U.S. needs to raise its expectations. Believe that what is going on is structural. It is not cyclical and will continue for decades.
That will boost business confidence. See your type of view (illustrated in the article below) how make the marke think small.
They think we will vanish tomorrow. American businesses have to think: This is going to be BIG! And we want to be part of it!
Despite export boom, manufacturers cautious about job growth
By DAN CATERINICCHIA – Apr 20, 2008
WASHINGTON (AP) — The massive cranes slicing the skies over Brazil, Dubai and China can't come off the assembly lines fast enough at Manitowoc Co.'s manufacturing plants here and overseas.
But an insatiable global appetite doesn't mean the Wisconsin-based heavy equipment maker is boosting its payrolls.
The company last year added about 1,000 workers to bring its total to 11,000 but has no plans to repeat that hiring binge as recessionary effects play out here and abroad, said Eric Etchart, president and general manager of Manitowoc's crane segment. At best, Manitowoc may make some temporary employees permanent this year to help deplete a $2.88 billion crane backlog, up about 81 percent from 2006.
Manitowoc's growing export strength is matched by its increasing caution at home — a position mimicked by U.S. manufacturers steeling themselves for recessionary reality.
The weak dollar, combined with rapid industrial growth in Asia, the Middle East and Eastern Europe, has boosted exports of construction and agricultural equipment, and raw materials such as aluminum and steel. Heavy equipment maker Caterpillar Inc. said Friday demand for its global mining and energy products pushed first-quarter earnings up 13 percent — easily surpassing Wall Street estimates.
These foreign sales are offsetting weaker demand from U.S. homebuilders and automakers, and cushioning the broader economy straining from the credit crunch, soaring energy prices and declines in consumer spending.
Many economists expect the weak dollar-strong export link to remain for another year as the Federal Reserve tries to push down interest rates, which tends to weaken the greenback. Manufacturing jobs, however, will not be created on the back of that export strength.
"You're not going to see the job growth. Manufacturing employment, in a good year, is flat," said Thomas Runiewicz, an industrial economist at Global Insight.
Businesses expand their payrolls based on expectations. Other nations' economies are not shrinking, but growth projections are slowing in China, Latin America and elsewhere, Runiewicz said. He expects no more than a 0.6 percent gain in U.S. manufacturing output this year, and that estimate would be between flat and 0.3 percent without the strength of exports.
The current job situation also is alarming. Manufacturing employment fell by 48,000 in March and by 310,000 over the past 12 months, according to Labor Department data. Manufacturers have shed jobs annually since 1997, although Caterpillar again bucked the trend. Chief Financial Officer Dave Burritt said the company's payrolls have grown by about 30,000, or roughly 42 percent, in the last five years, and Caterpillar recently added 3,000 jobs alone at its Peoria, Ill., headquarters.
Still, in the current environment, the "countervailing forces" of the dollar's continued strength against China's yuan and the effects of the domestic housing slump are preventing the U.S. from getting the full export and job growth of a cheaper dollar against the euro, said Peter Morici, a business professor at the University of Maryland.
The overall U.S. trade deficit, which set records for five straight years, fell in 2007 because of export strength. The weak dollar also has helped limit imports of aluminum, steel and other materials that have become cheaper to buy from domestic producers.
Nearly half of the manufacturing industry's 73 subsectors were expanding through February, according to the National Association of Manufacturers. Manufacturing output rose 1.8 percent in 2007 and is forecast to climb to 1.5 percent in 2008 as continued export strength cushions the blow of slumping home and automobile sales, said David Huether, NAM's chief economist.
Construction machinery makers like Terex Corp. are straining to keep up with foreign demand for equipment used on infrastructure development projects. Also thriving are food processors, oil refineries, electronics makers and others, Huether said.
Terex Chief Executive Ron DeFeo said 70 percent of the Westport, Conn.-based company's business comes from outside the U.S., and that 2007 ended with a record backlog of $4.18 billion. Some of its cranes are sold out beyond next year.
"We're scrambling to increase production capacity," DeFeo said, adding that Terex added about 500 workers last year and expects to match that in 2008, with 40 percent of the new hires based in the U.S.
But other companies being boosted by exports, including the U.S. unit of German conglomerate Siemens, have no plans to add workers as they monitor the current economic climate.
Exports are up nearly 30 percent in the last three years at Siemens Corp., and the company has added about 3,000 employees in the last two years, said George Nolen, the company's president and CEO. But that growth is over. While domestic sales remain strong, German parent Siemens AG has announced work force reductions that will affect U.S. operations.
If overseas demand for U.S. products is stronger than expected in the year ahead, manufacturers may need to rethink their hiring plans, some economists said.
"Net exports ought to remain a bright spot for a bit of a while going forward ... but at some point, you have to add bodies," Jared Bernstein, senior economist with the Economic Policy Institute in Washington. "You can't meet increased demand with productivity growth alone."
AP Business Writer Dave Carpenter in Chicago contributed to this report. |
