Quite a View from the “Summit” of the Americas
Michael is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Why would over three hundred and thirty business executives attend the Summit of the Americas held last week in Columbia? The simple explanation is they are looking for growth and with growth the accompanying increase in revenue and profits. The mature markets of the U.S. and Europe do not lend themselves to a lot of growth. Unlike Europe's stalled economy, the Latin and South American ecnomies continue to grow. According to The White House, the areas 2010 GDP of $3.6 trillion dollars is projected to rise to $4.8 trillion dollars by 2015. That is why PepsiCo (NYSE: PEP), Caterpillar (NYSE: CAT) and Wal-Mart (NYSE: WMT) were there.
The best way for multinational companies to drive growth is through emerging economies like Latin and South America. When the Columbia free trade agreement is ratified it could add over a $1 billion dollars a year in exports to the already $14 billion dollars posted in Columbia in 2011. According to the U.S. Commerce Department, the U.S. Exports to the Americas is about $700 billion a year.
Smart, well managed companies always seem to find ways to grow. In the case of PepsiCo they are growing by acquisition as well as increased product sales in the region. In November of 2011 they acquired Mabel, a producer of cookies, crackers and snacks in Brazil. Doesn't it make sense that a young expanding middle class will use some of their new found disposable income to purchase products that Pepsi has to offer.
Who better to benefit from the added construction and infrastructure development in the region than Caterpillar. According to the Latin Business Chronicle last year the behemoth construction and mining-equipment manufacturer had the highest growth among multinationals operating in Latin America. Besides expanding China, this Latin and South American region needs the heavy equipment that Caterpillar is famous for to keep up with its construction and infrastructure growth.
Wal-Mart sees the 440 million people of Central and South America as potential customers. If they can do in Brazil what they have done in Mexico (according to The Latin Business Chronicle it is the third largest company in Mexico and tenth-largest in Latin America) it will greatly improve its global growth. In Brazil it already has established the ground work with the purchases in 2004 and 2005 of 118 Bompreco and 140 Sonae stores.
PepsiCo, Caterpillar and Wal-Mart were just three of the multinational companies at the Summit of the Americas. They are three well managed global companies looking to increase growth and investor value. Maybe they should be three companies added to ones portfolio for future financial growth as well.
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