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For Caterpillar The Depression Has Never Been Worse... But It Has A Cunning Plan How To Deal With It
Moments ago Caterpillar reported its latest monthly retail sales statistics and the numbers have never been worse: not only is the dead CAT bounce in US sales finally over, tumbling -8% Y/Y, after a -4% decline in September and hugging the flatline for the past few months, but sales elsewhere around the globe were a complete debacle: Asia/Pacific (mostly China) was down -28%, a dramatic drop from the -17% a month ago, EAME dropping -13%, and Latin America down -36%...
... but global retail sales just posted a massive -16% drop in the past month, after dropping 9% a year ago and another 12% in 2013, this was the biggest annual drop since early 2010. As the chart below shows, CAT has now suffered a record 35 months, or nearly 3 years, of consecutive declining annual retail sales - something unprecedented in company history, and set to surpass the "only" 19 months of decling during the great financial crisis by a factor of two!
Worse, with the market no longer rewarding stock buybacks, Caterpillar suddenly finds itself flailing in the gale strength winds of what nobody can claims any longer is not a global industrial depression.
However, there is good news - while Caterpillar's revenues and cash flows may be plummeting with every passing month, at least the company has a cunning plan how to recover some inventory.
According to the WSJ, Caterpillar is eager to reassure shareholders it won't get burned on equipment leased to customers in China even as the economy cools there. CAT Financial Services President Kent Adams said during a conference call on Tuesday that the company keeps tabs on the position of machinery electronically through its Product Link system.
"If a customer falls behind, we have the ability to derate the engine or turn the engine off, and we've set up a legal presence in all of the provinces of China."
In other words, any and all Chinese lessors who fall behind on their payments will suddenly find their excavator's engine shut down and no longer operable, stuck in the middle of a mine, quarry, or construction site with a paperweight weighing dozens of tons.
So this is great news right? After all, at least Caterpillar will have recourse to its equipment, and can "solidify" its balance sheet. The problem, as we showed last week, is that there already is an epic glut of CAT heavy equipment in the wild.
How epic? Here is a reminder of what CAT products sold recently at an auction:
Was: $2.9m | Now: $15,000: Caterpillar 992C wheel loader
Was: $2.7m | Now: $46,000: Caterpillar D11N crawler tractor
Was: $900,000 | Now: $47,500: Caterpillar 775D rear dump truck
Well, if all else fails, CAT's creditors will at least be able to convert their secured "claims" into all too physical inventory, even if that inventory's market value is now worth less than 99% of book.
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Fuck yeah! Bigger, less expensive, toys!!!
If CAT goes bankrupt, they can be bought by… FIAT? ;-)
Looney
For now the answer most certainly is yes.
Is what it is and you and I both know that NOTHING changes until people stop accepting those paper promises!
until then, same as it ever was!
Speaking of PAPER…
I wonder if Judas would’ve done his deed for thirty pieces of paper, instead of silver? ;-)
Looney
who fucking cares, he is long dead, and on a long enough timeline...
stupid is as stupid does. Does waste time and resources trying to "fix" it.
this is a hard lesson for most, especially when it comes to those couple idiots in their immediate family...
Fuck I want one of them trucks in my garage. Can Caterpillar make them street legal?
I was just thinking of that, Counterfeiter. Watch some fuuker cut me off, he/she it will get their just reward
Replacement tires.
The loader alone will run close to $50,000 for new biscuits.
But what's the unladen mileage on those tires?
CAT pretty much tells you how the recovery has been going the last few years.
We are so far from a recovery
Layoff List: http://www.dailyjobcuts.com
-
Fed says we're still not ready for a rate hike yet though.
Thought they said they were but will pull the rug and qe at the drop of a hat
They guys on GOLD RUSH should have woodies!
there's no way those retail prices are real.
There's a rumor CAT will start manufacturing fudge packing machine.
I suppose these ones here are some of the remaining Cat employees:
http://www.thepornster.net/video/445/bareback-fudge-packers
"there's no way those retail prices are real."
Well, that depends.
Do you really have a use for them ?
