Caterpillar to expand China excavator production

US construction equipment maker Caterpillar on Wednesday announced a $100million expansion project for its manufacturing facility in the city of Xuzhou in east China's Jiangsu province, aiming to increase excavator production.

The project, which is still waiting for government approval, will expand the production of hydraulic excavators at Caterpillar Xuzhou Limited (CXL) by 80 percent once completed, Doug Oberhelman, chairman and chief executive officer of Caterpillar, said at a press conference.

"This expansion demonstrates confidence in our business, our workforce here in Xuzhou and the continued strength of the Chinese market," Oberhelman said.

CXL currently sees a daily output of 49 hydraulic excavators, according to an introductory tour conducted at a CXL workshop ahead of the press conference.

A site for the new facility has yet to be chosen. The facility will manufacture products primarily for the Chinese market, the company said.

Oberhelman also announced a plan to begin the production of wheeled excavators at CXL starting in the first quarter of 2014.

The planned production of wheeled excavators in China will position Caterpillar to compete in China and other growth markets, he said. The company currently produces wheeled excavators in France.

The investment moves underline the ambition of Caterpillar, the world's largest manufacturer of construction and mining equipment, to strive for a leading position in China's excavator market.

"China is a priority market for Caterpillar... as this market continues to grow, we are aggressively expanding our production capabilities to meet customer needs. Our goal is to be the industry leader in China by 2015," said Gary Stampanato, Caterpillar's vice president.

Stampanato said the company will start using more domestic parts and move away from importing engines for its machines.

CXL was jointly founded by Caterpillar and Xuzhou Construction Machinery Group in 1994, and taken over by Caterpillar in 2010. The company has since become a flagship for Caterpillar's manufacturing operations in China.

Entering China in the late 1970s, Caterpillar currently has 17 manufacturing facilities and nine new facilities under construction in China, all of which will go into operation by 2013. It also has four R&D centers and three logistics and parts centers.