Economic uncertainty keeps Caterpillar cautious

By Alyssa Donovan

January 28, 2013 Updated Jan 29, 2013 at 10:50 AM CDT

PEORIA, Ill.-- Caterpillar officials say they are proceeding with a cautious outlook this year as economic uncertainty is being felt across the globe.

With Caterpillar seeing a sharp decrease in sales and revenue in the fourth quarter of 2012, the economic outlook for 2013 is a hot topic.

Caterpillar Spokesman Jim Dugan says a lot of the uncertainty is coming from Washington not making decisions on automatic spending reductions, the fiscal cliff and a long term debt solution.

"Until that gets sorted out we don't really know where the U.S. Economy will go," said Dugan. "That uncertainty is certainly weighing over everything."

Dugan says the other factor for the year 2013 is the overall fiscal health of Europe. Multi-national companies like Caterpillar depend on more than just U.S. dollars. Foreign trade policies are often a factor in the bottom line.

David Cleeton, the Chairman of the Illinois State University Economics Department says the European Union, the largest trading partner with the U.S., may finally be interested in negotiating a free trade agreement.

"It is a way through more efficient trade and international transactions to get some more efficiencies and boosts in the economy without relying on governmental based spending," said Cleeton.

Cleeton says that certain sectors of the economy that have rebounded after hard times are helping the bottom line as a whole. Natural gas is beginning to impact the industrial sectors of the economy and the housing market is starting to turn around.

But for a global company like Caterpillar, a successful year depends on so much more and seems nearly impossible to predict.

Dugan said, “When we look at 2013 what we see is the potential for another all time record year but also the potential for a year where we see a decline in sales and revenue and a decline in profits."

However, Cleeton says having a free trade with the 27 countries that make up the European Union would give a company like Caterpillar the opportunity to re-strategize global operations and help its bottom line.

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