Robert Samuelson in today’s Washington Post, “A new economic world order?”
This just in: Caterpillar — the maker of earth-moving equipment, including bulldozers and monster mining trucks — reported first-quarter profit of 36 cents a share, up from a loss of 19 cents a year earlier. More important, the improvement stemmed heavily from much higher demand from developing countries. Although machinery sales dropped in North America and Europe, they rose 40 percent in Asia and 7 percent in Latin America. With more exports, Caterpillar is hiring again. The U.S. job increase, though only 600, contrasts pleasantly with the roughly 10,000 layoffs since late 2008 that had reduced the company’s American workforce to about 43,000.
What’s significant about this is that it suggests a much-desired “rebalancing” of the global economy. The world needs a new engine of growth to replace free-spending American consumers and their ravenous appetite for other countries’ exports.
Apropos Caterpillar and trade, last Thursday the Senate Finance Committee’s Subcommittee on International Trade, Customs, and Global Competitiveness held a hearing, “Doubling U.S. Exports: Are U.S. Sea Ports Ready for the Challenge?” Among those testifying was Steve Larson, Chairman and President, Cat Logistics and Vice President of Caterpillar Inc. in Morton, Ill., with comments that addressed the same economic priorities Samuelson raised. From Larson’s prepared testimony:
Today, Caterpillar exports to nearly 200 countries around the world. In 2008 the average in-transit inventory of U.S. machines and engines exported on any given day was about $500 million. Caterpillar spent more than $5 million on logistics each day to export U.S.-built machines and engines, while spending $2.4 billion worldwide on transportationrelated expenses.
Additionally, with our global supply chain, imports into the U.S. are extremely important to Caterpillar, increasing 400 percent between 2003 and 2005 alone. In 2008 we imported goods valued at $5.5 billion into the U.S. from 114 countries and over 500 suppliers, with $3.4 billion coming through U.S. and Canadian seaports.
An efficient supply chain takes on added importance as the world rebounds from this global economic recession. This is particularly true for the U.S., with over 90 percent of the world’s consumers living outside our borders. Clearly, international trade and exports will play an increasingly crucial role in driving domestic economic growth, creating new jobs, and ensuring continued U.S. leadership in the global economy.
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