Word: caterpillar
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...money from exports to pay interest on debt owed to American banks. Cheaper foreign steel keeps the price of Detroit's cars more competitive with those from Japan, so Detroit's autoworkers have reason to approve Reagan's decision. Major steel users who are big exporters, Caterpillar Tractor of Peoria, Ill., for one, are also in favor of lower-cost steel. It allows them to make products for sale abroad at more competitive prices...
...Caterpillar's woes began in 1982, when international sales started to dry up in the face of slowing foreign economies and declining oil exploration. Also, the company lost a $90 million contract to provide pipelaying equipment for projects in the Soviet Union when President Reagan imposed economic sanctions in response to the declaration of martial law in Poland. That same year, the United Auto Workers mounted a 207 day strike against Caterpillar when the company tried to rein in its labor costs, which it claimed were $20 per man hour...
Perhaps the most important factor behind Caterpillar's troubles in foreign markets has been the overly strong dollar, because it makes the company's products more costly to foreign buyers. Since 1981, sales to Africa and the Middle East have fallen from $1.9 billion to $680 million. The decline is even sharper in Latin America, where they have dropped from $903 million to $266 million. Even though some trade with the Soviet Union is once again permitted, business is virtually nonexistent because the Soviets now view Caterpillar as an erratic supplier...
...strong dollar has helped Komatsu, Caterpillar's powerful | Japanese competitor, to gain ground. Because of lower labor costs and a cheap yen, Komatsu is selling similar machinery for up to 30% less than Caterpillar in places such as Latin America and Africa...
...attempt to remain competitive, Caterpillar has been drastically reducing overhead. It plans to close five of its 22 U.S. plants, plus one in Britain, and it is ending the manufacture of lift trucks in Ohio and moving some production to Britain and South Korea. "The strong dollar actually encourages the transfer of manufacturing to places other than the U.S.," says Erskine Chapman, Caterpillar's head of worldwide sales. The company has arranged new manufacturing agreements with firms in South Korea, West Germany and Norway. Executive Vice President Peter Donis recently hinted that Caterpillar may even reduce operations in Peoria...