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China loses Trade Appeal WTO over Curbs Exports

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This topic contains 7 replies, has 2 voices, and was last updated by  Charles Randall 11 years ago.

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  • #1954

    basil parmesan

    China Loses Trade Appeal Over Its Curbs on Exports

    By TOM BARKLEY / Wallstreet Journal – Business /Tue Jan 31, 2012

    WASHINGTONA World Trade Organization appeals panel ruled against China’s efforts to limit the export of raw materials used in the steel and chemicals industries, a decision that could provide the U.S. and Europe with ammunition against similar limits on China’s rare-earth exports.

    U.S. Trade Representative Ron Kirk on Monday called the WTO decision a “tremendous victory.” “Today’s decision ensures that core manufacturing industries in this country can get the materials they need to produce and compete on a level playing field,” he said in a statement.

    China pledged to scrap export controls when it joined the WTO in 2001. But under pressure to retain raw materials for domestic needs, Beijing has gradually restricted exports, defending its curbs on environmental grounds, saying it needs to conserve some of the materials and limit the environmental impact of the production of others.<Picture – Boomberg News A factory worker looks over machines >

    processing zinc and other materials in Jiyuan, China.

    It has made similar arguments in defense of its export quotas on rare earths, 17 elements that are key to the production of high-tech products.

    The WTO panel Monday confirmed that China’s export duties and export quotas on raw materials violated global trade rules and had to be changed. While WTO rules let countries restrict exports to protect the environment, it has said China hasn’t demonstrated that it accompanied the export restrictions with limits on domestic production or consumption of the materials.

    The European Union and Mexico had joined the U.S. in the case, which began in 2009. The countries have argued that Chinese restrictions on the export of several raw materialsbauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zincgave Chinese companies an unfair advantage by keeping the price of domestic raw materials low compared with prices in other parts of the world.

    The case has been watched closely as the U.S. and others weigh how to increase pressure on China over rare earths, whose prices have climbed sharply due to China’s export quotas.

    The appeals panel decision could result in an easing of exports of the coveted minerals, say U.S. and European officials.

    “We certainly expect China to get rid of the export restraints,” a senior U.S. trade official said in an interview. “And to the extent that these export restraints cover a much broader set of products than just the one we broughtincluding rare earthsthen we would expect them to move on those fronts.”

    The official reiterated that the raw-materials ruling could help determine the course of action on rare earths, while adding that no decision has been made.

    “Obviously we had some pretty serious concerns about rare earths to begin with, and this decision just compounds those. So we are looking at it very carefully,” the official said.

    EU Trade Commissioner Karel De Gucht also signaled that the ruling has rare-earth implications. “China now must comply by removing these export restrictions swiftly and furthermore, I expect China to bring its overall export regimeincluding for rare earthsin line with WTO rules,” he saidin a statement.

    Chinese officials “regret” the WTO decision, the Ministry of Commerce said on Tuesday, according to the state-run Xinhua news agency. In a statement on the ministry’s website, an official reiterated China has tightened oversight of high energy-consuming and polluting resources in recent years. “The WTO should not only uphold free trade but also allow members to take necessary steps to protect the environment and natural resources,” it said.

    The appeals panel didn’t uphold all of the initial rulings that favored the U.S., Europe and Mexico, reversing findings on China’s export-licensing requirements, minimum export-price requirements and some administrative and fee matters. But the main rulingthat the export duties and quotas violate WTO rulessurvived with the appeals panel rejecting China’s argument for the restrictions.
    The WTO’s dispute-settlement body will decide whether to adopt the panel report within 30 days, after which China would have to come up with a proposal to comply with the ruling.

    The ruling comes as the U.S. is taking a more muscular approach to conflicts with one of its major trading partners. President Barack Obama, in last week’s State of the Union address, said the U.S. was forming a high-level panel to deal with trade disputes with China.

    “The Obama administration will continue to ensure that China and every other country play by the rules so that U.S. workers and companies can compete and succeed on a level playing field,” Mr. Kirk said.

    The administration faces pressure political pressureboth in Congress and on the election trailto take a bolder stance against China’s trade and currency policies. U.S. Sen. Sherrod Brown (D., Ohio) said he plans to call for more aggressive trade enforcement action against China on Tuesday, holding an event with labor leaders at the Capitol on highlighting American job losses caused by alleged Chinese unfair practices in the auto-parts trade.

