MinRes to put lithium mine on ice, to cut 300 jobs
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With sales and operations at the ends of the earth, few companies are in a better position to take the pulse of the global economy and the resource sector in particular than Caterpillar.
The world’s number one heavy equipment manufacturer has been hit hard by the decline in mining and construction – sales are down more than $20 billion from its 2012 peak.
On Friday the Peoria, Illinois-based giant had to cut 2016 revenues forecasts again and now sees sales $2 billion lower at between $40 billion to $42 billion.
March was the 40th month in a row there were fewer buyers of the company’s machines
The mining industry make up 19% of CAT’s total sales (quarrying and aggregates account for another 10%) and worldwide sales to the sector dropped 25% in March on a rolling 3-month average basis compared to last year.
March was the 40th month in a row there were fewer buyers of the company’s machines (although the rates of decline are slowing).
With the release of its full year earning in January Chairman and CEO Doug Oberhelman said the company hasn’t seen any signs of improvement and was reluctant to predict a bottom for the industry.
Three months on and Oberhelman remains just as bearish, pouring cold water on hopes the bottom of the cycle has been reached:
“Commodity prices improved from their recent lows, but excess supply remains. It is not clear at this time that the current prices are either sustainable or sufficient to drive increased demand for equipment.
“Mining customers continued to focus on improving productivity in existing mines and reducing their total capital expenditures, as they have for several years.”
5 Comments
Alistair Harris
Pretty soon all the used iron will be bought up and then it will be off to the Cat dealer!
Mac Evans
You got that right! We used to see a lot of one job machines with just a few thousand hours and now those machines are about extinct. Everyone is holding on to their new machines for another life cycle and renting. Only time will tell…
Talon
And you expect absolute candor from the head of a company?
Miners bought heavy when the price was high and will probably be more focused on maintenance for the next few years even if their markets are turning bullish.
LAMB
I visited the regional office/depot in Nova Scotia a couple of years back and was astounded at the lavish facilities they had – but even then, their sales had declined and they were laying off people. Perhaps their over-zealous spending was their downfall? I always liked CAT quality and service, sad to see them go into decline.
Ray
Iron ore will be in oversupply for a long time and China is doing its best to flood the market with its own mining equipment – often via heavily subsidised Chinese manufacturers who also use it in their operations when they cancel mining contracts they take over. By selling subsidised equipment they hope to wipe out competition so they can provide employment to Chinese workers – better than paying social security. In every operation they take over they aim own the land if possible and to replace professional personnel and skilled workers with Chinese and arrange payment deals that appear meet foreign regulations but all done behind a bamboo curtain back in China. By owing the Central Bank and Government in China they can print money when needed and bamboo curtain that too.