Caterpillar to Beef Up Mining Offerings - TheStreet

Caterpillar to Beef Up Mining Offerings

Caterpillar is beefing up its line of mining equipment, a clear bet by the manufacturing giant that demand for mineral extraction around the world will continue to rise.
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PEORIA, Ill. (TheStreet) -- Caterpillar (CAT) - Get Report is beefing up its line of mining equipment, pouring $700 million into the effort over the next four years, a clear bet by the manufacturing giant that demand for mineral extraction around the world will continue to rise.

Milwaukee, for one, isn't happy about the news.

That's because Caterpillar's new products will compete with the equipment produced by mining-gear specialists

Bucyrus

(BUCY)

and, to a lesser degree,

Joy Global

(JOYG)

, both based in Wisconsin.

Shares of Joy Global, which specializes in underground mining machines and had

enjoyed a bout of decent news of late

, fell $1.50, or 2.6%, to $55.46.

Bucyrus, meanwhile, which offers a full complement of equipment after

acquiring the mining machinery business

of

Terex

(TEX) - Get Report

, ended trading Thursday at $51.34, down $2.02, or 3.8%.

In a press release Thursday, Caterpillar said it decided to build a fresh line of shovels -- enormous planet-gougers that will weigh in at 125 to 800 tons apiece. The company expects to begin pilot production on the smallest models in early 2011, at its plant in Aurora, Ill., outside Chicago.

The first commercial machines will roll off the assembly line "later in 2011," the company said, highlighting the speed with which Caterpillar is now able to ramp up manufacturing. The company has spent the better part of the last decade retooling its production facilities for so-called "lean manufacturing," the hyper-flexible, efficiency-obsessed assembly methods pioneered by

Toyota

(TM) - Get Report

.

Caterpillar said the shovels are designed to be paired with its famous line of mining dump trucks -- the Star Wars-size machines that haul raw ore here and there inside

the world's open pit mines

.

The company also said that it will increase production of those trucks by 30% next year. Caterpillar, which builds its biggest ore haulers in Decatur, Ill., said the added capacity will be ready by the beginning of 2011.

In India, meanwhile, the company will hike production of its 60-ton and 100-ton mining trucks, products that Caterpillar will use to meet demand from metals extractors in Asia and Russia.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.