The taxation of a US corporation’s foreign profits, part of the financial reform bill soon to face a vote in Congress, is a major concern, incoming CEO of Caterpillar, Doug Oberhelman, told CNBC Tuesday.
“The tax rates are a big issue for us around the world,” said Oberhelman. “We’re worried about [the tax rates] making us uncompetitive against virtually all of our competitors, who are not here in the US.
“We’re watching it [the financial regulation bill] very, very closely.”
Oberhelman, who becomes CEO Thursday of the construction machinery giant, said that the new regulations relating to derivatives “impacts us in a big way”—in that it affects as much as 70 percent on every machine Caterpillar sells in the US. Oberhelman will assume the chairmanship of Caterpillar Nov. 1.
Oberhelman said he’s excited about Caterpillar’s latest initiatives, which include an outlay of $1 billion for expansion in China and construction of a new plant in Brazil. He also discussed new projects in the US.
The Brazil activity represents the first time since the 1950’s, Caterpillar’s initial foray into the South American nation, that the corporation has invested heavily there.
Also on the foreign front, Oberhelman said the company is considering moving a Japanese operation that makes hydraulic excavators to the US.
Two weeks ago, the company announced plans for additional manufacturing in US, including a new line of 125- to 800-ton mining shovels, which will be used worldwide, and an expansion of capacity at a Decatur, Ill., plant that makes mining trucks.
The company rehired about 1,500 US workers in the first quarter.
“The momentum of China, and India, and a lot of the emerging markets as such, it’s going to be hard to stop that,” he added. “I can’t imagine that they will continue to boom at rates they have been.
“All in all, when you see 3 to 4 billion people around the planet who want to move into the middle class, that draws infrastructure. And infrastructure is what Caterpillar does so well.”