On the CBS Sunday Morning program, there was a story about:
BOOM TOWN: Peoria, Illinois: It's home to Caterpillar tractors. As the U.S. economy slides downwards, Caterpillar's sales worldwide are booming. Cat has been adding jobs in the U.S. and reporting record profits for the last four years. We take a look at a global success story in the heart of Illinois.
From Caterpillar's 4Q 2008 Earnings Release:
PEORIA, Ill. -- Caterpillar Inc. (NYSE: CAT) announced the fifth straight year of record sales and revenues and the fourth consecutive year of record profit. For 2007, sales and revenues were $45 billion, up 8%, and profit per share was up 4% from 2006. The company also reported record fourth quarter sales and revenues of $12 billion, 10% higher than the fourth quarter of 2006, and profit per share up 14% from a year ago.
“Our broad global footprint has enabled us to benefit from strong economic growth outside the United States, as global markets for mining, energy and infrastructure development are booming,” said Chairman and Chief Executive Officer Jim Owens.
And thanks to a strong global economy, 2008 looks even better for CAT:
"We are forecasting 2008 to be the sixth consecutive year of record sales and revenues driven by strength in the economies outside North America, strong worldwide engine demand and a slight rebound in on-highway truck engine sales. These factors will more than offset continued weakness in the North American machinery market.
We expect 2008 to be the fifth consecutive year of record profit per share, a reflection of our broad global footprint and diverse products and services."
2007 Sales Summary for Catepillar Machinery:
North America: -11% (-$1.6 billion)
Europe, Africa, Middle East: +38% (+$2.4 billion)
Latin America: +24% (+$0.60 billion)
Asia Pacific: +31% (+$0.90 billion)
Overall Sales: +9% ($2.3 billion)
Comment: Caterpillar's story seems increasingly common. Despite a slowdown in U.S. sales, CAT's global sales are strong, more than "offsetting weakness in the North American market," allowing U.S.-based MNCs like CAT to remain profitable and healthy in spite of weakness here (see sales figures above, and see chart above showing America's declining share of world GDP using IMF data). This kind of support from overseas markets makes this slowdown different from past periods. For example, in the 1990-1991 recession and recessions before that, I don't think CAT and other U.S. manufacturers had the kind of support from markets outside the U.S. that exists today. See this related post.