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What An Industrial Depression Looks Like: Photos From An Australian Heavy-Machinery Auction
Two weeks ago, when looking at the latest Caterpillar retail sales data...
... we said that "If Caterpillar's Data Is Right, This Is A Global Industrial Depression."
Today we get visual evidence of this, courtesy of an Australian heavy industrial equipment auction where machines such as a Caterpillar 992C wheel loader, which normally costs $2.9 million, can now be bought for just $15,000, a 99% discount!
As Australia's ABC reports, now that the commodity bubble has burst for good, auctioneers are hard at work selling tens of millions of dollars of suddenly useless coal mining machinery for just a fraction of its original market value.
The reason is known: the severe downturn in the Australian resources sector (courtesy of China's whose commodity imports are declining with every passing month) has led to a massive oversupply of equipment, and much of it is unsuitable for use in any other industry. This means unwanted excavators, trucks and sundry heavy machinery will end up as scrap, if not sold at auction.
ABC's reporter visited just one such auction in New South Wales, which was owned by Big Rim, a mining services contractor which also collapsed after the miners it serviced also closed.
What he saw was stunning:
"At the moment we've probably got the worst downturn I've seen in 25 years," said Chris Hassall, whose company is conducting the auction.
Peter Turner's Gold Coast company Turner Engineering used to compete for contracts with Big Rim. "I'd be interested in at least 50 per cent of what's here, and there are at least 100 machines here," he said.
One of those machines was a large water tanker which Peter Turner was running the ruler over. "It's not worth a lot. It's worth $75,000 or something, but you can't build the tank for that."
Worse, when the auction began the owners of a once-thriving business were hoping this fire sale would at the very least cover their debts. No such luck as the photos of the epic discounts on the equipment show.
"Some of the old equipment that was working in the last two years is now redundant, won't go back to work," said auctioneer Chris Hassall.
"We had 20 trucks in the Hunter Valley recently that 18 months ago were probably worth $600,000 each. We've just cut 'em up, returned about $40,000."
It's prices like these which help explain why shares of the Kerry Stokes-controlled Seven Group are less than half what they were two-and-a-half years ago. Seven holds the largest Caterpillar franchises in both Australia and China.
Coupled with the mining downturn, with good second hand machinery so cheap, it is little wonder new sales have been hit hard.
For the sellers it was a bloobath; however at least some of the buyers were happy. "Contractor Peter Turner had been hoping to pay $75,000 for a water tanker, and in the end paid a little more at $77,500."
As ABC concludes, "it was a day which displayed the stark reality of a coal mining industry which has gone from boom to bust in a very short space of time."
Unless China ravenous appetite for all possible commodities returns, the industrial depression, already the worst Australia has seen in 25 years, will only get worse.
And this is what an industrial depression looks like in numbers:
Was: $2.9m | Now: $15,000: Caterpillar 992C wheel loader
Was: $1.4m | Now: $50,000: Hitachi EX1200 hydraulic excavator
Was: $2.7m | Now: $46,000: Caterpillar D11N crawler tractor
Was: $900,000 | Now: $47,500: Caterpillar 775D rear dump truck
Was: $200,000 | Now: $2,000: Large workshop with water tank
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You can feed yourself hamburgers with the Hitachi and clean your plate with the Cat. Supersized eating needs the right implements
Destroying working equipment for scrap metal? Krugman probably jizzed in his pants after hear that. So much capital destruction.
/drool
Just wait till you see what happens to the price of gold.
It's cheaper to buy this machine, park in a building site in California and live in it.
That's less than a Tesla.
why wouldn't they just start a parts division, and sell them piece-meal?
Those prices are OFF the Chain!.I cannot believe anyone woud sell that equipment for car money.
If that were in the US, those prices easily would have quarupled or more.
"Makes me wonder how long until we see prices like these in the USA. That D11 could get very useful."
I was thinking exactly the same thing.Hell of a defensive machine.The Exacavator is a steal also, those make great destroyers.
Funny thing even a small part for one of those if needed could easily cost more than the purchase price.
"Funny thing even a small part for one of those if needed could easily cost more than the purchase price."
Buy 2, or 3 of them. Once they start breaking down, concentrate on keeping one running..
Hydraulic systems deteriorate over time. Hoses are made from plastics.
"why wouldn't they just start a parts division, and sell them piece-meal?"
They would have to be imported to sell.IF they are selling the entire machines for throwaway prices, parts are worth nothing THERE.
