Excavator Companies Riding the US Semiconductor and Battery Boom... "Benefiting from New Factory Construction"

Caterpillar 1Q Sales Up 17%... "Positive Market Outlook"
Expecting Boom in Trucks and Building Materials

The Wall Street Journal (WSJ) reported on the 8th (local time) that construction-related manufacturers are enjoying a boom as a new wave of factory construction is taking place in the U.S. due to the Biden administration's Semiconductor Support Act and the Inflation Reduction Act (IRA).

According to the report, Caterpillar, the world's largest construction machinery manufacturer, announced in its Q1 earnings report on the 27th of last month that its revenue reached $15.9 billion (approximately 21 trillion KRW), and operating profit was $2.7 billion, marking increases of 17% and 47%, respectively. Sales of machinery and engines in the North American region alone rose 32% year-over-year in Q1, offsetting declines in sales in China and a slowdown in growth in other overseas markets.

[Image source=Reuters Yonhap News]

Jim Umpleby, CEO of Caterpillar, said during the earnings announcement, "We are positive about the market conditions," adding, "The Q1 results lead us to expect performance this year to exceed our initial expectations."

In the U.S., demand that was blocked due to supply chain bottlenecks during the COVID-19 pandemic has revived. Additionally, with government subsidies, global semiconductor and battery companies have decided to invest in the U.S. and have begun building factories, leading to increased performance for local manufacturers of construction equipment, trucks, building materials, and industrial software.

U.S. steelmaker Nucor also reported that its steel product-related revenue in Q1 reached $971 million, a 42% increase compared to the same period last year. Chad Utermark, Vice President of Nucor, explained, "Semiconductor plants and electric vehicle facilities (including both assembly and battery plants) are currently included in our order book."

Rockwell Automation, a supplier of factory software and automation equipment, also saw nearly a 30% increase in Q1 sales due to this factory construction demand. Rockwell raised its core sales growth forecast for this year from the initial 13% to 17%.

Production of commercial trucks, which faced difficulties during the pandemic due to parts shortages, has also expanded. PACCAR, the world's largest truck manufacturer, produced and delivered 51,100 trucks in Q1 this year, nearly a 20% increase compared to Q1 last year. PACCAR expects to deliver between 51,000 and 54,000 trucks in Q2, exceeding Q1 deliveries.

Consequently, Cummins, which supplies diesel engines to PACCAR trucks, also forecasts a 15-20% increase in sales this year due to the surge in demand.