In an early-September filing with the SEC, Caterpillar said it "will announce a general price action of up to 5 percent for machinery and up to 7 percent for engines. This price action, announced to Caterpillar dealers worldwide, is in line with expected general economic conditions and industry factors. This price action will be effective January 2007."
Cat expects continued strong demand for mining and construction equipment. And, recently, the company has had difficulty producing fast enough to keep pace with demand. In its second-quarter financial statement, CEO Jim Owens said, "we're continuing to work with suppliers and within our factories to remove bottlenecks and increase production for a number of our products."
Caterpillar has increased prices more than 13 percent in the past two years, fueling the strongest profits in company history. On the day of Cat's price-increase announcement, its stock-price increase led a rally by Wall Street's Dow Jones industrials.