Means nothing. Print money and hand it out at ZIRP, boost equity share prices to create the wealth effect, this replaces money earned from Industrial Production. Problem solved, shop on!
Don't we have any problems here? Let Australians worry about their problems. Deflation finally reared it's head. I been waiting for over 6 years. When the public finally figures out they been lied to...there will be a price to be paid.
The Australia I remember from my early 30's was a land of incredible prosperity, work was there for any person will and able. The homes of the middle class were in the most beautiful neighborhoods imaginable. Cities were clean and modern, people frinedly and well off. Only the few deadbeat welfare types could blight the scene. But these were few enough to not matter.
A drive through the countryside to provincial cities was the same, modern, clean and full of working and happy people. Frankly, I did not want to come home to the good old USA, but work demanded it.
For former convicts and poor migrants, OZ is a paradise! No wonder they must use such powerful policies to keep the world's rabble out! Mind you, 10's of millions of migrants have targeted OZ for inavsion. Look at Europe! It is only the Government's strict "turn the boats back" policy that saves them. Otherwise, half of S.E. Asia would be sailing to Sydney. They caome from Afghanistan as well, Pakistan, India, Indonesia, even the Chinese and Vietnamese. They all want to live in OZ, and get their share of what others have worked to build. I see the same thing in Sweden, what Swedes have built up from a poor rural country into a modern gleaming nation, the migrants want to take for their own, without ever having done a thing to create it. OZ would quickly be overrun, in the matter of months, IF THE BORDER ever opens to them.
You obviously never went to Redfern... or saw the ghettos and camps the aboriginals are forced to live in.
And you say "OZ would quickly be overrun...". Typical white-trash thinking.
Feel.temp.insanity:
Sounds like you want to send a boat to pick up some migrants and bring them to OZ. Your house can be the first one "commondeered" by the government and given to the migrants.
You and your family coming over are they? Fine... I'll send a dingy. But you will all bow your fucking heads when you enter through my front door bitchez!
No one forced the Aboriginal population of Eveleigh St to turn it into trash, either. There's a lot of talk by Aboriginals about how much pride they have in themselves and their culture, but they sure as shit didn't take pride in the places they lived in there.
...sure, let's blame the (brown) victims. Typical white trash thinking indeed.
hey fuckstick, I'll take Jack Burton's word over yours any day.
Hey fuckstick?! hahahah what a child, couldn't even come up with an intelligent come back. Typical ad hominem attack by a typical troll.
All that prosperity based upon DEBT "money" aka. On the backs of future generations...like us.
Ashton Kuchner would like to ride one of these on Sunset Blvd.
Double whammy
The longer Issue is once a $900k truck sells for $50k when the market rebounds that's a lost $900k sale
Coal and Fracking are in endgame. No surprise used coal mining gear is going for pennies.
Buy it super cheap, get it transported and when the next cycle comes up, lease it to heavy construction
The big mines are going to self driving equiptment. Easy to do on a closed system loop. Save $200 k per year per driver (need 3 for three shifts) plus housing transport costs for their 3 wek shift. So this outdated used up equipment is going the way of the dinosaur, along with their drivers.
Until they get hacked.
Put those machines to work mining gold!
Fuel may seem cheap at the moment, but in just a few years it will take 1 barrel of oil to extract and refine 1 barrel from the ground.
They have a similar auction just southwest of Columbus, OH every month....RECOVERY!!!
Bah!!!!
Those things are all for finding physical resources.
It is all digital now! The only resources needed are virtual ones. Like TBILLs, stocks, bonds, and virtual currency.
(Which is also why they don't like physical cash!)
I wonder where the virtual food, clothing, shelter, and the electricity to power those virtual resources will come from?
Bah!
Details! Details!
Don't get into the weeds!
(if you cannot hear the sarcasm, I cannot help you.)
boy that takes the hummer small dick to another level.. driving gold prices.... move the stuff to Gold rush show....
I'll bet the property tax assessed on that equipment wasn't adjusted down to market value.
"Sell it all! Sell it now! I don't care what price! Just get it out of here!"
Free 2-day shipping available for Amazon Prime members.
i want to build a motocross track now!
Here are some signs of a coming recession.
