Caterpillar CEO Warns US Against 'Turning Inward'
April 23 2009 - 4:23PM
Dow Jones News
Stimulus spending in China already is giving a boost to U.S.
companies such as Caterpillar Inc. (CAT), but benefits from a U.S.
stimulus package probably won't be seen until next year,
Caterpillar's CEO said Thursday.
China is the third-largest export market for Caterpillar, the
Peoria, Ill., based manufacturer of heavy equipment used in
logging, construction and mining industries. In remarks at the
Council on Foreign Relations, Caterpillar Chairman and Chief
Executive James Owens said Caterpillar sales in China took a hit
from the global economic downturn, but "bounced back pretty
smartly," thanks to China's stimulus spending.
"Shovel-ready" projects in China got off the ground within a
matter of weeks, something Owens said won't be seen in the U.S. He
predicted the $787 billion U.S. economic stimulus package signed
into law in February isn't likely to be felt until the first half
of 2010.
"We're talking nine months, realistically," for stimulus-funded
construction projects to move into high gear, said Owens.
Although Owens predicts the recession will end in the U.S.
sooner than in Europe, he expects emerging markets are going to be
the key to economic growth in the future. He urged the Obama
administration and Congress to support free trade, saying "turning
inward would be a tragic mistake."
The Caterpillar CEO called on other executives to support free
trade and speak up against "buy American" initiatives and "silly
legislation" that could hurt U.S. businesses.
"Enron's over, get out there," he said.
While Enron Corp. famously used off-the-books deals to conceal
debt, Owens noted that U.S. companies have responded to the latest
economic downturn by hoarding cash. While stashing cash makes sense
as banks and capital markets remain skittish, Owens said it "is
beginning to constipate" the U.S. and the rest of the world.
- By Judith Burns, Dow Jones Newswires, 202-862-6692;
Judith.Burns@dowjones.com