Do these machines have 50,000 hours on them ? Even a rebuilt engine can be $100,000 plus.
Do you have to move them off the property they currently are on ?
Do you own 20 more machines just like them that you will be parking soon ?
K
The CATs are street legal if you live in Detroit, an economical alternative to a Hummer.
That D11 would be A-Team approved transportation for sure!
Headlights, turn signals, wind shield, seat belts and, voila, you're street legal. (Al least for golf carts you are,)
@ Looney
Minor correction... bought with fiat! ;-)
I don't think this plan will be enforced. I think it's a public press release to give a threat out to those using the equip, and also to boost investor confidence in CAT showing how they have a plan to handle dead beats.
But think like a crooked banker for a minute, if you're the CFO at CAT: Would you rather show an account receivable on the books, or a bad debt? At least an account receivable extends and pretends like there is a customer at the end, using the equip that someday 'will' pay. But a bad debt or equipment shut down is a terminal accounting measure. Won't happen IMO.
exactly....and, what kind of plan is it anyway. If a CAT customer has tough financial times, we're going to ensure their death by turning off their equipment!! How does that improve CATs financial position?
It would never work anyway. The users will just bypass the shut off relay(hotwire).
CAT will eventually be bought by the Chinese company that successfully re-engineers all that equipment while it was being leased from CAT.
New Chinese owners of U.S. plants will reduce wages, increase hours, and bust the Union - and Washington and Wall Street will be just fine with that.
It's not just CAT. Komatsu is also showing declines. It'd be interestign to see a longer time series of this data:
http://www.komatsu.com/CompanyInfo/ir/demand_orders/files/201508main_pro...
Anybody selling heavy equipment in the USSA is fucked thanks to EPA's Tier 4 emmissions controls.
I think those regulations only apply to VW.
Is CAT still making money on this custom built home destroying equipment, sold to Israel, used on Palestinians?
http://www.salem-news.com/gphotos/1289206312.jpg
LOL!...CAT is smart...well, maybe not...When the Repo-man shows up to collect the equipment, I'm betting it will be stripped clean...CAT "spare part" listings on eBay are going to explode!
Which will kill spare part sales directly from CAT...sometimes "Smart" isn't as "Smart" as "Smart" thinks it is...
~~~~~~
Independent PBS film about China's "economy"...LOTS of desperate people...stealing everything that isn't nailed down... metal thieves galore...one small town had it's drinking water wellhead stolen...Local cops said it was likely stolen to be sold as scrap for pennies.
Sub-prime CATs. That is fucking terrific.
If CAT wants to boost profits, GET THE FUCK OUT OF ILLINOIS!
Caterpillar threatens to leave Illinois over taxeshttp://archive.chicagobreakingbusiness.com/2011/03/caterpillar-threatens...
CAT mgmt is so rayciss. Why? B/c they chafe @ keeping the free shit army of Illinois in free healthcare, EBT, HUD, and fone vouchers.
You would think that if you elected a Prez from the state where a corporation has its headquarters that said corporation would have a good four, or eight years. When Texas held the WH Vlad and W saw "eye to eye" and raised prices on the rest of us. What's wrong with CAT management? Downstate Republicans hate Chicago so much that they can't craft an infrastructure bill and get it passed? nose, spite face.
"the company keeps tabs on the position of machinery electronically through its Product Link system"
Another executive dumbfuck.
1. Disconnect the battery - oops, tracking lost.
2. "Remove" the antenna - oops, position lost.
3. You're not tracking the machinery you stupid fuck, you're tracking the tracking equipment...so when you find the tracking equipment, all you may find of the machinery is the frame...lots of valuable spare parts on a CAT...and if you've disabled it, the owner CAN'T, and probably isn't in the mood, to MOVE IT TO A SECURE LOCATION..
Stupid fucks.
Yeah, corporate idiots thumping their chests. Like the rule-of-law actully works in China! Ha ha.
The chinks will simply cut up the metal and salvage anything that's functional---if they aren't smart eoungh to disable the remote-control kill switch.
In June we bought a Cat skid-steer loader, model 226B3.
Cost was $36k, interest rate is zero.
