caterpillar licensed products. Caterpillar's expansion in China accelerated in the early 1990s with the establishment of a more aggressive local production strategy.

Today, Caterpillar operates 10 facilities - both joint venture and wholly-owned businesses - which, together with its network of independent Caterpillar dealers, offer customers in China the best-in-class products, services and support that have made it a global leader.

The city of Qingdao in Shandong Province is the location for an Innovation Center that will leverage Caterpillar's global technical resources to develop the products and processes necessary to support the China market.

This investment will provide engineering and technical support for Caterpillar's China based operations, including the recently announced investment in Shandong SEM Machinery Co., Ltd., one of China's leading wheel loader manufacturers.

Earlier this year, Caterpillar acquired a minority stake in SEM with an option to purchase the remaining equity in 2007.

In addition, Caterpillar is engaged in preliminary discussions with other Chinese manufacturers, which could result in additional future investments.

Caterpillar Logistics Services, Inc. provides world-class supply chain solutions and services to its parent company, Caterpillar Inc., and over 50 companies throughout the world.

Caterpillar is one of the world's largest remanufacturers, recycling more than 100 million pounds of end-of-life iron every year into remanufactured engine, transmission and hydraulic components.

For 80 years, Caterpillar Inc. has been building the world's infrastructure and, in partnership with its worldwide dealer network, is driving positive and sustainable change on every continent.

With 2004 sales and revenues of $30.25 billion, Caterpillar is a technology leader and the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. More information is available at

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