  • #4725

    Charles Randall

    China Rare Earths Safe From WTO Export Ruling
    Published Tue Jan 31, 2012 / By Reuters

    China lost an appeal at the World Trade Organization on Monday after complaints about its restrictions on raw material exports, but will be able to maintain its supply stranglehold on rare earths, crucial ingredients in many high-tech products.

    Picture China Export dock cranes – Eightfish | The Image Bank | Getty Images>

    A WTO panel on Monday said Beijing violated global trading rules by restricting exports of raw materials like bauxite, coke, magnesium, manganese and zinc, which inflated prices and gave domestic Chinese firms an unfair competitive advantage.

    Many countries later accused China of choking off global supplies of rare earth metals, causing prices to rocket.

    Although rare earth metals were not part of Monday’s ruling, a number of U.S. lawmakers urged the United States to use the decision to launch a new case to force Beijing to lift its rare earth export restrictions.

    “The decision of the appellate body is a huge victory for the United States,” said Michael Silver, chief executive of American Elements, a U.S.-based rare earth processor. “It confirms the existence of the two-tiered price structure that has caused so much concern.”

    EU Trade Commissioner Karel De Gucht said the decision would force China to drop export restrictions for the materials mentioned in the case and for rare earths.

    But while China might be forced to tweak some of its export policies, analysts said Beijing’s strategy to restrict rare earth supplies and control prices would likely remain unchanged.
    “It is still too early to say what the impact will be but I can’t see it having a big impact on prices the main issue will still be supply and demand,” said Vivian Pang, an analyst with the Asian Metal consultancy in Beijing.

    China controls 95 percent of global rare earth supplies a group of 17 elements used in new industries like renewables and hybrid cars and its dominance means that it is in a strong position to disregard WTO rulings if it so wishes.

    The United States, European Union and Mexico had all launched WTO legal cases in 2009, challenging China’s right to restrict raw material exports.
    “The question is whether China will actually stop or at least reduce export taxes,” said Silver. “I expect they will, so they remain WTO members in good standing.”

    China’s Ministry of Commerce said on Monday that it “deeply regrets” the ruling but would comply.

    Tu Xinquan, associate director of the China Institute of WTO Studies, said Beijing was likely to have to adjust its policies in order to comply but its overall strategy need not change.

    “There are other ways it can meet its objectives,” he said.

    No Environmental Grounds

    WTO provisions allow a country to limit trade on health and environmental grounds, but it said on Monday that China had so far been “unable to demonstrate” that its restrictions helped conserve resources, cut pollution or improve public health.
    Beijing has said that unregulated rare earth exploitation had caused untold damage in big producing regions like Inner Mongolia. It has also said it should not have to bear so much of the global output burden, especially as domestic demand grows.

    The idea is to continue to play up the environmental impact the issue is whether it can convince the WTO that its policies are applied equally to foreign and domestic firms, hence the emphasis on the domestic output cap.

    China deployed similar arguments in 2004 when imposing quotas on coking coal exports. Despite the threat of WTO action, exports have dwindled from 10 million tonnes a decade ago to 3.6 million tonnes last year, and it is now a huge net importer.

    In the last few years, Beijing has banned dozens of unlicensed rare earth miners and raised entry thresholds. It has also imposed strict export limits and cracked down on smuggling.
    It issued export quotas amounting to 30,184 tonnes in 2011, and said the figure for 2012 would remain unchanged in order to “guarantee
    international demand”. Exporters used just 56 percent of their allocations last year.

    China has rejected claims that local firms have gained an unfair advantage, saying nationwide output caps which are compliant with WTO rules have also raised domestic prices and forced local users to scale back operations.

    The question for the WTO is whether or not Chinese firms gain an unfair advantage, but there is nothing it can do to stop domestic rare earth producers from selling to domestic consumers at a cheaper price, said Tu of the Institute of WTO Studies.

    “I don’t know if domestic firms get cheaper supplies but if it is just enterprises setting prices, rather than the government, there is nothing anyone can say about it.”