For mining, now is the time to make a purchase either with cash on hand or credit. You can't beat zero (negative) cost of money.
My note schedule is a farce of zero interest rates. It's amazing to see.
Kind of depends on whether you can still get credit, with a company (and industry) that's in decline. Also consider that most of the new stuff is way over-priced.
At this time it's really about blind hope, that things will "turn around;" that or being bought out by a larger entity that sees an opportunity to control more of the market (though making up losses on volume isn't such a great long-term strategy- again, the only salvation is that there's growth ahead [very low probability]).
Maybe this slow but regular decrease of sales is not coming from the economy itself but because of losing a part of the market to competitors especially chinese products.
To be sure, we would to have all the sales of the sector to se if the trend is similar.
How much do you wanna bet that the Chinese aftermarket will come out with electronics kits to replace the CAT mal-ware eventually?
for the 600 dollar iPhones, it took about 20 minutes after they came to market....
version 2.0 came out 30 minutes later.
Yeah. And forcing the Chinese to start making their own spare parts is a really smart move too. Not.
#22 wire with some alligator clips will probably do the jumper bypass trick.
So, their protection is to make the deadbeat debtors' life harder. Does not sound like much protection.
Bullet-proof vest that stops bullets after they go through the body.
And there is no enterprising Chinese guy who will retrofit those engine computers to a simple ON. Sure.
That is probably already being done.
The bucket list.
When you are in a hole, stop digging. That's why CAT is not selling any new equipment.
Too many existing holes.
That's it? That's their big plan? So what! Caterpillar will simply be a bankrupt company with thousands of dead machinery sitting in China. How will simply turning off the machinery make those Chinese companies solvent again and able to pay their leases?
It's the principle of the matter, US corporations have a sterling reputation to uphold.
It's for the children...of the stockholders.
Re the CAT 992C wheel loader: I bid 1$. The seller agrees to include a service manual.
Does your offer include free delivery to the location of your choice?
In Q2 '16 I'll need 2 Cat D7/D8's (smaller than the D11 above) for an Ag project with at least ten years expected life/daily use (no ex-mining units). USD $300,000 each CIF West Africa.
You mean you don't want a machine with 40,000 hours on it? But it'll be cheap !!! (to buy)
How in the world do ya'll find those deals?
70 Tons. Room for you and 700 of your best friends. And if they piss you off...dump!
In most of America that's about 70 of your best friends.
too bad CIA/State Dept. can't remotely deactivate the Toyotas that they gave those moderate Syrians.
Putin is jamming the satellite signal, pray that he doesn't jam MTV.
And ruin all the fun that is about to ensue?!
A man could do a lot of work with that D11. Just maintaing those beasts though...
Maybe they should start making military vehicles. Give me the magic off-switch though.
Cat equipment has been way overpriced for decades. Karma is a bitch.
Well, you can always buy JCB or Daewoo and wait 2 weeks for replacement parts.
International Harvester!
What CAT did in that conference call is tell everyone in China to NEVER use CAT again.
Firstly, the Chinese WILL bypass any electronics/tracking. If some going concern is so cash strapped to not pay their bills they won't hesitate to do other things.
Secondly, they'll just scrape the vehicle - part it out to make last cash before repo.
Thirdly, "legal presence" in China is an oxymoron.
Somehow when the AIIB cranks up CAT will be an also-ran vendor on those supported projects.
RIP CAT
A company coming up with a better way to reposess their extremely specialized product is a sign to get away, get far away. How many customers in the world are there for a Caterpillar 775D rear dump truck? Maybe 200, 300?
At those prices? Guess again.
If there were that many customers, the prices wouldn't be that low. Cmon, econ 101 brah.
There's lots of companies who use that size truck. It's too small for mining (60 tonne capacity) but it's a good size for road companies doing rock cuts on roads and have to haul the rock a few miles.
What's the source (web site) of these auction items?
previous ZH article dated 11/09/2015
hedge this fact with insurance, gasoline and matches.
hey did they pass VW emissions test LOL
"we've set up a legal presence in all of the provinces of China."
