Caterpillar Shifts from Offshoring to Onshoring Back to the U.S.A.

March 12, 2010
Caterpillar Inc. has undertaken a study that could lead to a new hydraulic excavator facility being built in the United States, as part of the growing trend toward onshoring—bringing production work back to the United States to reduce global supply chain management costs. Such a move significantly increase Caterpillar’s employment in the U.S. dedicated to excavator production

As part of a long-term strategic initiative, construction equipment manufacturer Caterpillar Inc. has undertaken a study that could lead to a new hydraulic excavator facility being built in the United States, as part of the growing trend toward onshoring—bringing production work back to the United States to reduce global supply chain management costs. Such a move could triple the current capacity of hydraulic excavators now produced by the company in the U.S. and significantly increase Caterpillar’s employment in the U.S. dedicated to excavator production, and further leverage excavator production in Japan to serve increasing demand in China and across Asia.

“The study is based on the current analysis of where the global excavator market is heading and how Caterpillar should position itself for continued leadership in the excavator industry,” explains Gary Stampanato, Caterpillar vice president with responsibility for excavators.

Currently, the company only produces two excavator models at a facility in Aurora, Ill., where it also produces wheel loaders, soil and landfill compactors, wheel dozers and components. In addition, Caterpillar produces excavators in Belgium, Brazil, China, France, Indonesia, Japan and Russia. If the contemplated decision is finalized, the new facility would manufacture the two models now made in Aurora, as well as several additional excavator models now produced in Japan and exported to the United States.

This study is part of a long-term strategic initiative to develop the appropriate global footprint needed to competitively produce hydraulic excavators. Hydraulic excavators are a core machine family made by the company and are widely used in applications around the world. If finalized and approved, the new U.S.-based factory would be the primary North American source for excavators.

Under this scenario, Caterpillar’s Akashi, Japan, excavator facility would have the available capacity needed to better serve customers in the rapidly expanding Asia-Pacific region. Based on Caterpillar’s current long-term forecast for the Asia-Pacific region, it is possible Akashi may need to increase capacity and employment to help meet demand. A final decision regarding this study will be made at a later date.

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