Caterpillar has announced plans to expand its flagship Brazilian factory in Piracicaba, where it manufacturers 'Core' earthmoving machines.

It has also acquired a 50000 m2 factory in Campo Largo, which it will upgrade and use for the manufacture of backhoe loaders and compact wheeled loaders, machines that are currently built in Piracicaba.

Total investment in the two facilities will be US$ 180 million over the next two years.

"The strategic decision to expand the operations in Brazil is part of Caterpillar's long-term global strategy for growing our business in key growth markets and this move will enable Caterpillar to meet demand from its growing base of customers in Latin America," said Rich Lavin, Caterpillar group president with responsibility for growth markets and core products.

"In selecting the new manufacturing facility, we considered a number of Brazilian cities over the last six months," said Luiz Carlos Calil, President of Caterpillar Brasil. "Campo Largo was selected due to the site characteristics and the possibility of increasing capacity sooner."

Production at the Campo Largo is expected to begin in 2011. At full capacity the factory will employ 1000 people.