Caterpillar Chairman and CEO Doug Oberhelman participated in the Asia-Pacific Economic Cooperation (APEC) CEO Summit 2014 dialogue, “Asia Pacific Economic Integration and the Global Multilateral Trade System” on November 9 in Beijing, China.
Other dialogue participants were H.E. Michele Bachelet, President of Chile; Hon. Robert Azevedo, Director-General of the World Trade Organization; Dennis Nally, Global Chairman of PriceWaterhouseCoopers International LTD; and Frank Ning, Chairman of COFCO Corporation & ABAC Chair 2014.
Several Caterpillar leaders attended the Summit, including Ed Rapp, group president with responsibility for Construction Industries and Qihua Chen, vice president with responsibility for the China Operations Division.
Oberhelman also discussed the global economy, including potential Asia Pacific trade agreements, with CNBC.
“As long as we’re all talking about lowering trade barriers, eliminating tariffs, interchanging and being able to access each other’s markets, there will be benefits that will come out of this,” Oberhelman said.
A stronger dollar is a headwind for many U.S. exporters, but the CEO of Caterpillar, the world’s largest construction company, told CNBC that greenback strength has given his company a boost.
The U.S. dollar hit multi-year highs against several currencies last week, including a seven-year high against the Japanese yen, feeding off signs of continued recovery in the world’s largest economy.
The U.S. dollar index, which measures the greenback against a basket of major currencies, has rallied nearly 12 percent since early May and hit a high of 88.146 last week – a level not seen since June 2010.
Many U.S. exporters face the risk of losing out to competitors abroad now that their product is more expensive, but that hasn’t been the case for Caterpillar, whose performance is seen as a barometer for global economic growth.
“You have to remember that we’re a big producer in Japan also. In fact in the latest quarter, dollar strength was a little bit of a tailwind for us because we tend to produce and sell in those markets to offset costs and revenue,” CEO Doug Oberhelman said.
“We’ve set that up so we don’t have to worry about whether we are long or short yen. We’ve really offset our costs in regards to Japan it’s not been a problem against our big competitor,” he said, referring to Japanese construction and mining equipment manufacturer Komatsu.
Xi’s “realistic” speech
Doug Oberhelman, chief executive officer of Caterpillar Inc.
Speaking to CNBC at the Asia-Pacific Economic Cooperation in Beijing, Oberhelman also gave his perspective on China’s President Xi Jinping’s speech to chief executives ahead of the summit on Sunday, where he dismissed concerns about China’s slowing growth trajectory and said the risks to growth were “not so scary.”
Slowing growth in China has been flagged as a major headwind for Caterpillar given that China is the world’s largest construction and equipment market.
“I felt the speech was realistic… at 7 percent the economy still doubles every decade or so. It’s pretty enviable,” said Oberhelman.
On Sunday, Xi pledged $40 billion to improve trade links with other nations in the region, a move that Oberhelman’s excited about.
“We love infrastructure, so that one that should tie together some relatively poor regions that really need a lot of development and that will cause growth in those areas, so we’re all for that,” he said.