  • #4724

    Charles Randall

    Here are couple great news artilces showing that WTO has taken gloves off and finally getting tough with new member …… China after EU and Mexico joined complaints from US. The appeals from China were still trying use environmental loop-hole on export curbs was struck down for Rare Earths and other products (like coal coke) that its used manipulate prices in past.

    The EU forcefully joining complaints by US & Mexico definitely helped put the issue over the top and WTO to start enforcing regulations all other members have to live by to stay in good standing. Its only first step since China still has issues on currency manipulation (it is slowly addressing), government subsidy and bared private investments among others to get its trade more in line with other member restrictions.

    China has even used Rare Earths exports as retailation against Japan when it had dispute in other trade matters – it was probably another one reasons the complaints gained action in WTO panel as well.

    China was recently upset when one of its companies was sanctioned by the UN for buying Iran oil despite rest of world community trying to bring Iran nuclear arms race to close.
    Hopefully the continued forceful messages will get thru and that if China wants to continue have access to world markets and raw materials it must abide by same rules as rest of WTO community.
    The initial reaction has of course been negative & disbelief with some anger that they are finally being held accountable.


  • #4723

    Charles Randall

    <To see this news item in Viedo version go to link @

    Made in America Again: Jobs Returning to U.S. from China
    Rock Center with Brian Williams

    <Picture US furnitue worker at Jig Saw>

    Some jobs that were outsourced to China are returning to the United States. In North Carolina, a once shuttered furniture factory is reopening and boasting that its wood furniture is, once again, made in America. The news provides hope for some Americans that jobs they thought were lost forever might be making the round trip back to the United States. Harry Smith reports.

    america from overseas. they’re real and they are here.

    >>> welcome back. drive around almost any american city and you’ll find them easily shuttered, vacant factories. the jobs are gone. in some cases they’ve gone overseas. to quote bruce springsteen , they ain’t coming back. or are they? where manufacturing jobs are concerned, we are just seeing the first glimmers of evidence that some of those jobs may be making a round trip back here to the states. harry smith visited a factory owner who sent his company’s jobs to china, but then home called him back. and in just the last few days his products are made in america again.

    >> reporter: lincolnton , north carolina , is a pretty old town. still proud from better days when manufacturing put decent paychecks in people’s pockets. it seemed like those days were

    >> we made a great product. we were proud of it. and we lost it all.

    >> reporter: maybe it can happen

    >> it will. it will. it will be better.

    >> reporter: out on the edge of lincolnton at the old cochran furniture factory, the lights are on again. new machinery is being delivered. and soon local lumber will be milled into fine furniture .

    >> i wake up and i think about this and i think about the people that really depend on this happening, and i won’t let them down.

    >> reporter: bruce cochran ‘s family has been in the furniture business here since the civil war , but bruce sold the business 20 years ago.

    >> this is my grandfather right here.

    >> reporter: easier to sell than try to compete with the chinese, he figured. so he became a go-between who connected american furniture companies with chinese manufacturers.

    >> the money was incredibly good, and, you know, when you’re making money like that, you really — you really don’t see the consequences of some of the things that you’re doing and the detriment that — you know, people losing jobs here. i realize that i was really a big part of the problem.

    >> reporter: bruce kept hearing ce.

    >> my daddy always said, it’s not about making furniture , it’s about people making furniture . and i think about that all the time. it’s about the people.

    >> reporter: so bruce finally decided to listen to that voice and start up the old factory again. when you first came to your wife and you said, honey, i’m thinking about opening up the old business again.

    >> she thought i was crazy. at first she thought i was kidding. then there were the detractors, they’re still out there, saying no way that you’re going to be able to pull this off.

    >> reporter: but at the big furniture show in north carolina last fall, the orders poured in.

    >> perfect.

    >> reporter: buyers were impressed with the samples. solid wood , made in america , guaranteed for life.

    >> you don’t remember me, i remember you.

    >> reporter: for bruce , this isn’t just sentimental. he sees real opportunity. e rising, shipping costs have doubled. china is not the bargain it used to be.

    >> we have to recognize that the average chinese worker is about as quarter productive as the u.s. worker.

    >> reporter: hal sees bruce as a dramatic shift. he says the days of china so often have a cost advantage over u.s. manufacturers is about to come to an end.

