Caterpillar expects China infrastructure spending to boost its growth

Source:Reuters - Global Times Published: 2012-9-9 23:05:03

Caterpillar, the world's largest maker of construction equipment, expects a $157 billion Chinese infrastructure spending drive to feed through its sales next year, boosting its operations both locally and in North America.

China has given the go-ahead to 60 infrastructure projects as it seeks to tackle the weakness resulting from Europe's debt crisis and a slow US recovery that have dragged its economic growth to a three-year low.

President Hu Jintao pitched the stimulus plan in a keynote speech Saturday to business leaders at the Asia-Pacific Economic Cooperation (APEC) summit, drawing an enthusiastic response from Caterpillar's top regional executive.

"It's very good news," Richard Lavin, who oversees Caterpillar's China business, told Reuters during the summit in Russia's eastern port of Vladivostok.

Lavin said he expected details of the infrastructure spending plan to become clearer in the next few days or weeks, but Hu's comments suggested "it's going to be very broad in its application".

"He talked about roads, bridges, airports, sewage systems, energy - all of these are areas that we play in, it's the core of our business," said Lavin, Caterpillar's group president based in Hong Kong.

"I think we can expect a fairly broad and significant impact across our business," he said.

The US company, which has 18 plants in China and nine under construction, has suffered from overcapacity and has started temporarily exporting machinery made there to the Middle East and Africa, but expects its bet on the long-term China growth story to work out.

"We don't serve China 100 percent from China - we import machines for construction, also for mining, from outside of China, principally from North America. We expect to see a boost from North America, as well as in China," Lavin noted.

Reuters - Global Times

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