Caterpillar is expected to report a 40 percent decrease in profit as a steep drop in demand for mining equipment, especially from Chinese buyers, offsets modest increases in U.S. construction equipment sales. Reuters

Heavy equipment maker Caterpillar Inc. (NYSE: CAT) is expanding a Chinese manufacturing facility by 80 percent, the U.S. company said Wednesday.

Once completed in 2016, the facility in Xuzhou will increase hydraulic excavator production at Caterpillar Xuzhou Ltd. (CXL) by 80 percent. Caterpillar also announced plans to begin production of wheeled excavators at CXL beginning in early 2014.

Caterpillar, which has 17 facilities in China and another nine under construction, produces wheeled excavators in Grenoble, France. Production in Grenoble will continue, while the wheeled excavators produced in China will position Caterpillar to compete in China and other growth markets with this product.

Shares of Caterpillar slipped $1.68 to $109.06 in afternoon trading.