    >> i think we’re looking at the tipg point right now. by 2015 , we’ll be at the same level as the cost of the chinese products.

    >> reporter: 2015 ?

    >> yes.

    >> reporter: that’s a couple of years from now. far away. it’s for a bunch of products, things like computers, electronics and televisions, for industrial goods like rubber products and machinery.

    >> reporter: that could mean million of new american jobs in the next few years. how big an impact will this have on the economy as these jobs go from china back to the united states ?

    >> it will be a major impact. are when you take the manufacturing jobs and then the service jobs that get created alongside those, that we will add 2 to 3 million jobs to the u.s. work force .

    >> reporter: this is no small thing. for bruce , reopening the factory is not a leap of faith but an act of belief. in himself and the people who used to work for him.

    >> how are you doing today?

    >> reporter: taryn padgett worked for bruce and his father for 20 years. she was unemployed and frightened about the future when bruce called to hire her back.

    >> when he called me, it was such a relieved feeling. i know when i talk to some of these people i know that relieved feeling is coming for them.

    >> reporter: now she’s doing the hiring.

    >> my phone started ringing immediately. constant. people stop me in the grocery store.

    >> reporter: kevin cook used to work here, too.

    >> what strengths do you feel that you have?

    >> i feel that i’m a hard worker, i’m always on time . i’m good with people. and you know, i’ll give you the hundred percent every day that i’m here.

    >> that’s exactly what i want to hear.

    >> reporter: the effects can be felt across lincolnton .

    >> when i heard about them opening back up, wow, okay, there’s momentum. it gives you steam. gives everybody steam. rie is part owner and manager of bessie’s kitchen where they serve the best fried chicken between raleigh and asheville. cars and trucks going in and out of that driveway.

    >> and the truck drivers . that would be great for the truck drivers because we got a great big parking lot out here.

    >> reporter: even the white house has taken notice. that was bruce , a republican, sitting near michelle obama at the state of the union address last week. 130 new jobs may not seem like much —

    >> this it is you’re looking at it right here. that is the first piece of furniture that lincoln furniture has actually produced on this line.

    >> reporter: but bruce and the folks at lincolntonfurniture feel like they’re on to something.

    >> it’s pretty emotional. just like you’re a part of my family. i want everybody to sign this piece of furniture today.

    >> reporter: they’re not waiting for the economy to bounce back. they’re pitching in to see that it does. bruce cochran is a living parable about people and profits and priorities. it almost seems to me that there’s some personal redemption in this for you as well.

    >> my father was a — he was a great man. and i was not of that ilk. i was not as compassionate, and i didn’t have the empathy. and genuine love for the people that he had. and i got a second chance.

    >> harry smith here with us in the studio. i think most reasonable people can agree, it would be good for our country to be manufacturers again, and then i heard you saying that he had a rough go getting financing and i hate to hear that.

    >> it’s so interesting. because here’s a guy with a great business plan . couldn’t have more experience, got the best people in the community to get this started. they had a bunch of cash to start. he needed operating capital . he went up and down the east coast , went through all the banks in the south, couldn’t find financing until he went to s home town .

    >> well, there you go. thank you very much for bringing us that story. that was fantastic.

    >> my pleasure.

  • #4722

    Charles Randall

    Here is good article about return of Jobs to US from China. Unfortunately it focuses on aspect of more productive US workers and higher quality product made cheaper as reason (and for this American furniture factory example perhaps it is most of it) but ….. perhaps bigger reason is that once China is held accountable for unfair advantages like currency manipulation, Export curbs and subsidy, lack private company ownership, pollution control and other WTO requirements all reasons that the American jobs & factories left (stolen perhaps?) disappear also.

    You have to wonder at this story revelation occurring at same time as China being forced to abide by WTO and world rules the same as Western Countries: like the sanctions of China company for buying sanctioned Iran oil, Global push for China to stop fixing/manipulating currency, push for pollution control and regulation of contaminated and unsafe products, and subsidizing / curbing exports to leverage prices as in this months WTO ruling on China Rare Earths appeal.

    This is real story – when the free trade is held to WTO fair trade regulations much of China advantage disappears and will become real advantage for China as damaging explosive growth stops destroying both environment and quality of life for average worker in China as well as improve its domestic market gains.

