OBERHELMAN ON CNBC: A RENAISSANCE IN…

OBERHELMAN ON CNBC: A RENAISSANCE IN…

Sep 28, 2015

“OBERHELMAN ON CNBC: A RENAISSANCE IN MANUFACTURING” By Caterpillar Caterpillar Chairman and CEO Doug Oberhelman, along with Honeywell Chairman and CEO Dave Cote, was featured this morning on CNBC’s Squawk Box on its “voice of manufacturing” day. “We’re in the very beginning of a renaissance,” Doug said about manufacturing. Innovation is the Past and Future Caterpillar has a long history of innovation and using leading edge technology to provide customer solutions. “We are seeing a lot of things happening inside our factories that are really cool,” said Doug. “It’s exciting.” Through Cat® Connect and other leading products, Caterpillar machines are connected to each other, our factories, Caterpillar engineers and the equipment owners. “In the next twenty years, they will be more so,” Doug explained. “That generates more opportunity.” Caterpillar is constantly pushing forward, researching ways to move more dirt with less fuel, developing products that generate lower emissions and creating autonomous vehicle solutions. Doug repeated the message he’s telling employees every day: Innovation is key, now and in the future. Market Access Means Sales and Growth Caterpillar delivers its very best products and services, but that alone doesn’t ensure success. Laws and regulations around the world directly affect our operations and financial future. Doug underscored the need for pro-growth policies, including trade agreements. “We need access to markets. If foreign markets are opened even further and if the international playing field is level, we can expect even more opportunities for Caterpillar,” Doug said. “If we can … be on a level playing field, we win.” This level playing field also includes the U.S. Export-Import Bank. Caterpillar strongly supports the reauthorization of Ex-Im Bank that supports our customers and suppliers around the world. Failure to reauthorize Ex-Im Bank may likely cede business to Caterpillar’s overseas competitors. “We need the Ex-Im bank, bottom line.” Purchases of Caterpillar products are often contingent upon Ex-Im Bank financing because if customers can’t get financing from the U.S. Ex-Im Bank, they can get comparable financing from the export credit agencies of other countries and that benefits our competitors. We’ve Got to Win in China Doug addressed the importance of China to Caterpillar for many reasons, including that it is the largest construction equipment...

China Factory Indexes Ebb In New Sign Of Economic Weakness

China Factory Indexes Ebb In New Sign Of Economic Weakness

Sep 2, 2015

By Kelvin Chan, Manufacturing.net Chinese manufacturing showed further signs of weakness in August, adding to evidence of an inexorable slowdown in the world’s No. 2 economy despite recent government efforts to support growth. Two factory activity indexes released Tuesday were at multi-year lows. An official manufacturing index based on a survey of factory purchasing managers fell last month to 49.7, the lowest level since August 2012, from 50.0 in July. The index, compiled by the Chinese Federation for Logistics and Purchasing, is based on a 100-point scale on which numbers above 50 indicate expansion. A separate survey, the Caixin purchasing managers’ index, fell to a six-year low of 47.3 from 47.8 in July, although the number was slightly better than a preliminary reading released last month. Caixin’s survey focuses on smaller, private enterprises while the federation’s survey is weighted toward larger, state-owned companies in China’s manufacturing industry, which employs tens of millions. Taken together, the surveys provide a bleak picture of stubborn weakness in the overall economy. With the official index falling below the “critical” 50-point mark, “manufacturing has insufficient growth momentum,” National Bureau of Statistics economist Zhao Qinghe wrote in an analysis of the data. Some analysts said the weakness may not be as bad as headline numbers suggest because it stems from temporary factory shutdowns in Beijing and nearby Tianjin in August. Authorities have been trying to reduce air pollution ahead of a massive military parade in the capital on Thursday to mark the end of the 70th anniversary of Japan’s World War II surrender. China’s economic growth held steady at 7 percent in the latest quarter ending in June, which was the weakest performance since the 2008 global crisis. Officials hope to maintain the growth rate for the rest of the year but many economists doubt the target will be met. In the latest attempt to shore up flagging economic growth, China’s communist leaders cut interest rates last week, the fifth time they have done so in nine months. The rate cut had been expected after a slew of disappointing recent economic indicators, including a larger-than-expected 8.3 percent decline in July exports, weak retail sales growth and slowing industrial production and...

