The world's largest construction-equipment maker knows how to do the right things at the right time. Just when Japan came up with positive manufacturing data, Caterpillar
Full control of the 45-year-old joint venture business, Caterpillar Japan Limited, will help accelerate Cat's pace of growth in the world's third-largest economy.
On the right track
According to a Bloomberg report, Cat is planning to boost production by nearly 20% at its Akashi manufacturing facility, which also serves as the design center for Caterpillar's excavators. In 2012, the company intends to produce record excavators to capitalize on the expected rise in demand for construction equipment as Japan rebuilds after the devastating earthquake.
Owning the venture now will mean a stronger hold in the Japanese market with better products and services. It will also bolster Cat's efforts to expand reach in the Asia-Pacific region, especially emerging markets. This region already contributes nearly 25% to Cat's top line, and revenue from the area surged a staggering 45% in 2011 from a year ago. Cat is expanding in a big way in China as well, and with Japan now getting back on its feet after the devastating tsunami, the timing of Cat's move seems perfect.
Infrastructure rebuilding in Japan has gained speed, as evidenced from higher capital spending by Japanese companies between October to December 2011. In fact, it jumped the most in five years during this period. The total amount of investment in plant and equipment by all industries was 7.6% higher than a year ago.
Soon after these encouraging numbers, automakers (who were among the worst-hit in the country) came out with estimate-topping February sales. Production and inventories for biggies like Toyota Motor
The Foolish bottom line
With the Japanese government extending stimulus to rebuild the economy, Cat appears to be on the right track, gaining traction in this corner of the world.
The best way to stay updated on Cat as it leaps across boundaries and grows bigger is by adding it to your stock Watchlist, our free and personalized stock-tracking service. Click here to add Caterpillar to your Watchlist.
Neha Chamaria does not own shares of any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.