Caterpillar eyes expansion across Asia Pacific

KUALA LUMPUR - World's largest earth moving equipment maker, Caterpillar Inc said it is expanding its manufacturing footprint in Asia Pacific as it owed its record earning success in recent years to its five-year plans.

The company launched Southeast Asia's third factory in Rayong, Thailand recently and is planning to open in December its fourth in Batam, Indonesia, which will produce mainly large mining trucks.

Its first factory was built in Indonesia in 1983.

"Southeast Asia is a lot different market, its smaller than China but heavily mining. A lot of mining opportunity, a lot of oil and gas opportunity, electric power, not as much construction. But we think with a lot of the economic development plans that are putting in place we think Southeast Asia is starting to move ahead more aggressively on the construction plans," its president for the Asian operations, Kevin Thieneman told Xinhua in a recent interview.

The announcement came as the company expects reduced its forecast for sales in China to slow this year as it foresees a decline in demand by five to 10 percent for construction equipment amid a sluggish economy.

It is targeting $9.25 a share and a $70 billion forecast for sales and revenue at the end of the year.

Last year, the company's global net profit soared 83 percent to $4.9 billion from the previous year.

Its sales and revenue last year grew at a record 41 percent to $60 billion from 2010.

China makes up three percent of its overall sales.

"Short term there are some pains... it may be condition is a little too tight so we will now see the loosening up of the economy to power ahead for the balance of the year. But mid to long term we are still very positive," he added.

Expansion plans are underway in China as the company increasing its wheel loader production capacity three fold by 2014 in its Shandong engineering machinery, its wholly-owned Chinese construction company.

It is also hiking its hydraulic excavator production capacity by 80 percent in a project that would be completed by 2016.

And Thieneman said the company owes its success to its five- year plans modeled after China's five-year plan that covers a series of social and economic initiatives that have been put into effect since 1953.

"China gets part of the credit for that. Our previous CEO Jim Owens is a great student of China... when Jim first came into the job in 2005 he created the first five-year plan as you can imagine that's the modeled after China's methodology,"

"What that did for us is for the first time, it has done a great job in lining and focusing on the company on what we want to achieve, its called vision 2020. We have fifteen years ahead to achieve what we want to accomplish," Thieneman said.

"You have two ears and one mouth sometimes we feel guilty of talking more than we should and so Doug Oberhelman (Caterpillar's CEO and Chairman) has really driven our focus on that, focus on collaborating with our suppliers. That's more than anything that attributable to why we're powering ahead so well over the past 18 months, really focused on our weak points," he added.