WCA May 2007

From the Americas

White House watch

The economy

The President shakes them up in Peoria When US President George W Bush makes a factory visit, very little is left to chance to ensure news coverage of an event in which everyone – notably the President – gets on and off safely. Mr Bush’s 30 th January tour of the production facilities at Caterpillar Inc headquarters in Peoria, Illinois, was to be such an occasion. Caterpillar is the President’s kind of company. CAT, as it likes to be called, is the world’s largest manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. Caterpillar chairman and CEO Jim Owens delivered a gracious introduction. “The US and global economy have benefited from the President’s pro-growth tax and free trade policies, which have stimulated strong economic growth,” Mr Owens said. “I thank Team Caterpillar for representing the competitive American spirit and positioning our company to take advantage of the opportunity created.” Mr Bush responded with some well received remarks in which he called CAT ‘one of the great American companies’ and commended it for demonstrating that US firms can successfully compete on the world stage. Holly Bailey, who blogs for Newsweek , described a sudden change of pace, commencing with the commander- in-chief (‘wearing a pair of stylish safety glasses – at least more stylish than most safety glasses’) springing behind the wheel of a massive D-10 tractor and kicking off a game of chicken with reporters: “I would suggest moving back,” Mr Bush said as he climbed into the cab. “I’m about to crank this sucker up.” As the engine roared to life, White House staffers tried to steer the press corps to safety. But when the tractor lurched forward they, too, were forced to scramble. Watching the chaos below, Mr Bush looked out the tractor’s window and laughed, steering the massive machine into the spot where most of the press corps had been positioned. A press photograph shows Mr Bush grinning like a pumpkin. Messe Düsseldorf – highly experienced in the handling and positioning of huge equipment at international shows and exhibitions – might have a word of advice for CAT management. When visitors of uncertain temperament are expected, make certain that all large machines are disconnected from their energy source and/or drained of fuel. “Get out of the way!” a news photographer yelled. “I think he might run us over!” yelled another.

American manufacturers are losing ground

According to the Institute for Supply Management (Tempe, Arizona) the US manufacturing sector contracted in January, the last month for which information is available. Taking many economists by surprise, ISM said on 1 st February that its manufacturing index registered 49.3 in the previous month, reversing an expansion in December when the index stood at 51.4. A reading above 50 indicates growth; below 50, contraction. The data informing the national report is gathered from companies in seven industries across the United States. Until November the nation’s industrial sector had grown for 41 consecutive months. But ISM economists said the sluggish housing and automotive sectors, as well as high energy prices, are holding back US manufacturers. The survey found that production, order backlogs, and inventories all contracted in January. As measured by the ISM index, production dropped to 49.6 from 52.4; order backlogs fell to 43.5 from 45; and inventories plummeted to 39.9 from 48.5. New orders grew, but at a slower pace – registering 50.3, down from 51.9. The price index increased to 53 from December’s 47.5, clocking the rise in prices paid by manufacturers for the materials of production. Analysts had expectations of an overall reading of 51.5 for January. But Norbert J Ore, chairman of the ISM Manufacturing Business Survey Committee, said that ‘manufacturing lost momentum in the second half of 2006, and is starting 2007 in less than robust fashion.’ A slowdown in the US economy will likely be a drag on global growth this year, economists predict. But Asia and Europe are expected to remain fairly resilient. Even as a cooling US housing market weakens the appetite of Americans for foreign-made goods, the swelling ranks of middle-class consumers in China, India, and the rest of emerging Asia will pick up the slack, the experts say. International Monetary Fund (Washington, DC): “Global growth as a whole is projected to slow a tad to 4.9% this year from an estimated 5.1% [in 2006].” UBS (Swiss investment bank): “While the world’s other major economies will be affected by slower US growth, their own domestic demand should continue to drive global growth.” The Organisation for Economic Cooperation and Development (Paris): OECD has trimmed its 2007 growth forecast for its 30 mainly industrialised member countries to 2.5% – the lowest rate since 2003 – from an earlier estimate of 2.9%. It also sees lower growth rates for the world’s richer, more mature economies. Excerpts from the New Year forecasts: As the US slows, world economies are expected to grow

29

Wire & Cable ASIA – May/June 2007