President's plan not that simple

  A lot was made about President Obama's proposals in his recent State of the Union address to reward companies who bring jobs back to the United States from other countries.

Sounds good, right? But in many cases, it just isn't that simple.

For example, it would seem, some people have said to me since the president's speech, that Caterpillar Inc. was one of the companies the president was talking about, especially since he mentioned China and Caterpillar employs thousands of people in China.

One person said to me that if Caterpillar in bringing jobs back from Japan when they open a new manufacturing facility in the United States, which the company said it is doing, they should be able to produce more in the states and export it to China.

It doesn't work that way in China. It never has and nobody knows if it ever will.

You see, if you want to sell a product in China, it has to be made in China. Considering the size of the market and Caterpillar's gains in the Asian market, it makes sense to have factories there, producing machines there that then are sold there.

Let us not forget, if not for its sales in that and other Asian markets during the worst of the recession, Caterpillar would not have sustained profits in all but one quarter during that period. That's how bad other markets, North America in particular, had become during the recession.

The company's record sales and profits being enjoyed now would not be possible without those markets, either.

Record sales and record profits equates to jobs, not only in those markets but right here in central Illinois. How many other companies reduced their workforce during the recession for a relatively short time before recalling many of those who'd been laid off, then adding even more jobs? Few; in fact, Caterpillar may be the only one among the Fortune 50.

I'm not on Caterpillar's bandwagon or payroll here; I'm just stating facts.

In a meeting with reporters after the company released in 2011 financial report a couple weeks ago, Group President Ed Rapp did not dismiss President Obama's proposal out of hand but pointed out a company must be cost competitive to survive globally and the only way to do that in Asia is to have operations in Asia.

Noting the United States market represents only 5 percent of the world market, Rapp said, "If you want to be a global leader you have to play in the other 95 percent."

Further, he said, "I remained convinced that the best way to be a great U.S. company is to be a great global company."

One thing that was missing from his comments was whether Caterpillar would consider creating other jobs in the United States if Congress approves the Obama proposals. That shouldn't be surprising, however; why commit to something that hasn't happened and, given the president's relationship with Congress, probably won't happen?

Like I said, it sounds good. But it just isn't that simple.

About the Author

Paul Gordon is the editor of The Peorian after spending 29 years of indentured servitude at the Peoria Journal Star. He’s an award-winning writer, raconteur and song-and-dance man. He also went to a high school whose team name is the Alices (that’s Vincennes Lincoln High School in Indiana; you can look it up).