Africa, Russia rising markets for U.S. industrials

By Scott Malone

CHICAGO (Reuters) - Record-high prices for oil and commodity metals are spurring strong infrastructure investment in Africa, Russia and Latin America, which are becoming important new markets for diversified U.S. manufacturers, top executives said this week.

That demand could help to offset any slowdown in the red-hot China market, particularly critical at a time when many multinationals are counting on growth abroad to offset the effects of a slowing U.S. economy.

"When people say emerging markets, they think India and China, like there were only two," said Jim Owens, chairman and chief executive of Caterpillar Inc (CAT.N: Quote, Profile, Research, Stock Buzz), at the Reuters Manufacturing Summit in Chicago this week.

But the world's largest maker of earth-moving equipment saw faster growth in its Europe, Middle East and Africa region last year.

"The southern cone of Africa, which has got great mining, is finally coming back," Owens said, adding that oil-driven investments in the Middle East and Eastern Europe is also driving strong growth. He noted that Russia over the past few years has become a $1 billion market for the company.

General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz), the second-largest U.S. company by market capitalization, also cited Africa as an important growth area.

"We have a number of business activities in Nigeria and Angola and are expanding our manufacturing capability in Angola, specifically in our oil and gas businesses," said John Rice, a GE vice chairman who serves as CEO of the company's infrastructure arm.

He also cited "South Africa, which we think over the next five or 10 years is going to be a very important country and a very important economy for us."

U.S. oil futures CLc1 have touched new record highs above $100 a barrel this week, while the price of the metals that are key raw materials for many industrial processes, like copper and steel, have leveled off after climbing for several years.

CAUTIOUS ON CHINA

Several executives interviewed cited concerns that China's economy, which has been the world's fastest-growing for the last several years, could slow, particularly after the Beijing Olympics in August, which have spurred a wave of investment.

"It may not be at your 10 and 11 and 12 percent growth, but I think if it's even half of that it's still a very nice economy," said Glen Tellock, CEO of Manitowoc Co Inc (MTW.N: Quote, Profile, Research, Stock Buzz), a maker of cranes.

GE has seen its growth rates in China slow, Rice said.

"Demand in China is still good," Rice said. "It's not maybe what it was two or three years ago."

In light of the potential for a slowdown in China, and facing the rising costs that have resulted from its rapid industrialization, several executives said they are putting more focus on Vietnam as an alternate to China.  Continued...