While it’s no secret to Latin Trade readers that Latin America is a global growth star, research by Latin Business Chronicle shows which multinationals are benefiting most from that boom.
According to the online publication’s Latin Multinational Index, which tracks quarterly revenue growth of more than 20 leading multinationals operating in Latin America, U.S.-based Caterpillar is the undisputed star.
Last year, Caterpillar increased sales in Latin America by 57.7 percent to $6.2 billion. That was nearly twice the growth rate of runner-up Volkswagen. The German auto giant boosted its Latin America sales by 29.8 percent to $17.9 billion.
During the first half of 2011, Caterpillar also did well, boosting first-quarter revenues in Latin America by 84 percent and second-quarter sales by 34 percent.
Caterpillar has been helped by strong growth in mining and construction in Latin America. “Mining customers are increasing their investment, which is driving significant demand for our large mining products and higher parts sales,” Caterpillar said in its second-quarter earnings release.
Brazil was the largest contributor to higher machine volume in Latin America last year. The country’s mining sector — led by Vale (the world’s second-largest mining company) — benefited from strong demand in China last year. In fact, Vale is the multilatina that grew its revenues most last year, according to the Multilatina Index from Latin Business Chronicle.
Mexico contributed the second-highest volume growth in 2010 for Caterpillar. “Positive factors were lower interest rates, higher mining production and a more than 30 percent increase in exports,” the company said in its 2010 annual report.
Meanwhile, Caterpillar volume more than doubled in Peru, the third-largest contributor to volume growth in Latin America last year. “Peru benefited from a 200 basis point reduction in interest rates, increased exports and a 14 percent increase in manufacturing production,” Caterpillar said.
The company has also boosted the number of employees in Latin America — from 10,776 in 2009 to 15,220 last year.
Caterpillar has been an avid supporter of the United States’ free trade agreement with Colombia, which was signed in February 2005 but suffered from repeated delays in winning U.S. congressional approval.
“Not only is Colombia one of Caterpillar’s 10 largest U.S. export markets by country, but it is also one of America’s closest allies,” Caterpillar Chairman and CEO Doug Oberhelman said earlier this year. “The U.S.-Colombia Free Trade Agreement will promote U.S. exports and support American jobs. The agreement is also a validation that Colombia is a good place to conduct business. Perhaps more importantly, it will bolster understanding and improve living standards of citizens in both countries.”
Since other FTAs went into effect in Latin America, Caterpillar exports have dramatically increased, it points out. Last year, exports to Mexico were up five-fold, three-fold to Chile and by more than 60 percent to Peru.
Caterpillar expects to continue doing well in Latin America, pointing to the region’s estimated GDP growth rate of 4.5 percent. “Our outlook assumes continued growth in construction spending and mining production,” the company said in the second-quarter earnings release.
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Canadian Prime Minister Stephen Harper during his visit to Colombia in August 2011.
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