Why it’s now cheaper to produce some goods in the South…

Why it’s now cheaper to produce some goods in the South…

Aug 5, 2015

“Why it’s now cheaper to produce some goods in the South than in China” By Ana Swanson, Washington Post Before World War II, red-brick textile mills that processed cotton and wove it into cloth were all over the southern United States, dotting the Carolinas, Georgia and Alabama. But in the last 50 years, automation, free trade agreements and competition from countries like China whittled down the historic industry until it was almost gone. Now some textile jobs are coming back, but on much different terms. As The New York Times reported Sunday, some Chinese manufacturers are setting up shop in the United States, after finding it cheaper to produce their goods in the American South than in China. Keer Group, a Chinese yarn-maker, is investing $218 million in a factory in South Carolina. Another Chinese manufacturer, JN Fiber, is investing $45 million in the state. And Indian company calledShriVallabh Pittie is investing $70 million in a yarn-spinning plant in nearby Sylvania, Ga. The changes are happening in other industries and locations, as well: Chinese auto glass maker Fuyao is investing in a $230 million production facility in Ohio, and Chinese acquirers are expanding manufacturing capacity at Cirrus Aviation in Minnesota and Nexteer Automotive in Michigan. An index created by Boston Consulting shows how much the difference between the cost of manufacturing something in the United States and making the same thing in China has narrowed. In 2004, a good that could be made for a dollar in the United States could be manufactured in China for 86.5 cents. One decade later, that $1 product in the United States would cost 95.6 cents to make in China — not a whole lot of savings. The narrowing of the gap has a little to do with what’s happening in America and more to do with what’s happening in China. Americans are still making far more in wages than Chinese manufacturing workers. Adjusted for productivity, Chinese factory workers made $12.47 an hour last year, a little more than half of what American workers made, $22.32 an hour, according to figures from the Boston Consulting Group. But other attributes of doing business in America make up the difference in cost. For example,...

China Manufacturing Slumps To 15-Month Low

China Manufacturing Slumps To 15-Month Low

Jul 27, 2015

By Kelvin Chan, Manufacturing Business Technology HONG KONG (AP) — China’s manufacturing slumped to a 15-month low in July in a fresh sign of deterioration in the world’s second biggest economy, a survey showed Friday. The manufacturing index based on a survey of factory purchasing managers fell to 48.2 this month from 49.4 in June. It uses a 100-point scale on which numbers above 50 indicate expansion. The monthly survey was previously sponsored by global bank HSBC. It is now sponsored by Chinese financial publication Caixin. The preliminary version released Friday is based on 85-90 percent of responses from factories. The final version is due August 3. The factory output sub-index decreased at a faster rate, falling to its lowest in 16 months. New export orders and overall new orders both contracted after expanding the previous month. Employment in China’s giant manufacturing industry, which employs tens of millions of people, continued to shrink, according to the survey. China posted 7 percent economic growth last quarter, the weakest performance since the global financial crisis. The latest numbers underscore the ruling Communist Party’s complicated task of keeping economic growth on track while reducing reliance on trade and investment that helped power the sizzling expansion of previous years. Instead they want to base growth on slower, more sustainable domestic consumption. The report shows that the economy is struggling to revive even after recent support measures. Beijing has cut interest rates four times since November and pumped money into construction spending after signs the economy was slowing too sharply. “We think that recent policy easing has yet to fully feed through into stronger economic activity and expect policymakers to respond to signs of weakness by stepping up support in order to prevent growth from slipping much further this year,” Julian Evans-Pritchard of Capital Economics said in a report....

U.S. Manufacturing costs are almost as low as China’s…

U.S. Manufacturing costs are almost as low as China’s…

Jun 30, 2015

“U.S. Manufacturing costs are almost as low as China’s, and that’s a very big deal” By Brian Dumaine, Fortune “Made in the U.S.A” is becoming more affordable. The reason? Fracking. You don’t need to a Nobel Prize in economics to know that the fracking revolution has been good for the U.S. What’s not so well known is just how competitive cheap oil and gas has made American manufacturing. BCG, the Boston consultancy, estimates the average cost to manufacture goods in the U.S. is now only 5% higher than in China and is actually 10% to 20% lower than in major European economies. Even more striking: BCG projects that by 2018 it will be 2% to 3% cheaper to make stuff here than in China. Part of the reason for the narrowing gap is that wages have been rising in China. And American companies have been boosting their productivity faster than many of their international competitors. But perhaps the single largest factor is that fracking has helped dramatically drive down the price of oil and gas that’s being used in energy intensive industries such as steel, aluminum, paper and petrochemicals. BCG calculates that U.S. industrial electricity prices are now 30% to 50% lower than those of other major exporters. “A 5% price discrepancy in manufacturing between China and the US doesn’t amount to much,” says BCG’s David Gee, “when you consider that US manufacturers face the risks of delay when shipping from China, the threat of port strikes, and the local investments and partnerships that Beijing often requires of foreign companies doing business there.” Lower energy prices can also open up new opportunities such as a using natural gas to power fleet vehicles and trucks, which would reduce American dependence on foreign oil and cut greenhouse gases. Natural gas can also be converted into hydrogen to power fuel cells like the ones in Toyota’s  TM 1.12%  Mirai passenger car. (The Japanese car giant will start taking orders for the Mirai in California this summer.) Over the last few years, cheap energy has encouraged players in various industries to earmark $138 billion for new U.S.-based investments. This spring, for example, the petrochemical giant Sasol  SSL 2.22%  started construction on an $8.1 billion...