Why Equipment Production Leaving the USA!

[Gale Hawkins]

Plenty of companies are hiring — just not in U.S. | Business | Chron.com - Houston Chronicle

That article mentions CAT moving production to China but it is not to just beat the high labor costs. The article talkes about 50% of CAT's growth in Sales will come from Asian customers.

The general subject is the fact US based companies are profitable due in part to growing customer base in China, India and Africa vs. USA.

Europe and North America sales are being surpassed by the fast growing middle classes of Asia so it makes sense to produce for that market in Asia.

Troubling to me is how they can now fine even the R&D talent they need in the countries of the expanding middle class (consumers).

Based on the info in this article one can see why most tractor companies will be hiring outside of the USA just because the USA sales will not be where their growth in profits are not coming from any longer.

Their focus is no longer on the USA market. Not sure what this means if anything.

 

[smstonypoint]

Troubling to me is how they can now fine even the R&D talent they need in the countries of the expanding middle class (consumers).

Based on my experience of having to sit through innumerable university graduations during my former life, international students (especially from India, China, etc.) obtaining graduate degrees (MS, PhD) in engineering, chemistry, compute science, etc. far outnumber the domestic students obtaining degrees in those fields.

Steve

 

[Gale Hawkins]

I am proud for them working hard to improve their and others lives. My concern is that R&D was one of the last few niches. Companies that can both design and produced the goods needed by the world should see the gains we saw in the 50's-60's in standard of living.

It is easier to be forgotten when your money, knowledge/skills and labor is no longer in demand.

The upside may be higher quality imports from these nations just like we saw from Japan in the 70's-80's.

There is a good chance the large tractor production will stay in the states but when you look at all of the HUGE equipment being imported today I guess that is an iffy thought.

Africa must have some real potential as a developing market. Yesterday WM is making a big push to into Africa by buying into a huge chain already in that market.

i guess any place still using draft animals is a potential tractor market. 50 years ago draft animals were still in demand especially in the tobacco industry in this area but chemicals and tractors replaced that need.

 

[ArtMech]

Based on my experience of having to sit through innumerable university graduations during my former life, international students (especially from India, China, etc.) obtaining graduate degrees (MS, PhD) in engineering, chemistry, compute science, etc. far outnumber the domestic students obtaining degrees in those fields.

Steve

The survey carried out (in my country) among young citizens in the labor exchange office gave the following TOP 10 answers to the question: What kind of speciality would you like to acquire?

1. Management
2. Law
3 4. Economics
3 4. Psychology
5. Recreation, tourism, hotel administration
6. Journalism
7. Design
8. Politics sciences
9. Civil engineering
10. Public administration

Respondents were the pupils, students and young people already working.
As you may see - no chemistry, no machine engineering, no computer science as well.

 

[smstonypoint]

Respondents were the pupils, students and young people already working.
As you may see - no chemistry, no machine engineering, no computer science as well.

Thanks for posting this. I'm not aware of a similar survey for the US, but I speculate that the results would be roughly similar.

I recall seeing a TV program on college preparation for Chinese students. The competition is intense for admission to the top universities and the students put in an amazing amount of work in studying for the admission tests. The Chinese graduate students that I taught over the years have had great math skills.

Steve

 

[ArtMech]

I guess equipment production location depends on the industry concentration area and the number of working staff involved. The equipment delivery through the oceans costs comparatively not a lot, but sometimes the import, export, profit or other taxes being huge push the makers to bring the production out of the origin country. Especially in case of foreseen constant business within the decades.

If the agriculture/industry will start to develop in some African countries with the weaker economy, the equipment manufacturers will start to build machine factories over there. But again, there will start to be a competition among the potential equipment makers and the one with the lowest cost price will win. Because nobody is thinking about the quality right now. Everybody knows nothing is made in the globe for evermore. Important but not the most is a factor of service quality, parts delivery and competence of staff dealing with the equipment. I mean what could save businessman's dollar. That said concerns mining, civil engineering, infrastructures and other heavy industry.
If about the farmers, all depends on the countries subsidy program. No one farmer, who uses draft animal, would never ever earn enough money from his farm to obtain at least B type Kubota. But many of them will purchase new tractors while receiving a government support. And Africa may make changes in it.

 

[300UGUY]

Plenty of companies are hiring just not in U.S. | Business | Chron.com - Houston Chronicle

That article mentions CAT moving production to China but it is not to just beat the high labor costs. The article talkes about 50% of CAT's growth in Sales will come from Asian customers.

The general subject is the fact US based companies are profitable due in part to growing customer base in China, India and Africa vs. USA.

Europe and North America sales are being surpassed by the fast growing middle classes of Asia so it makes sense to produce for that market in Asia.

Troubling to me is how they can now fine even the R&D talent they need in the countries of the expanding middle class (consumers).

Based on the info in this article one can see why most tractor companies will be hiring outside of the USA just because the USA sales will not be where their growth in profits are not coming from any longer.

Their focus is no longer on the USA market. Not sure what this means if anything.

Nothing beats cheap labor. Matierals are now globally priced in most cases, so the only varible left is cheap labor. Cheap labor means that you are going to see a lot more Mexican and asian products in the next few years. Cheap labor rules.

 

[Ductape]

Nothing beats cheap labor. Matierals are now globally priced in most cases, so the only varible left is cheap labor. Cheap labor means that you are going to see a lot more Mexican and asian products in the next few years. Cheap labor rules.

What about the cost of conforming to all the EPA regulations, electric rates, property tax, business profits tax, state tax, federal tax, local impact fees, and on and on and on. We have made it very difficult to operate a business profitably here in the USA.

 

[Willl]

The article talkes about 50% of CAT's growth in Sales will come from Asian customers.

By that reasoning we should be seeing some move over here, no ?

 

[Gale Hawkins]

By that reasoning we should be seeing some move over here, no ?

Yes we have a lot of car companies that have done just that and one Asian line is not built in Georgia USA but I am sure there are a lot of imported parts perhaps.