Cummins Inc. driving for profits in China (2005-9-12)

On a sweltering August morning, dozens of diesel freight trucks bound for Beijing sit on the mountainside off-ramps of the Badaling Freeway, where sweating drivers spray a cooling mist on brakes hot from the descent.

Convoys of the big trucks roar past, carrying sacks of rice, stacks of celery and loads of fresh vegetables destined for the grocers and cafes that serve Beijing\’s 14 million residents.

Long known for rickshaws and rice paddies, China today is characterized by machine tools and assembly lines, 300 million workers and a bustling freight-truck market that reaches all the way to Southern Indiana.

Columbus diesel maker Cummins Inc., one of Indiana\’s oldest manufacturers, earns multimillion-dollar profits as a leading diesel supplier in China, producing engines in its Chinese joint-venture plants.

Factory workers across Indiana and the United States fear exports from low-wage Chinese industries could wipe out their jobs.

While exports do help drive the modern Chinese economy, the country is not simply a low-wage assembly line for the world. China is spending billions on its own economy, putting up buildings, constructing roads and expanding truck fleets.

"Everything we make in China we can sell in China," said John Watkins Jr., a Cummins vice president who runs the company\’s 5,000-employee China operations from a skyscraper in Beijing.

U.S. congressional members have weighed in with a series of proposals that would limit Chinese exports to the United States, which were valued last year at nearly $200 billion. But what is going on in China is more than just exporting.

Economists estimate about 40 percent of all goods made by foreign companies in China are exported back to their home countries. The other 60 percent tend to be used locally.

From the southern metropolis of Shenzhen up the coast to Beijing and over to the remote inland city of Xiangfan, China is in consumption mode.

Cummins\’ executives insist their aim isn\’t replacing U.S. engines with Chinese exports. They say the focus is China, a country so large, stretching 3,100 miles from the Himalayas to the Yellow Sea, they call it a market in itself.

"We\’re looking to double our sales here over the next five years," Watkins said.