Caterpillar Inc., the world's largest maker of construction equipment, agreed to buy out its partner in a Chinese joint venture as part of its plans to expand excavator production in the country.
The Peoria, Illinois-based company agreed to buy Xuzhou Construction Machinery Group's 16 percent stake in Caterpillar Xuzhou Ltd., a joint venture established in 1995, for an undisclosed amount, Caterpillar said today in a statement.
Caterpillar said it's expanding excavator production in Xuzhou, China. The company held a groundbreaking ceremony today in the city for a plant that will build large excavators. The new factory will help increase Caterpillar's excavator capacity in China by fivefold through 2014.
"In the next few years, we expect China to continue to invest heavily across the country in a wide range of infrastructure improvements," Rich Lavin, Caterpillar group president with responsibility for emerging markets, said in the statement. "It is critical for Caterpillar and its dealer network to continue investing in China."
Caterpillar raised its 2010 earnings forecast in April because of growth in Asia and Latin America. The Chinese government's stimulus program and an increase in lending helped both residential and non-residential construction increase in the first quarter, Caterpillar said at the time.
Caterpillar fell 31 cents to $64.40 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 13 percent this year.