  • #4721

    Charles Randall

    China No Match for Dutch Plants as Philips Shavers Come Home
    By Maaike Noordhuis- Bloomberg – Jan 19, 2012 3:22 AM CT
    Royal Philips Electronics NV (PHIA) workers in the Dutch town of Drachten who expected to be fired were astonished when the site manager said the company was bringing production of its top-priced electric shavers home from China.
    Rob Karsmakers, the factory manager who returned from four years working for Philips in Asia, told the baffled crowd that the consumer-electronics company would boost investment in Drachten, where it employs 2,000 staff.
    “A product engineer in Shanghai now is just as expensive as in Drachten,” said Karsmakers, who has overseen the plant since 2009, in an interview. “But in China, the headcount turnover is high. That is not sustainable.” Philips, which also lights the Eiffel tower and the Olympic Stadium in Beijing, employs a total of 14,000 people in the Netherlands.
    The nation, the fifth-largest economy in the euro region, has expanded its allure as a manufacturing powerhouse next to its dominant German neighbor. The Netherlands leads in areas as varied as paints and combat uniforms for the U.S. Army. Apple Inc. (AAPL) uses chips produced by machines from ASML Holding NV (ASML) for its iPhone and iPad, and TomTom NV (TOM2) help drivers navigate unfamiliar roads.
    The Dutch trade surplus in the first nine months of last year was the second highest in the euro area behind Germany, Eurostat data show. The Netherlands was the seventh-biggest export nation in the past five years, according to ING Groep NV (INGA) and the United Nations Conference on Trade and Development.
    Keeping Triple-A
    “The Netherlands in particular is a country of trade, it is how we earn our money,” said Maarten Leen, an economist at ING. Set up as gateway into Europe, with five major sea docks and the Schiphol airport near Amsterdam, the Dutch have managed to maintain a current-account surplus since 1981, Leen said.
    Standard & Poor’s affirmed its AAA long-term credit rating on the Netherlands on Jan. 13, citing the “sustained and healthy current account surpluses,” averaging 6.4 percent between 2005 and 2010. That offset the view of a weaker-than- anticipated political climate in Europe, it said.
    The Dutch have played a leading role in global economic trade for centuries. The Dutch East India Company came to dominate business in Asia after it was founded in 1602, in the first ever initial public offering by a company, and traded spices, metals, textiles or porcelain.
    Global Dutch brands today include Heineken NV (HEIA) beer, Royal Dutch Shell Plc (RDSA) and Unilever NV (UNA), the maker of Dove soap, Lipton tea and Magnum ice cream.
    Chemicals, Tech
    Chemical products such as Akzo Nobel NV (AKZA)’s Sikkens paint, and machinery such as ASML’s lithography systems make up a substantial part of export growth, on top of the traditional agriculture products such as flowers, onions and tomatoes.
    The chemical and technology industries have shown the strongest growth in exports since 1996, with volume increases of 4 percent and 5.8 percent per year, respectively, data from Dutch statistical office CBS show.
    “We have a superior infrastructure, with docks in Rotterdam, Delfzijl and Geleen, and the connection to the pipeline system for gas and ethylene in the surrounding countries, in Belgium, Antwerp and the Rhine-area in Germany,” said Werner Fuhrmann, vice chairman of the VNCI Association of the Dutch Chemical Industry.
    For ASML, its position in the Netherlands is key, as the company relies on a network of “hundreds of high-tech suppliers” and research institutes to develop its lithography scanners, Chief Financial Officer Peter Wennink said.
    Specialized work “we can do fast and effectively with partners in the south of the Netherlands,” he said.
    Brainport Area
    ASML, which has a 80 percent market share in the semiconductor equipment sector, is part of the Brainport area in the southern part of the Netherlands, an industrial hub that combines industries from food, to automotive to design and technology, including Philips and TomTom.
    The company hopes to surpass Applied Materials Inc. (AMAT) this year as the largest player in its industry, Chief Executive Officer Eric Meurice said yesterday, after the company posted better-than-expected fourth-quarter numbers. “Our secret is that we put a lot of money in R&D and we have linked our research and development to manufacturing,” he said at a press conference.
    For Karsmakers, bringing manufacturing of the high-end shavers closer to the research facility in Drachten and serving the European market, offered a good “local-for-local” opportunity, as it would also reduce transport costs, he said. Philips kept production of its cheaper shavers in China to serve the Asian market.
    Emerging Challenge
    The country’s corporate prowess has attracted suitors. In the past decade, Dutch companies, including ABN Amro Bank NV, previously the country’s largest bank, and Royal KLM NV, the national carrier, have fallen into the hands of foreign owners, leading to widespread controversy in the Netherlands about a national company sell-out.
    Today, the Dutch have other challenges. With the lingering European debt crisis, and two thirds of exports still dependent on Western Europe, the country faces a “great challenge” to match the growth it has seen in the past 15 years,” Leen said, adding the Netherlands still hasn’t made its mark in emerging economies, specifically in Asia.
    China’s economy expanded in the fourth quarter at the slowest pace in more than two years as Europe’s debt crisis curbed demand for exports and the property market was weakened by measures to rein in home prices.
    With the gravity point of the world economy shifting to countries like China, India and Brazil, innovation in the Netherlands should help the country maintain its trade position, Economics Affairs Maxime Verhagen said in a speech last year at the Wageningen University in the Netherlands.
    The future lies in developing innovative products that help cut CO2-emissions, tackling the fallout of aging populations, and the growing demand for food from a growing global population, Verhagen said, referring to products such as Philips home healthcare offerings and Royal DSM NV (DSM)’s light material Aircargo containers.
    “A big threat for industry in the Netherlands, or even Europe as a whole, is that governments erode fundamental innovation and education,” Peter Wennink, CFO of ASML, said in an interview.
    To contact the reporter on this story: Maaike Noordhuis in Amsterdam at

