Caterpillar Inc. (CAT:US) Chairman and Chief Executive Officer Doug Oberhelman anticipates a recovery in China, the world’s second-largest economy, as the government focuses on urbanization.
“China is showing some signs of life,” Oberhelman said in an interview with Carol Massar on Bloomberg Television’s “In the Loop” today. The country accounts for about 3 percent of the Peoria, Illinois-based company’s sales, according to a Nov. 13 presentation.
China said this week it plans to actively promote urbanization programs under new leader Xi Jinping. That may drive sales at Caterpillar, the world’s largest maker of construction and mining equipment. The company’s inventory in China rose this year as the economy slowed, and Oberhelman expects economic growth to increase next year.
“Urbanization brings a lot of infrastructure requirements,” said Oberhelman, who visited the country in October. “I’m convinced we are going to see positive changes in the next few months. I’m pretty optimistic about China, not a big boom like we’ve seen, but slowly recovering.”
Since becoming CEO in 2010, Oberhelman has bet on growth in emerging markets including China by expanding and building new factories and acquiring mining equipment makers such as Bucyrus International Inc. in Wisconsin for $8.6 billion and China’s ERA Mining Machinery Ltd. for about $790 million. Caterpillar on Oct. 22 forecast sales growth for 2013 that would be slower than in the previous three years.
Oberhelman said while the company may look at smaller acquisitions, there is “nothing on the horizon” on the scale of Bucyrus.
Oberhelman said he expects President Barack Obama and Congressional leaders to negotiate a deal to avoid the combination of spending cuts and tax increases known as the fiscal cliff.
“I really believe we will meet the deadline,” he said. “Assuming no fiscal cliff, which I am assuming, the U.S. will look pretty good in 2013, not great but not bad,” he said.
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