Caterpillar Announces Plans to Build Small-Sized Hydraulic Excavators in China

Caterpillar continues to make major capital investments in China

BEIJING, People’s Republic of China (PRC) - Caterpillar Inc. (NYSE: CAT) announced today plans to build world-class small-sized (less than 20 tons) hydraulic excavators in Nanjing, Jiangsu province, China. This facility fits into Caterpillar’s China and emerging markets, strategy, and it will be a key element of the company’s worldwide excavator manufacturing footprint. The announcement follows the signing of an investment agreement between Caterpillar and Jiangning Science Park Administrative Committee (JSPAC). The proposed facility will be located in the Jiangning Science Park district (JSP) and wholly owned and operated by Caterpillar.

“This facility will add to Caterpillar’s growing operations in China and provide the primary manufacturing source for Caterpillar small-sized hydraulic excavators for China,” said Tom Bluth, Caterpillar Vice President, who is based in Beijing and has responsibility for Asia Pacific manufacturing operations. “I would like to thank JSPAC for its support as we have worked to choose the best location for this new facility. This site offers Caterpillar a business friendly environment with excellent access to transportation facilities, established suppliers and a skilled workforce,” Bluth said.

The proposed facility will be located on 37 acres (150,000 square meters) of land in the JSP, and Caterpillar intends to begin construction of the 365,000 square foot manufacturing building in early 2009 pending appropriate governmental approvals.

“The plans to build this hydraulic excavator manufacturing facility in Nanjing further demonstrate Caterpillar’s commitment to China,” said Mary Bell, Caterpillar Vice President with responsibility for the Building & Construction Products Division. “Our customers in China are demanding a greater variety of construction equipment, and as a result, the small machine market is growing rapidly,” she added. “This new investment will enable Caterpillar to provide our customers in China with the world’s best products and services.”

The small-sized hydraulic excavator facility in Nanjing is the most recent example of Caterpillar’s expanding manufacturing presence in China. Caterpillar core products manufactured in China include: hydraulic excavators, track-type tractors, motor graders and paving products, wheel loaders, large diesel engines used primarily for marine and power generation applications, and generator sets for use in China and the Asia Pacific region. Caterpillar also manufactures components at several facilities in China.

Today, Caterpillar has 16 operations - both joint venture and wholly owned businesses - in China. Caterpillar has developed a strong supply base, which fits well with its operations and investment strategy. Team Caterpillar is also growing rapidly in China. By the end of this year, Caterpillar will employ over 7,000 people. The company distributes its products through five independent dealers, which offer customers throughout China the best-in-class service and support that have made Caterpillar a global leader.