1. Business loans for M&A not CAPEX.
http://www.zerohedge.com/news/2015-10-15/there-goes-final-pillar-us-recovery-loan-growth-paradox-explained
2. Factory orders continue to drop
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
3. Default risk spikes
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
4. M&A set record
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
5. Fed sees 2 bubbles
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
o Commercial Property higher than pre-2007 level.
http://nreionline.com/finance-investment/cre-prices-are-now-officially-above-pre-recession-peak
o Global Corporate Debt Market hits $5 trillion.
http://fn.dealogic.com/fn/DCMRank.htm
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
That "here'what to do" stuff is useless when the fiat collapses. Buy GLD???? No f'm way. Anyone who says to buy paper/electronic metal has no clue or is is agent for the Banksters. Answer this, How do you get your value from any fund in fiat collapse? UPS won't be in business without a functioning "money" system. So quit telling us that Michael Kelley knows what to do.
Bullshit Tyler
How about a mine for $1?
http://www.zerohedge.com/news/2015-08-01/commodity-collapse-comes-full-c...
i got lucky and bought a $150k bulldozer for $50k...now i can build more over priced homes because realestate never goes down in price...bitches
Large Workshop with watertank looks like an ideal QTH for a brothel...
Limits to Growth. Capital moves from Industry to agriculture. Or starve.
Sadly, Australia does not have a significant financial economy that can concoct snake oils out of these junks to stuff to their pension funds, etc. The gap in the significant mining sector has to be filled with domestic consumption and services. Guess what, you just have to lower standards and get the numbers to consume. Great place to invest in their walmarts to enjoy also where their welfare funds flow. Globalization caught them with their pants down.
Looks like Alberta in June/July 1986.
This I not the first time for this kind of thing.
Squid
Huge real estate bubble in Perth,WA.
When the SHTF in a year or two watch out (no guns,use harsh language).
Still,got legal brothels in most cities,a bit like Amsterdam....
Same problem as Egypt,economy relies so much on tourism.
When tourism goes downhill serious problems I think.
@paracelsus. Bubbles in most capital cities especially Sydney and Melbourne. Perth housing has started to come off with areas like Mosman off ~19% (mining towns like Geraldton down much more) thus far and this thing still has some way to go. I note a number of US hedge funds are very short AU banks and property related stocks. Tourism is actually increasing due to the cheap AUD so my thinking is that this will not be the issue. The major issue IMO is housing price levels and corresponding debt levels (Last count was over 100% to GDP). If house prices fall it will take the economy down with it. Bad debts look to be starting to tick up for AU banks....
Caterpillar 775D rear dump truck... park it up build the worlds biggest tiny house
One bubble ends while a new one is in full swing. A housing bubble that is. I suspect I will be seeing a similar article in ZH relating to cheap houses once the housing boom goes the same way as the mining boom....
Comments about agriculture in Australia are spot on. Highly regulated dairy farms going like hotcakes with berries on top -- berries from the magnificant grazing lands by new owner global combinations.
Attorneys backlogged with conveyances and restructuring. Bank credit requiring due diligence. Glenn Stevens, chair of Reserve Bank of Australia, making headlines ranting Sydney housing prices are "crazy" and can't sleep worrying about "Basel" -- reserve requirements.
15% Goods and Services Tax aka sales tax are being discussed for fresh foods.
It's Spring. No worries until Fall.
We work half the year to pay taxes, tolls, service and permit fees. I just had a village charge 265 dollars for a permit to install a 1900 dollar patio door and requiring two inspections. The second and final inspection to be performed between 8-noon or 1-5 the day after job is completed. This requires our service tech making hourly carpenter wages an additional potential 4 hour commitment. That patio door in that village from here on out will be 2295. Guess who pays for out of control restrictions? Bueller?
It is time to kill the beast. Taxation without representation ? Ring a bell ?
Lois Lerner will receive a fed pension until she dies. Wake up America. The only thing the government serves is money. Have you had enough yet?
It is true (for non believers). I am the Eng Mng for a mining equipment company in South africa and the market is in deep shit. If it was stagnant it was great but it is downright to the bottom. Only some gold/pt mines are digging. 75% of work force is retrenched. This is real and not read in an article.
Strangely, because of this we have electricity! When the niggers came to power in 1994, they fucked up the ESKOM the energy distribution which at that time was the second in the world in terms of power generation, but the fucking niggers paid to themselves bonuses, fired the whites who incidentally had the know how and 20 years later of no maintenance or development in tandem with growing business, we in SA were left without domestic electricity as most of it had to be diverted to the mines. Now that the mines are closing, we can use the kettle.
damn Gold.. I like the way you call a spade, a spade
mmmm... seed corn... nyum nyum nyum....