  • #4720

    Charles Randall

    One Coker Technology folks sent me this one.
    It is EU version of US jobs coming home from China – it shows same thing is happening in NL/ Dutch plants with Philips Electronics/Shavers as their example.

    As in the US version the story focuses on strengths and individual aspects of the Philips shaver example and does not give true weight to Global demand for China to adhere to WTO rules and deleverage advantages it should never have had in first place.
    <Source: >


  • #4717


    Made in USA: U.S. Market Shines Brighter

    Feb 8, 2012

    U.S. companies, facing slowing markets and rising costs around the world, are taking a new look at their home market.
    With growth slowing in China and a slump gripping much of Europe, companies are adding capacity in the U.S., replacing aging equipment and even moving overseas production back from low-cost labor markets, a sign that corporate America could be poised to take a bigger role in the economic recovery

    Manufacturers Look Homeward, Boosting Domestic Production and Spending as Overseas Gains Overseas

    U.S. companies, facing slowing markets and rising costs around the world, are taking a new look at their home market.
    With growth slowing in China and a slump gripping much of Europe, companies are adding capacity in the U.S., replacing aging equipment and even moving overseas production back from low-cost labor markets, a sign that corporate America could be poised to take a bigger role in the economic recovery.

    Christoph HitzUnion Pacific expects to buy twice as many locomotives this year, spending upward of $400 million.

    The pace of earnings growth at companies slowed in the fourth quarter, and there are signs that profitability is falling. That is prompting companies ranging from beverage maker Coca-Cola Co. to industrial supplier Emerson ElectricCo. to disclose cost cuts. But after keeping a tight lid on costs for the past few years, many other companies are expanding capacity to meet rising demand.

    WSJs Bob Hagerty has the story of companies bringing staff and equipment back to the U.S. in the face of economic uncertainty in Asia and Europe. AP Photo/Damian Dovarganes
    United Rentals Inc., the worlds largest equipment rental company, plans to increase its capital spending by about a third, to $1 billion, this year as more construction and industrial companies opt to rent rather than own equipment like elevated forklifts and backhoe loaders.Cummins Inc., which makes engines for trucks and heavy equipment, is boosting its capital spending to more than double the rate of two years ago.
    Carlisle Companies, a small conglomerate that makes insulation, tires and restaurant supplies, plans to open two new plants in the U.S. and bring tire production back to the U.S. from China.Union Pacific Co. expects to buy twice as many locomotives this year, spending upward of $400 million. The auto industry is dusting off idled U.S. factories, adding work shifts and expanding production from Chattanooga, Tenn., to Belvidere, Ill., on rebounding car and truck sales. Some auto makers even hope to use the U.S. as a manufacturing base to export autos and auto-parts to Latin America and Asia.

