Another Distribution Center for CAT - Analyst Blog


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In a bid to expand its Cat parts distribution network, Caterpillar Inc. ( CAT ) announced that its wholly owned subsidiary, Caterpillar Logistics Inc., is building a new 500,000-square foot parts distribution center in San Luis Potosi, Mexico. The new distribution center is expected to be operational by mid-2013.

San Luis Potosi has been chosen for the distribution center given its proximity to major airports, railways and also due to easy accessibility with major cities in Mexico.  The facility is expected to create around 150 jobs.

This new facility is part of Caterpillar's expansion plan to enhance its part distribution network in Central and South America. This will be the company's sixth parts distribution center following facilities in Central California; Clayton, Ohio; Spokane, Washington; Waco, Texas; and Dubai, UAE.

In addition to building new facilities, Caterpillar has capacity expansion projects in place at existing Cat Logistics facilities in Atlanta, Georgia; Grimbergen, Belgium; Melbourne, Australia; and Shanghai, China. These projects are focused on increasing capacity and realizing network efficiencies to ensure unmatched customer support. All of these facilities are using common systems and processes in addition to Service Parts Management (SPM), a global solution that replaces multiple legacy software systems supporting the Cat parts network. 

Apart from expanding the Cat parts distribution network, Caterpillar is coming up with new facilities, adding production capacity for many of its products in the United States, South America, Europe and across Asia, to position itself for meeting the growing demand for its products in future.

We believe Caterpillar's expansion plans of opening new facilities and expanding existing operations, particularly in the emerging markets, will boost its long-term potential.  We believe that the top line will continue to grow on the back of increasing demand for construction and mining equipment. The shares of Caterpillar presently retain a Zacks #2 Rank (short-term Buy recommendation).

Peoria, Illinois-based Caterpillar Inc. is the manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company is one of the few leading U.S. companies in an industry that competes globally from a principally domestic manufacturing base. Caterpillar operates two divisions - Machinery and Power Systems (M&PS) and Financial Products. Caterpillar competes with the likes of  CNH Global NV ( CNH ),  Komatsu Ltd.  ( KMTUY ) and  Volvo AB  ( VOLVY ).

CATERPILLAR INC ( CAT ): Free Stock Analysis Report
CNH GLOBAL NV ( CNH ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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