February 22, 2008
It Plays in Peoria...And Worldwide
If the Rust Belt is supposed to no longer be a manufacturing Mecca for behemoths of steel, someone forgot to tell Caterpillar.
The Illinois-based, heavy equipment maker was featured in this past weekend's "CBS News Sunday Morning" for treating global as an “adjective, not an expletive” by exporting more than half of its products.
The strategy has reaped record sales in 2007 and – more importantly -- allowed the company to increase its domestic payroll by more than 16,000 employees since 2006.
To watch the report from Martha Teichner, please click the embedded video or go here.
Posted by JP Fielder at 4:46 PM
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November 13, 2007
Report from China: Yangshan Deepwater Port
[A dispatch from over the weekend.] 
The ACTPN delegation headed toward what, in 2003, was a virtually unknown island of 3,5000 residents in the East China Sea. Today this island is the home of the Yangshan deepwater port, the third largest port in the world. The Chinese took just four years to construct a massive port off the mainland and develop a 30.5 km (19 miles) bridge and connecting the two. (Here's a photo of the bridge.)
To provide perspective on Yangshan’s size, let’s look at its progress: In 2003 it was a small island of 3,500 residents. The population was relocated and in their place is a port that will move 7.5 million containers (TCUs) this year.
The volume dwarfs America’s largest port, the Port of Long Beach, which moves 1.5 million TCUs/year and illustrates how China’s preparation for moving goods as global trade expands. Yet they’re only just beginning: By 2020, when its fourth and final phase is complete, Yangshan will move 15 million TCU/year, making it the world’s largest port. Where will America’s infrastructure be in 13 years?
More photos: 1. A view of the port. 2. Ship loading.
Posted by JP Fielder at 10:40 AM
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November 6, 2007
PetroChina, Not Really No. 1
Read today's International Herald Tribune (IHT) article [New York Times story here] about the stunning debut of PetroChina on the Shanghai Exchange and it's a certainty that China's largest producer of oil and gas just took over Exxon as the world's largest company by market capitalization.
But not so fast, says Andrew Batson in today's Wall Street Journal [subscription story here]. A veteran journalist who has lived in China for 10 years and understands the country's complexities as well as any journalist, Batson (who joined Gov Engler and the ACTPN delegation for breakfast on Tuesday in Beijing) points out: The soaring valuations put on PetroChina and other Chinese-listed companies seem to say more about the problems and idiosyncrasies of China's market than the performance of the companies themselves.
In fact, it is very difficult to determine the real value of Chinese government-controlled companies like PetroChina.
[These companies have] complicated corporate structures that keep most of their shares locked up in government hands, with the few that are publicly traded spread across different markets. The scarcity can drive up prices. And the problem is compounded by China's capital controls, which can cause domestic prices to differ greatly from those on other markets. Batson points out that only 2.2 percent of PetroChina's shares were made available during yesterday's IPO. Those shares nearly tripled in price, from 16.70 yuan to 43.96 yuan, or about US$5.90 each,
If you're into fuzzy math, like the IHT and apply that price to all of PetroChina's shares, the company would have a market capitalization of around $1.08 trillion, twice that of Exxon. But Batson (and the Journal) live in the real world, where we calculate the figures we have, not those PetroChina wants! About 86 percent of PetroChina's shares are held by its state-owned parent and don't trade on any exchange, and it is hard to know what price they would fetch if all of them were actually to come to market...
Another way of valuing the company would be to apply prices only to what investors can actually buy and sell -- the so-called free float. The total value of PetroChina's publicly traded shares is about $72.5 billion. That's still large, but nowhere close to Exxon Mobil. Thank you for the clarification Mr. Batson, and reminding us the world's largest company still hails from the good ol' U.S.A.
Posted by JP Fielder at 10:24 AM
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November 5, 2007
A Counterfeit Backhoe -- Chinese Fakes are BIG
[More from J.P. Fielder, senior communications director, from NAM President John Engler's trade mission to Japan and China. In China, Engler is heading a delegation that represents the President's Advisory Committee for Trade Policy and Negotiations, or ACTPN.]
Two very interesting points from the ACTPN delegation's meeting with James Fallows, senior editor for The Atlantic Monthly and arguably the most knowledgeable journalist about the interrelation of U.S. and Chinese manufacturing. (His July cover story was, "China Makes, the World Takes.")
First, Japan still dwarfs China in overall GDP and that we cannot lose focus on this important ally and manufacturing partner. This is something we discovered last week as the Japanese, from business leaders to government officials, were highly appreciative of Gov. Engler's visit.
