Caterpillar view of ‘Buy American’

Just now got to this e-mail of a letter from two officials with Caterpillar up in Greenville about the "Buy American" provision in Nancy Pelosi's version of the stimulus. All of our pages through Monday are now done, so on the off chance that the letter might get outdated before we could run it, and since the subject has been on my mind, I'll go ahead and run their missive here:

“Buy American” provisions could kill American jobs

Caterpillar is a proud American company. We were born in California, made our home in Illinois and maintained a strong U.S. manufacturing base that serves the global marketplace. Caterpillar laid roots in the Greenville area in 1994, beginning with the Greenville Engine Center (GEC). Our operations now include the GEC, Caterpillar Logistics Services, Inc., and the Marine Center of Excellence.  We are also proud of our global footprint that allows us to compete and support Cat equipment throughout the world. Today more than half of what we produce in the U.S. is exported to markets outside the United States.

We are also a company that will benefit from the infrastructure component of the proposed $825 billion U.S. stimulus package.  But there is one element of the stimulus proposal that greatly concerns us — it's the “Buy American” provisions.  Why would an American company be against a provision that forces the U.S. government to only buy American products?  Our reasons go beyond our confidence that we can compete and win business because of the value of the products we produce.

Today, countries from Asia to Europe are pursuing similar infrastructure packages to stimulate their economies.  In some cases, like China, these proposed projects are more ambitious than those in the United States.

This is our concern.  Caterpillar would like to sell U.S.-made products to infrastructure projects at home and abroad.  But if the U.S. sends the message that regardless of value, countries should only buy locally produced products, Caterpillar's exports, as well as the U.S. jobs they support, will be hurt. In some of our Illinois factories, as much as 70 percent of what we make is sold overseas. Over half of the engines produced in Greenville are for export use including those most recently “in-sourced” from our European factories.  That’s not surprising given that 95 percent of the world’s consumers live outside our borders, and most infrastructure growth is occurring in the developing world.

It's hard to be against something that sounds as patriotic as "Buying American."  But turning inward and embracing protectionism is what turned a bad recession in the 1930s into the Great Depression. Let’s show some political courage and learn lessons from the past. Our country doesn’t need to isolate itself from the international economy. Rather, we need policies that will help us improve competitiveness and grow.  For starters we need a "National Export Strategy” that keeps U.S.-made goods in demand globally, U.S.-based companies competitive and U.S. workers employed—including tens of thousands of Caterpillar and supplier employees.  The approval of these “provisions”, as they are written, could have a devastating impact on the operations of the Greenville Engine Center, Cat Logistics and the Marine Center of Excellence, as well as the lives of our employees and their families.

John Downey
Facility Manager
Large Power Systems Division
Caterpillar Inc.

Josh Frey
Facility Manager
Caterpillar Logistics Services, Inc.
Caterpillar Inc.

18 thoughts on “Caterpillar view of ‘Buy American’

  1. Harry Harris

    I have no problem with any overseas company which develops a product and a market outside our country and economy and brings it here to compete with whomever they wish. I have a big problem with a company that develops a product here, based on our market, knowledge base, technology, and then goes offshore chasing low wages no environmental regulation, and sorry working conditions and sells back into our market. We have allowed our manufacturing base to be severely eroded by outsourcing. Name one thing made here other than housing that can’t be produced cheaper overseas. I stated 10 years ago that within 20 years nothing except medical products would be manufactured here – and those only because profit margins are so high that labor costs are negligible. I’m well on my way to being right. Buy American? Try to find an American-made lightbulb – even a CFL. We have built an economy on debt rather than earnings that largely moves money around and depends on heavily-leveraged financial products and a growing payday lending industry. Our adversary is not foreign companies, but US companies that we have allowed to treat our nation as a mercantile trading colony drowning in debt and over-inflated real-estate and stock assets bloated by that debt.

  2. bud

    The State outsources much of it’s support work to the Phillipines. I suggest you get your own house in order before criticizing the rest of the nation’s industries. And we still can’t get an editorial page on Saturday. How sad is that.

  3. Lee Muller

    Mr. Harris,
    The worst part of this is our tax dollars being given to our competitors to build factories for free through the World Bank, IMF, and foreign aid.

  4. David

    I think if Mr. Frey and Mr. Downey essentially damned Obamas’ Porkulus Package with faint praise, and that if they’d felt at liberty to be completely candid they’d tell how wrong-headed and ineffectivethey thought big government profligacy is going to be.

  5. Brad Warthen

    I have less than half the staff I had at the start of this decade. Less than half. And bud’s griping at me about not having (print) opinion pages on Saturday.
    How sad is that?

  6. p.m.

    Brad, could the staff cuts possibly be testimony to your sterling efficiency?
    Was it Bush’s fault?
    Could you blame it on advanced cell phone technology and the Internet?
    Could it be that newspapers just aren’t timely enough any more?

  7. p.m.

    My research tells me the Senate stimulus compromise deletes $40 billion in aid to state governments for education and other programs, but keeps $650 million to help people without cable TV receive digital signals though their analog sets.
    Same old Washington, different year.

  8. Lee Muller

    The nerve of Mr. Obama to travel to Elkhart, Indiana to use their 15.3% unemployment as a prop for his spending campaign, since Elkhart is in trouble because its SUV and RV manufacturing plants are shutting down.
    Isn’t the demise of SUVs and RVs part of the Obama agenda, one of his announced policies for GM, Ford and Chrysler?
    Elkhart is a glimpse of the future under the policies of the radical environmental zealots and socialist central planners.

  9. Paul

    If I remember right, it was the Republican senators from the South that were busy nailing shut the coffins for Ford, Chrysler, and GM.
    Obama and the UAW were trying to save them

  10. Lee Muller

    Democrats are supporting the unreality that the UAW will not have to lose jobs, reduce salaries, cut benefits, and cut retirement income.
    Without drastic concessions approximating a 50% reduction in wages and benefits within the next 40 days, GM and Chrysler will be bankrupt.
    The UAW expects the the Democrats to force taxpayers to bail them out of their untenable, unrealistic, lavish benefits.
    Caterpillar will look to build on those markets by building three new factories in China for engines, wheel loaders and parts. It has also purchased factories in ….

  11. Lee Muller

    Caterpillar CEO Contradicts President on Whether Stimulus Will Allow Him to Re-Hire Laid Off Workers
    February 12, 2009 6:16 PM
    EAST PEORIA, ILL. — President Obama today repeated the claim we asked about yesterday at the press briefing that Jim Owens, the CEO of Caterpillar, Inc., “said that if Congress passes our plan, this company will be able to rehire some of the folks who were just laid off.”
    Caterpillar announced 22,000 layoffs last month.
    But after the president left the event, Owens said the exact opposite.
    Asked if the stimulus package would be able to stop the 22,000 layoffs or not, Owens said, “I think realistically no. The truth is we’re going to have more layoffs before we start hiring again”
    “It is going to take some time before that stimulus bill” means re-hiring, he said.
    Owens supports the stimulus plan, but said it would take some time to have an impact on his industry and “is a little light on the heavy construction.”
    – jpt
    Video at:

  12. jim

    At this point Caterpillar will probably be closing all of their plants in North Carolina because production has dropped from 30 backhoes a day to just one.
    This might help them avoid Chapter 11 bankruptcy. Considering from what I saw day to day there I wouldnt bet any of my money on Big Bad Cat anymore.

  13. Dan

    ” Buy American”?? Ha , Before they laid me off they were sending my drawings over to India. They are outsourcing a lot of their work to foreign countries and buying foreign equipment and putting their logo on it.

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