Caterpillar to Revamp Foundry for Larger Engine Castings

Controversial move involves assigning smaller products to Mexican venture

Caterpillar Inc. will invest $40 million to update its Mapleton, IL, foundry in order to manufacture large engine castings, but the smaller castings now produced there will be reassigned to a proposed joint-venture with Grupo Industrial Saltillo S.A., in Mexico.

Directors of Caterpillar and Grupo Industrial Saltillo have not confirmed the joint venture project. Caterpillar would have a minority share in the venture, and Grupo Industrial would manage it.

Planned to be in operation, by 2007, that new plant would supply engine blocks and heads from Caterpillar designs to engine plants in Mossville, IL, and Greenville, SC. A final decision on the venture is expected early in 2005.

According to varying estimates, 500-560 positions at the Mapleton foundry would be lost when the work is reassigned to Mexico. Reports say the plant would continue to operate with about 200 workers. Caterpillar, however, says the plan would save foundry from a less certain fate. The higher-volume, smaller castings product line has grown non-competitive, the company explains. The investment at Mapleton will keep it the base of Caterpillar’s casting operations and result in new metalcasting technology that will make the plant a cost-competitive operation producing the company’s large engine products.

"After a comprehensive study of the Mapleton foundry's performance and capabilities, it became clear that the facility's survival depends on leveraging its ability to produce large castings-an area of proven strength-while shedding the smaller, high-volume castings business where extreme cost pressures make the facility uncompetitive," said one Caterpillar vice president.

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