    It is an environment that feels like it is building momentum, William Plummer, United Rentals chief financial officer, said in an interview. We are coming out of the depths of the recession and are starting to build momentum on the upside.
    U.S. businesses increased their investments in December. According to the Commerce Department, new orders for nondefense capital goods excluding aircraft
    , a proxy for how much companies spend on equipment, climbed 2.9% from November. That ended two months of declines, suggesting businesses are becoming more confident. Compared with a year earlier, companies shipped 9% more.
    Companies have piled a lot of cash on the balance sheet and delayed a lot of purchases, said Joseph LaVorna, Deutsche Banks chief U.S. economist, who expects capital expenditures, or capex, to grow in excess of 10% this year. The capex story is very much alive and well, and capex and hiring go hand-in-hand.
    There are signs that hiring may be picking up as companies expand facilities. Job growth in January was its highest level since April, with unemployment falling for the fifth consecutive month.
    In addition, stubborn construction markets are showing signs of life, and that is helping companies like Caterpillar Inc., according to Andy Kaplowitz, a Barclays Capital analyst. The Peoria, Ill.-based equipment maker notched a 31% increase in its North American construction business, compared with Barclays estimate of a 20% gain.
    Im feeling better about the U.S. economy than I was 12 months ago, for sure, said Patrick Ward, chief financial officer at Cummins.
    Fortune Brands Home & Security Inc., whose products include Master locks and Moen faucets, recently boosted its capital spending plans for 2012 to $80 million, up about 17% from last year, after seeing modest improvement in the U.S. economy, said Chris Klein, CEO of the Deerfield, Ill., company.
    It isnt off to the races yet, Mr. Klein said of the economy, but it is definitely firming up.
    That may not mean major job gains. Most of the capital spending is on equipment that will improve production efficiency. For now, Fortune Brands has plenty of spare capacity and isnt envisioning new plants. Its 12,000-person U.S. work force probably will expand only slightly this year, with gains mainly in product development and marketing, Mr. Klein said.

    On the whole, fourth quarter earnings were weaker than expected amid sluggish growth in Europe and China, and executives voiced caution about 2012.

    Among the 301 Companies in the Standard & Poors 500-stock index that have reported their quarterly earnings thus far, 28% missed analyst expectations, a greater proportion than the typical 20%, according to Thomson Reuters.
    Companies that are making first-quarter forecasts are striking a mostly downbeat note. Of the 55 that have provided earnings forecasts, 43 said they expect the first quarter to be weaker, according to Thomson Reuters. That is the worst ratio since 2001. Profits for the final quarter of 2011 are up an average of 8.9% from a year earlier, and revenue is up 8.3%.

    While the impact of the European slowdown has been muted, analysts have noted how Chinas slowdown has eaten into profit. United Technologies Corp. said its Otis Elevator unit sales in China dried up in the fourth quarter compared with swift sales the quarter before. 3M Co. expects below-trend China growth for the first half of this year, after sales slowed markedly at the end of last year.
    Despite Chinas slump, companies still see opportunities overseas to buoy growth, which means the U.S. wont grab all of the capital spending. Caterpillar, for instance, said about 60% of the $4 billion it earmarked for this year will be invested in the U.S. largely to expand existing facilities. Auto parts supplier Tenneco Inc. will boost capital spending as much as 15% as it expands business in emerging markets. Charlotte, N.C.-based Carlisle will be expanding a plant in Italy and building a new one in India.

    But rising wages overseas, higher transportation costs and the shipping time of goods from China have prompted Carlisle to move tire production to Tennessee from China.
    We find it as cheap to manufacture in the U.S. as China, Carlisle Chief Executive Dave Roberts wrote in an email. We will still manufacture in China, but the idea would be to manufacture product for Asia in Asia, for the U.S. in the U.S.
    And strong domestic growth is driving Carlisle to open new factories in Seattle and Kingston, N.Y. We are starting to see the nonresidential construction market strengthen a bit, Mr. Roberts said in an interview. The momentum continues.
    Bob Tita contributed to this article.

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