I needed a laugh. Pull the other one.
This is why I don't own RRE in my hometown of Peoria. CAT moves or seriously contracts and that town will be a miniature Detroit within a month. It's getting there. One can see stunning aspects of social degeneration in that once German and farm-dominated area. The entry to the local Jimmy Dean's has a "NO FIREARMS" sign on it. Unheard of when I was growing up. And they don't mean hunting rifles - they mean Glock ghetto blasters. Don't cry for me Pe-o-ri-a.
It's sad. It wasnt that long ago places like Peoria were great places to live, raise a family and find decent work. Now the industrial midwest is becoming the new "south" and the old south is the new growth area of the country. Its all topsy turvy I tell ya! I am curious to know how this latest industrial contraction is playing out down south, we all know what its doing in the rust belt.
Please capitalize South, it's a distinct proper area, whereas lower case denotes direction, usually.
Besides, it's my sacred home.
Will Do - So is the South experiencing the same deterioration in the industrial sector the midwest is?
The funny part would be if they kill-switched a machine in mid-use and caused an industrial accident. At that point, "legal presence" will take a different form than they probably anticipated.
I would have cut off my own dick to have that 11N for under $50K!!!
Take it easy Jenner.
RIPS
Buy Here! Pay Here!
Bad Credit? No Credit?
Divorce? Bankruptcy?
NO PROBLEM!
We want to see you in one of our earth movers TODAY!
This is the sort of genius business strategy the corporations have adopted. You can buy a lightly used CAT for a tiny fraction of the price of new. Better yet, the older stuff is less likely to have the spyware and override tech that infests the new stuff. CAT is punishing new buyers and calling it smart. Then they can't figure out why new sales are cratering. This is how the corporatocracy destroys itself.
Mind you, with CAT's "Product Link system" maybe they just found out the real value of their equipment?!
Nothing against CAT's quality but there is enough risk in big time earth moving without getting on the wrong side of CAT and having them turn off your (their) iron on you!
In the "old days" if we couldn't make our payments, we would just run the iron until we could make our payments again...if CAT was really upset, they would just send out a crew to collect your iron...then you knew you were done for real.
At least then, your crew would sympithize with you as you laid them all off after seeing you lose everything you had.
IMO, Cummins makes a better engine than Cat.
Also, Mattress Mack at Gallery Furniture in Houston could sell Cats out of a tent in mall parking lots. Cat should contract sales with him as worldwide rep and forget about these down times. People in Texas know this to be true. Dale Carnegie and Tony Robbins don't know shit about motivation. Cat's sales force couldn't sell pussy on a troop ship.h
So you're saying CAT is a dog?
Pure genius. A customer falls behind, you flip a switch and de-rate his engine (and productivity).
Pure fucking genius. Decrease the likely hood of the company to repay you.
Maybe they know something about used heavy equipment auction prices that the rest of the world doesn't. . .
For fucks sake it's a Diesel engine. It takes very little to override all the electronics on it and have it run at full power.
Not the new stuff. Common Rail. Computers. (and then there's the DEF/emissions shit)
I've got diesels that have ZERO electronics (well, a simple GP controller, but that's not essential). I've also got diesels that are computer controlled; yeah, you could "override" shit such that you "could" get it to run, but it's NOT going to run well at all; no real way to provide any meaningful throttle control (over a range), and one really does need throttle control.
Deflation-palooza
All the more reason to bring back QE
who needs Tonka WHEN YOU CAN NOW BUY THE REAL THING?!!!
If the price keeps dropping, every six year old boy (whose not being trained to play with dolls) will be able to break open his piggy bank. Oh never mind, kids aren't taught to save, either.
I'd like to get me one of dem little Cat skidloaders new retail around 30K, maybe I can find one for $24.
They should start making killdozers
https://www.youtube.com/watch?v=PZbG9i1oGPA
since idiocracy is here they should make dildozers and ass blasters
https://www.youtube.com/watch?v=AwIY4PRIp4s
Cat should move to a more free country than the USA like China.
Hey, for $46K and a little more for mods, anyone can be the new Bulldozer Man and take that D11 for a spin through the financial district!
