Embrace Globalism
This is a critical moment for U.S. manufacturing. Of course it is fraught with risk and controversy -- but also rich with possibility. Unfortunately, the latter usually goes unnoticed by our policymakers. Many of them believe that U.S. companies can no longer compete on their own. They want to isolate America by erecting trade and investment barriers. They seem not to have a clue that we live in a global economy.</br></br>This parochialism hurts American companies, and hence it hurts America; it also hurts the rest of the world, denying the benefits our industry can bestow. The new protectionism, then, is a "lose-lose- lose" proposition. It is unsustainable: U.S. companies cannot collectively operate as a single-engine plane trying to pull the rest of the world along with us. We need multiple engines for growth, and the rest of the world provides them.</br></br>Here, Caterpillar's experience may be instructive, and perhaps lead to some larger lessons for U.S. business leaders in the global economy. We're in the midst of one of the most successful periods in our 81-year history, coming off our second year of record sales and profits. Our workforce has grown more than 20%, and our stock price has more than tripled in five years. To be sure, we've run up against the same labor costs and global competition as the auto makers and other troubled manufacturers. But we're doing fine. Why?</br></br>There's no single answer. We've addressed rising health-care costs proactively; we invested substantially to improve productivity and get flexible with our sourcing; we eliminated our centralized, functional structure and established independent businesses with specific profit- and-loss responsibilities. Throughout, we kept our focus on designing high-quality, innovative products. But most importantly, we're thriving today not because we survived globalism but because we embraced it.</br></br>Caterpillar is one of America's major manufacturers; last year alone we exported more than $9 billion in products. But we've also become a major British manufacturer, a major Brazilian manufacturer and a major Chinese manufacturer -- just to name three of the 40 countries where we have a presence. By expanding globally, we have maintained our ability to grow. We refused to concede markets to competitors and thus kept them from gaining undue strength to block our entry. When it made sense to invest for local access, we did so.