Emerson's CEO Lashes Out At U.S. Manufacturing Burden
David Farr, CEO of Emerson Electric Co., said federal governmental policies are hurting U.S. manufacturing. He cited cap and trade, health care reform and labor rules as undermining the industry and its ability to expand and grow jobs domestically. He said that his company will continue to focus on growth overseas.
Emerson, the maker of electrical equipment and InSinkErator garbage disposals with $20.9 billion in sales for the year ended September, will keep expanding in emerging markets, which represented 32 percent of revenue in 2009. About 36 percent of manufacturing is now in “best-cost countries” up from 21 percent in 2003, according to slides accompanying his speech at a Baird Industrial Outlook conference.
Companies will create jobs in India and China, “places where people want the products and where the governments welcome you to actually do something,” Farr said. Mature markets such as the U.S., Western Europe and Japan continue to decline in importance and the company will keep investing in emerging markets, Farr said during the presentation.
“We as a company today are putting our best people, our best technology and our best investment in these marketplaces to grow,” he said. “My job is to grow that top line, grow my earnings, grow my cash flow and grow my returns to the shareholders. My job is not to shrink and roll over for the U.S. government.”
The unemployment rate in the U.S. jumped to 10.2 percent in October, the highest level since 1983. Emerson, which Farr said employs about 125,000 people worldwide, has eliminated more than 20,000 jobs since the end of 2008 to lower expenses. “What do you think I am going to do?” Farr asked. “I’m not going to hire anybody in the United States. I’m moving.”
Emerson, based in St. Louis, recently fell 7 cents to $41.35 in New York Stock Exchange composite trading. The shares have risen 13 percent this year.
The company had $1.7 billion in sales last fiscal year connected to energy efficiency through demand for products such as variable-speed controls and digital compressors, and it plans to increase that amount to about $5 billion in five years, Farr said.
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