Caterpillar Shifting Production From Brazil to the U.S.

The world is changing. The Brazilian subsidiary of Caterpillar is losing its role as an export platform. The company has already started to transfer production lines to the United States. The move was triggered by the appreciation of the Brazilian Real against the dollar.

"There are already products that is more worthwhile to produce in the United States. We lost some lines and this will worsen as the U.S. economy will recover", said the president of Caterpillar Brazil, Luiz Carlos Calil.

He said the dollar at $1.70 does not offer a cost reduction in Brazil to offset the advantage of logistic facilities in the United States. The executive said that the exchange rate below $2.00 prevents the export of machinery from Brazil. When it reached the country in 1954, the goal of U.S. multinational Caterpillar was to serve the local market. Over time, the factory located in Piracicaba, in São Paulo, started to export to Latin America and complement the provision of the United States market. Before the crisis, the Brazilian subsidiary had reached export more than half of production to different destinations. In 2009, shipments for the United States fell 53%.

He says that The Real is too strong and rising steel prices hurt the competitiveness. The exchange rate was not favorable in 2008, but demand was so great that all the plants in the world were working at full steam. Today this has changed. He believes that, when at full steam, the internal market will not compensate for export. Today, Caterpillar employs 700 people less than before the crisis.

With news from newspaper O Estado de Sao Paulo.