Engineering firm Caterpillar set for major investment in Shrewsbury
Engineering giant Caterpillar is investing in its Shrewsbury facility as it benefits from a period of stability in the business.
The £55 billion-a-year company employs 350 people at its plant in Lancaster Road, where it reconditions engines for military and off-road vehicles such as BAE's Terrier armoured vehicle.
Spending
Now it is spending more than £1 million on its test facility and in new machine tools at the site.
The move is a reflection of the period of stability which the company finds itself in, as it shakes off the threat of cuts to UK defence budgets and benefits from a demand for being able to reuse existing engines in the current worldwide economy.
Matt Bulley, the division's managing director, said: "I would still say we are in a relatively steady position. We are not plummeting as we were 10 years ago, but are still in challenging times.
"What we are seeing in our remanufacturing engines, when there are budget constraints, being able to reuse and remanufacture products is a cost-effective way for the customer to use their vehicle rather than reinvesting in new ones.
"We are having to keep a very close eye on costs in all areas of the business, but in terms of continuing to look at opportunities to invest in salvage technology, and not throwing as many components in the bin.
"We are upgrading our test facility to the tune of £1 million, and we have some projects running in terms of investment in machine tools in our machine shop.
He added: "We have to make a case to compete for funding, like everybody else, but since we have been able to secure investment that suggests the company has a degree of confidence in Shrewsbury, but it's still very competitive.
The back end of last year saw Caterpillar announce 35 redundancies at the site, which the company said was aimed at controlling costs, and Mr Bulley added that some short-run contracts could lead to 'lumps' in the consistency of trading.
He was speaking at a major conference for companies supplying into the defence and security markets at the company's headquarters on Thursday.
Organised by export body UKTI, 'How to Win Business in the Defence and Security Markets' also saw county MPs Daniel Kawczynski and Philip Dunne – also the Minister for Defence Equipment – speaking to more than 50 of the region's businesses.
Mr Dunne said: "We are trying to make it easy for companies of all sizes to engage with the MoD. We currently have about 12,000 suppliers to the MoD, including 250 in Shropshire.
"Caterpillar is one of the largest, which is why they wanted to host this event."
He added: "From next year we will be growing defence equipment spending by one per cent a year in real terms. We have a 10-year forward equipment plan amounting to £164 billion for 10 years.
"People talk about budget cuts and that's true, but we are now at a point where we expect the equipment side to show growth going forward.
"There's a strong military reason also to encourage other countries to adopt similar equipment, as there's a lot of co-operation between forces – there were 43 countries involved in Afghanistan – and what that might mean is the opportunity to piggy back on UK capabilities to find access to other markets.
"The MoD is open for business, and we are here to help British industry to develop its markets overseas."
By Thom Kennedy
