Muncie Newspaper says CAT to open facility in Indiana…
* Report says 650 jobs could be created
* Not clear whether facility will manufacture locomotives
* Caterpillar currently assembles those in Canada only
CHICAGO, Oct 29 (Reuters) – Caterpillar Inc (CAT.N), the U.S. heavy equipment maker that has been moving aggressively into the rail business, will announce plans on Friday to open a railcar facility in east central Indiana, the (Muncie) Star Press newspaper reported on Friday.
Citing unnamed sources, the paper said Caterpillar’s Progress Rail unit would take over a huge vacant factory in Muncie which has doors in the rear that allow trains to enter and exit.
The newspaper did not say whether the plant would be used to service locomotives and other railroad rolling stock or to manufacture new equipment. It said the facility would eventually employ 650 workers.
A spokesman for Peoria, Illinois-based Caterpillar, best known for its yellow construction and mining equipment, declined to comment on the report.
Until recently, Progress Rail was focused strictly on the business of repairing and remanufacturing existing rail equipment made by other manufacturers, including General Electric (GE.N).
But that changed this summer, when Caterpillar purchased Electro-Motive Diesel, a locomotive manufacturer spun out of General Motors, for $820 million in cash from the private equity firms Berkshire Partners LLC and Greenbriar Equity LLC.
EMD’s headquarters, engineering facilities and parts-manufacturing operations are located in LaGrange, Illinois, just west of Chicago. But final assembly of the passenger, freight and road-switching locomotives EMD makes is performed at a plant in London, Ontario, Canada.
That has effectively stopped EMD from selling its locomotives to the many regional commuter rail lines in the United States, because they often require that the equipment they buy be assembled in the United States. Over the past four years, Caterpillar, which is also a big maker of diesel engines and gas turbines, has spent about $2 billion in the rail sector.
It was an industry that was viewed as important but dull until last year, when Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) (BRKb.N) bought Burlington Northern Santa Fe Corp for $26 billion.
It was Buffett’s biggest acquisition in the 44 years he has run Berkshire and one he characterized as “an all-in wager on the economic future of the United States.” (Reporting by James B. Kelleher, editing by Dave Zimmerman)