Caterpillar Inc. (NYSE:CAT) is upping its prices worldwide by as much as 2 percent by next year as it capitalizes on its market dominance in Europe, the United States and Japan, an analyst told International Business Times.
The company, often seen as a bellwether for economic growth, enjoys a “very, very strong” advantage over rivals Deere & Company (NYSE:DE) and Komatsu Ltd. (TYO:6301) for market share in the construction equipment sector in those developed regions, said Adam Fleck, an analyst at Morningstar.
“There’s not a whole lot of competition in those core markets where you’ve got a reputation that’s critical and have a strong dealer network that’s important,” Fleck said in a phone interview.
To boot, the company will enjoy price hikes of between 2 percent and 6 percent on engines that comply with new U.S. and European standards on carbon emissions.
He said prices are unlikely to go up in Latin America or the Asia/Pacific region.
Over the last year, sales sank in every region except Latin American, in which Caterpillar was buoyed by Brazil’s construction boom ahead of the 2014 World Cup soccer tournament. But massive street protests, and two years of economic stagnation under President Dilma Rousseff (at least, relative to growth under her predecessor, Luiz Inacio Lula da Silva), have helped send Caterpillar’s sales into the red in that region. The company’s mining equipment division was also dragged down by a cyclically waning mining industry.
And he said Caterpillar competes with low-cost rivals in those regions that don’t have clear equivalents in the developed world.
But as prices climb in developed economies, some in the U.S. are facing layoffs.
The company began laying off managers at its plant in Illinois last month, the Herald-Review reported.
Alexander C. Kaufman is a reporter at the International Business Times covering companies, retail and media. He joined in May 2013. Previously, he was an editor of...