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Cat’s Strategy to Offset Slumping Global Sales

Cat’s Strategy to Offset Slumping Global Sales

Peoria, IL – Construction and mining equipment maker Caterpillar Inc. is looking to offset a major decline in its overseas sales with a new strategy aimed at steeping up the marketing of remanufactured equipment, particularly in developing markets where both tariff and non-tariff trade barriers exist.

Overall, the company saw its global machinery sales decline by almost 10 percent during the three months ending in July with the greatest drop coming in Asia, where sales dropped 30 percent in both May and June, the company reported.

Construction sales for the period were down by 16 percent in China and by 14 percent in Latin America, it said.

But, the company has developed a new strategy to beef-up its sagging global business revenues by 20 percent by 2020, compared to a 2013 baseline.

According to its 2013 Sustainability Report, Caterpillar commonly faces a particular type of non-tariff barrier when remanufactured goods are classified as used goods, which cannot be imported under any circumstance or can only be imported after complying with special inspection, certification, or licensing regulations.

The tariff barriers it also faces, the report said, usually hinge on the excessive fees or taxes levied by some countries that significantly increase their customer’s cost of choosing a viable remanufactured product.

Both types of trade barriers most often come into play when customers seek to export their core parts and return them to Caterpillar in exchange for a remanufactured engine or component.

The company argues that as all of its remanufactured products carry the same durability, performance, quality and warranty equal to that of a new component, they should be treated as such.

That’s the line that Caterpillar management is reportedly taking with policymakers, government regulators and customs officials in several countries in an effort to open up their markets and expand remanufacturing options for the company’s customers.

To help it meet its 2020 growth goal, the company has developed a ‘job site efficiency’ (JSS) initiative “to help customers capture maximum value from their assets by improving on-site performance and sustainability,” particularly in the agricultural sector which now accounts for approximately 15 percent of Caterpillar’s total JSS volume.

According to the company, the results have been “significant.” On average, it said, agricultural customers have been able to reduce idle machinery times by 20 percent, and so-called “operator-caused events,” such as equipment wear and tear and safety issues, by 25 percent.

09/03/2014

Foreign Trade Zones Seeing Upsurge in Business

Washington, DC – The value of exports from America’s Foreign Trade Zones (FTZs) increased by 13.7 percent in 2013, to a record-high $79.5 billion in merchandise shipped to overseas markets, according to the US Foreign Trade Zones Board.

According to the group’s Annual Report to Congress, at $835.8 billion, the 2013 value of received merchandise into FTZs also reached a new high, surpassing the previous year’s record of $732.2 billion – a 14.1 percent increase.

Nearly two-thirds of the merchandise received by FTZs in 2013 was domestically sourced, with the value of domestic status inputs growing to $545.5 billion. The remaining $290.3 billion in received merchandise consisted of foreign status inputs, it said.

The composition of foreign status inputs received by FTZs has also shifted significantly, according to the report. In 2013, a 16 percent decline in foreign status petroleum inputs was offset by increases in other product categories, such as vehicles, electrical machinery, and consumer products.

According to the report, the $79.5 billion export figure is based solely on material inputs, and does not include the value added to those inputs by US-based manufacturers operating in FTZs.

“CAPTURING THE FULL VALUE OF EXPORTS”

The National Association of Foreign Trade Zones (NAFTZ) is currently working with the US Census Bureau and the US Foreign Trade Zones Board “to more accurately capture the full value of exports from FTZs, including the value added to foreign and domestic status inputs by FTZ user companies,” the report said.

“Record FTZ exports, merchandise received, and employment offer compelling evidence that the FTZ program is expanding and adapting to meet the needs of American-based companies competing in a global economy,” said NAFTZ President Daniel Griswold.

The zone program, he said, “has become vital to US economic policy goals of boosting exports, attracting foreign investment, and creating well-paying and sustainable private-sector jobs on American soil.”

“Since 2009, exports from foreign-trade zones have almost tripled, from $28 billion to nearly $80 billion,” Griswold added. “The FTZ program shows that when US-based companies are allowed to access global inputs at competitive prices, they can become export powerhouses.”

There were 177 active FTZs during 2013, with a total of 289 active manufacturing/production operations. A record high of 390,000 persons were employed at 3,050 firms that used FTZs during the year – an increase of 20,000 employees over 2012.

The FTZ Board processed 65 applications for new or expanded production authority in 2013, and reorganized 23 zones under the alternative site framework (ASF).

The first Foreign Trade Zone was opened on Staten Island by  the Port of New York-New Jersey in February 1937.

08/28/2014

 

Kuder Inc. Garners President’s “E” Export Award

Adel, IA – US Secretary of Commerce Penny Pritzker recently presented Kuder Inc. with the President’s “E” Award for Exports at a ceremony in Washington, DC, in recognition of the company’s “significant contribution to the expansion of US exports.”

Iowa-based Kuder is a leading provider of evidence-based assessment, education planning and career guidance tools and resources.

Between 2012 and 2013, the company’s export sales increased by 257 percent with the greatest overseas sales growth seen in Africa, Asia and the Middle East.

“The ‘E’ Awards Committee was very impressed with Kuder’s complete customization of products to fit unique international markets,” said Pritzker in her congratulatory letter to the company.

The company’s achievements, she wrote, “have undoubtedly contributed to national export expansion efforts that support the US economy and create American jobs.”

Kuder, founded in 1939, also received a special recognition from Rep. Tom Latham (R-Iowa), who said, “It is clear to me that Iowa’s own Kuder, Inc. truly represents the spirit of American business and the renowned Iowa work ethic.”

A total of 66 US companies were presented with the President’s “E” Award this year. The awards were based on four years of successive export growth and an innovative international marketing plan leading to an increase in exports.

06/02/2014