CAT Expects Rival Out Of China

The Wall Street Journal recently reported that Caterpillar’s Chief Executive Doug Oberhelman said he expects a new rival in the heavy-machinery sector to come out of China in the next few years. “There are all these companies [in China], and there’s consolidation happening, and you just know that one or two will emerge as a serious rival,” Oberhelman said in a recent interview.

The prospect of China’s emergence as a threat in a market Caterpillar has dominated for so long, is a big reason why Oberhelman, a former economist, has become one of the rare CEOs who still campaigns hard for international-trade deals.

“We need there to be a way of making sure we all play by the same rules,” Oberhelman said. “And businesses are scared to raise their voices on issues like trade. Caterpillar was not afraid of Japan in the 1970s and 1980s, and we’re not afraid of China now; we can compete, if it’s fair.”

Oberhelman also said he is increasingly frustrated that the U.S. has failed to ratify trade deals it has signed with South Korea, Panama and Colombia because of “populist politics and fears about unemployment.”

Oberhelman recently met with European Union trade commissioner Karel De Gucht to push him to conclude a Doha deal. Trade ministers have agreed to meet in Geneva in December to wrap up a watered-down version of the Doha round. “I don’t want a Plan B,” Oberhelman said.

The CEO disclosed a letter to De Gucht in which he wrote that Doha and the World Trade Organization to, “offer a once-in-a-generation opportunity to open markets, promote development, build support for the trading system and, most importantly, create better jobs.” In the letter, he blamed the lack of progress partly on “a lack of leadership from the business community.”

The EU’s free trade agreement with South Korea recently came into force. The deal won’t do much for Caterpillar, “but I hope it puts pressure on the U.S. to pass its trade deals,” Oberhelman said. ◆