Embracing globalization at FABTECH

October 7, 2008

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As the Dow did its dance on a cliff"s edge yesterday, the FABTECH International&reg & AWS Welding Show kicked off with gusto yesterday here in Las Vegas, and the credit crunch seemed refreshingly far away. Why?

It"s because Jim Waters has visited Chinese cities with populations of more than 5 million--with no airport. You know what I was thinking?



His audience did. Waters, vice president of production systems at Caterpillar, made the comment at yesterday"s keynote. China and the other BRIC economies continue on the growth path, albeit at a slower rate than in recent years. And they continue to build infrastructure, including airports, all of which need plenty of equipment from the likes of Caterpillar.

Although the construction equipment giant has yet to issue a formal statement about how the financial market turmoil has or will affect business, Waters did say the company has a long tradition in maintaining a very strong balance sheet. We believe in being successful not by creative financing but by creative design and manufacturing. Although he conceded that the credit crisis may well affect everyone, the fact is the world needs our stuff.

They do indeed. Waters, who rose through the ranks as a welder, didn"t hesitate to bring up an astounding Caterpillar statistic. We use 34 million pounds of weld wire a year. That"s not what suppliers use. That"s what we use. And all that weld wire is attached to steel.

Cat"s globalization strategy, he said, has roots going back to the mid-50s, and since the industrial giant has opened hundreds of plants around the globe. The majority of the company"s growth in recent years has come from foreign markets, so it"s of little surprise Cat opposes some of the recent rhetoric that"s entered the campaign trail and, for that matter, the national sentiment. For those reading news of job losses and extreme economic insecurity, tariffs to protect American jobs sounds like a good deal.

From our view, the threat of countries turning inward on all of our jobs is significant, he said. We have 48,000 jobs in the U.S., and seven out of 10 of them are in some way dependent on exports.

The issue"s a sticky one for metal fabricators. Some have experienced great hardships from globalization. Companies have shuttered their doors because of itand such stories have taken up a lot of newsprint. On the other hand, some successful shop owners say they"ve benefited from the dollar"s dip and the resulting boost in exports.

Waters rattled off a series of statistics supporting free trade. In 2007 the U.S. exported $1.7 trillion worth of products. About 31 million Americans depend on free trade for their jobs, according to the Business Roundtable Group, he said. The same organization links one quarter of the U.S. GDP directly to trade. And though these were all compelling numbers, one stat stuck with me. It"s one that really boils down the issue to a simple matter of math.

Ninety-five percent of the world"s population lives outside the U.S., he said. A turn inward is to wall us off from 95 percent of the world"s markets.


FMA Communications Inc.

Tim Heston

Senior Editor
FMA Communications Inc.
833 Featherstone Road
Rockford, IL 61107
Phone: 815-381-1314
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