The move is the final piece of the Thailand puzzle Caterpillar has been completing for the last 18 months and follows earlier relocations of hard rock products from Brazil and Tasmania.
Final production lines to relocate include the AD60 and AD55 articulated dump trucks, as well as the R2900 and R3000 loaders.
Caterpillar director of public affairs Asia Pacific William Oei told AMM the move would consolidate Cat's operations and make its Thai facility in Rayong the new global manufacturing hub for underground hard rock vehicles.
“We started a full and complete analysis of our operations two years ago with a view to developing and maintaining an efficient and flexible cost structure,” he said.
“This was to enable us to continue supporting our underground hard rock mining customers through the challenging cycle while positioning us to ramp up quickly once the mining industry returns to growth in the future.
“Our global manufacturing footprint is a critical part of that process and consolidating our underground hard rock product manufacturing in one location, in Rayong, Thailand, provides us with the ability to align our business for long-term, sustainable growth.”
The Rayong facility is newer and uses the latest manufacturing processes to allow for greater control over quality. It also benefits from a well-structured global network for supplies and logistics, giving Cat some advantages from a logistics, space and cost perspective.
While Cat is still in the process of evaluating the requirements of fully operating in Rayong, Oei said the move would not impact customers.
“Our customers will not be impacted at all and will benefit by our ability to continue innovating our product line and serve them better in the long run,” he said.
However, the transition is not good news for Cat’s Tasmanian workforce in Burnie, which is likely to face 280 job cuts.
While Cat was determined to do what it could to limit the damage by discussing alternative business possibilities with the owner of the Burnie facilities, the Elphinstone Group, it unfortunately has reached an impasse.
"Despite a comprehensive review and discussions about possible outcomes, it has been determined that an unavoidable gap will remain between Caterpillar’s exit and the growth of Elphinstone Group’s alternative business activities for the region," the company said.
"This decision is not a reflection of Caterpillar employees in Burnie nor the strong relationship and respect Caterpillar has for the Elphinstone Group.
"The companies will continue to maintain a close working relationship during Caterpillar’s transition to Rayong in order to achieve the best possible outcomes for the north west region."
Full-time Caterpillar employees will be eligible for a severance package as well as out placement services.
The transfer of production from Burnie to Rayong is expected to be completed by March 2016.