Second, protecting intellectual property should be a priority for U.S. policy toward China, and there's plenty of work to be done. As a casual observer, I was struck by the prevalance of counterfeit products in China. Sure, everyone expects the swarms of vendors selling knock-off Rolexes, Coach purses and "Beijing 08" knit hats, but I became painfully aware of the issue while driving to the Great Wall during our one day of touring, on Sunday.
As we passed a roadside construction site, Al Bernard, an ACTPN delegate and senior vice president of Manitowoc, manufacturer of heavy cranes, pointed to one of the backhoes working at the site. "That's a counterfeit backhoe," he suddenly said. "WHAT!? How can you tell?" I asked. This side of counterfeiting is very new to me, as I thought it was an industry making cheap junk (think T-shirts, purses and poorly constructed watches) in a garage. Wrong! This is about real American products being ripped off and built in foreign factories. In this case, it was a Caterpillar backhoe, not exactly something you slap together in the back garage but something that requires a legitimate assembly line and manufacutring facility.
Caterpillar is a strong all-American company based in Peoria, Illinois. Chinese free-riding on the ingenuity of hard-working Americans, not to mention the millions in R&D, is just not right. The rampant counterfeiting needs to be addressed by the Chinese government and with consultation from the international community, if necessary.
Posted by JP Fielder at 4:58 PM
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October 30, 2007
Report from Japan: On a Mission for Manufacturing
 [Editor's Note: NAM President John Engler is on a two-week trade and business mission to Japan and China, working with U.S. manufacturers and trade officials. We plan regular reports from abroad. In this entry, communications director J.P. Fielder gives us the lay of the land.]
To increase industrial cooperation between the U.S. and our major trading partners in Asia, NAM President John Engler launches two weeks of high-level meetings in Japan and China today.
This evening we landed in Tokyo for a whirlwind tour of the world's second largest manufacturing nation. Why Japan when everyone is talking about the growth and importance of China and India? Well, Japan remains the world's second largest economy, still nearly twice the size of China and a major trading partner to the U.S.
On Wednesday we will crisscross Tokyo, beginning with Gov. Engler's appearance on CNBC's Squawk Box Asia, followed by meetings with Sony's President and CEO Dr. Ryoji Chubachi, Honda Chairman Aoki, executives from Nippon Keidanren (the NAM's equivalent in Japan) and CISTEC, the Center for Infirmation on Security on Trade Controls. All of this before 5 p.m., when we'll board a train to Nagoya in preparation for Thursday's meeting with Toyota Chairman Cho (Toyota, based in the aptly named Toyota City, is just outside Nagoya).
Several substantive issues Gov. Engler is looking to discuss throughout the day:
U.S. and Japanese roles in the Doha Round of global trade talks.
A closer look at the Free Trade Agreement of the Asia Pacific (FTAAP), a regional agreement encompassing the entire Pacific basin (link to Peterson Institute study on FTAAP here.
How high cost manufacturing industrial countries like Japan and the U.S. compete with rapidly emerging economies in Asia that are lower cost, such as China, India and Vietnam.
Other points of interest we'll keep you updated on after day one in Asia:
Sony will provide a tour of its showroom, demostrating their latest products. Check out the new OLED TVs (, an incredible picture and just 3mm thick!
Talking policy with NAM's counterpart, Nippon Keidanren; Japan ranks as the only nation with a higher corporate tax rate than the U.S. (39.5 percent)
We'll take the bullet train to Nagoya; not exactly Amtrak and a certain contrast to the U.S. infrastructure.
Posted by JP Fielder at 4:01 PM
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May 24, 2007
Compared to U.S., Switzerland is Low Cost
 Who knew it would take a trans-Atlantic flight and drive to the foot of the Swiss Alps to expand on what American manufacturers already know: U.S. structural costs are prohibitive to foreign investment in
the United States.
This became clear while touring the Swatch Group's factory in Grenchen, Switzerland.
Swatch Group includes such prestigious brands as Swatch, Omega, Rado, Longines, and Hamilton, among others. If you don't shop on Rodeo Drive and hadn't heard of some of these brands, don't worry. Neither had we.
Hanspeter Rentsch, a member of the executive group's managing board, provided an excellent tour of the pristine facility that makes some of the world's most precise timepieces (the latest can hold accuracy, without a battery or movement, for more than 60 hours). Outside of Switzerland, the Group manufactures watches in Malaysia, Thailand, Italy, France and Germany. Notably absent from this list: the United States.
His rationale for not manufacturing in the United States? High tax rates and not enough skilled workers for a process requiring complete precision.
The Swiss company is quite neutral when commenting about its manufacturing relationship with the United States, but doesn't his answer harken back to of NAM's 2006 Structural Cost Study?
Posted by JP Fielder at 9:04 AM
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