Back in 2006, New Mexico State University economist Lowell Catlett gave a memorable keynote address at our annual meeting. In his address, he explained why a rising middle class in the developing world was so important to our members. For starters, a bigger middle class means higher living standards, which in turn means a bigger and more advanced electrical infrastrucure. Like more energy efficient lighting systems, and safer circuit breakers and wiring devices, and more extensive transmission lines (with the accompanying equipment). Second, the Chinese middle class alone will dwarf America's in the coming years. Some estimates (such as one by Goldman Sachs and another by McKinsey Global) predict that 600 million Chinese — twice the current U.S. population — will be middle class by 2015. A dramatically larger global middle class + increased need and desire for advanced electrical products = a much larger potential market for U.S. electrical manufacturers.
Dr. Catlett's message is even more relevant today than it was in 2006. As Bob Samuelson says in this week's Newsweek/Washington Post column, while Europe's economy is still struggling and the U.S. economy is expected to have under 3% growth over the next two years, the economies in China, India, and Brazil (and other emerging markets) are supposed to grow 6.4 percent annually in 2010-11. As Samuelson puts it, "This boosts their demand for the advanced equipment, instruments and basic industrial supplies (chemicals, coal) that constitute two-thirds of U.S. exports."
Electrical products and systems will be in that mix, including the technologically sophisticated equipment that goes into a 21st century electrical grid. When NEMA CEO Evan Gaddis, speaking before COPANT (the Pan American Standards Commission) last week, announced NEMA's plan to help spread Smart Grid into Latin America, the members of that commission expressed enthusiasm. After all, the countries of Central and South America, like those in Asia, are seeing expanding middles classes as well.
It all bodes well for electrical manufacturers.