What Recession? Manufacturers Still Plan to Spend Big
Industrial companies like Caterpillar, UPS and Dover appear to be moving full steam ahead on investments even with chatter about a downturn.
Caterpillar is targeting $1.5 billion in capital expenditures this year.
Photographer: David Paul Morris/Bloomberg
Manufacturers aren’t oblivious to recession fears, but chief executive officers aren’t worried enough — yet — to slash spending on factory expansions and new equipment.
Caterpillar Inc. expects dealers of its heavy-duty equipment to moderate purchases in 2023 as they work through inventory stockpiles. While sales will still grow this year, that will mostly be a reflection of price increases, the company said Tuesday when it reported fourth-quarter results. There’s no glut, though: Improving supply conditions allowed Caterpillar to push out more shipments to a still-constrained North American construction industry, while more than 70% of the combined year-end inventories for Caterpillar’s mining, energy and transportation businesses are linked to customer orders, executives said. Caterpillar is targeting $1.5 billion in capital expenditures this year, an increase from both 2022 and its pre-pandemic 2019 budget of $1.1 billion for the machinery, energy and transportation businesses.