Plowing through the Bimmers and knocking down those beautiful glass and steel temples of thievery..
Ahhhhhh-- that's entertainment.
CAT Product Link is an optional extra... Just don't tick that box... Even if you were de rated you can download the PLC program online and simply return to default settings...
The Link might be mandatory for some.
The PLC program may be node-locked. Might require some special programming to unlock.
I think that for most folks that would get to the point of being unable to meet payments (either lease or purchase) that their businesses are probably nearly toast anyways, in which case availability of the machinery would soon be irrelevant.
Perhaps all the car companies can do the same thing except instead of turning the engine off the software could just drive the vehicle back to the dealership. At least they wouldn't have to pay the repoman after "Joe Six pack" misses payment 6 7 and 8 of 96, which would help offset the 20% depreciation on that $70,000 truck.
Also useful for planned obsolescence, the cars drive themselves to the car compactors/crushers. This system will be fully operational by the time Cash For Clunkers version 4.0 hits.
The thought that CAT was leasing its equipment to its buyers, and holding the paper on ITS books never occured to me.
Isn't this what Lucent was doing? I remember how that turned out for them. A ZERO.
Exactly how much does the stock value go up when they turn off the products?
EMC got caught in the same bind. Their own previously sold product cratered the market for new sales for almost 10 years. They survived, but their stock dropped from $105/sh to under $5/sh.
None of these companies can survive if they provide the financing for new equipment sales and likely can't survive even if they don't back the financing.
Who is going to buy a $2.5 million machine when they can buy one for $45,000 and spend money to refurbish it?
Cisco still gets away with vendor financing. I have been waiting for that to catch up with them since 2008.
Maybe EXIM is keeping them propped up (like for Boeing)?
Might be some "back-door" financing going on with the Israelis recycling US "aid" dolllars? They pay to install back-doors.
So CAT threatens to turn off the machine for non-payment, the same machine the Chinese owner turned off already because there's no demand for his services. That's why he can't make the payments. Hello?
What a bunch of BS.
The equipment pictured is OLD, from the 80's. Most of that equipment would have 40,000+ hours on it, and need from hundreds of thousands, to a million dollars in maintenance just to be useable, and then ONGOING maintenance. Some of that equipment is only valuable as scrap and a few salvaged parts.
Just like a car that 30 years old and used every day. It gets to a point where it's not worth fixing, and sold for scrap.
You are an idiot. Heavy equipment can be rebuilt to almost new condition, if it's worth doing.
Yeah IF it's worth doing.
Just like a car can be rebuilt to almost new condition. All you need is LOTS of money and time. And then you STILL don't have the equivalent of a new machine.
Did you notice where I mentioned a million+ dollars to refurbish the equipment? Like that D11? And that's not even a full refurb.
I have new heavy equipment and old heavy equipment. Old, cheap equipment is fine if you only need it a few days a year, and even then, it's usually cheaper (and more reliable) to rent.
Also in places like California, you can't even use older, non emissions compliant equipment if you are a new purchacer of it. You need to repower the equipment with up to date engines.
If your livelihood depends on a piece of equipment? Get new (or nearly new) and spend the money to maintain it.
There is no more brutal treatment of heavy equipment than locomotives. Norfolk Southern and others rebuild them all the time. They just bought 100 "SD90MAC43's" from UP, and even though they are all operable, everyone will be rebuilt at 1/3 to 1/2 the cost of a "new" locomotive. I worked for a company that did the same thing with food processing equipment.
You still don't know what you are talking about.
Fascinating exchange. I keep going back and forth between the two of you.
I've noticed in general technology-heavy items are the ones where refurbing makes less economic sense. All the performance of smartphones is built into the technology, so they only last a few years before cheaper to throw out.
By contrast, backyard crank ice cream freezers today are worse quality than ones from 50 years ago properly maintained. All the performance you get out of it is built into a simple mechanical design.
Perhaps when technology is leveraged to achieve a higher performance envelope, that makes the construction gear more obsoletable and less cost effective to rebuild. Outdated tech and exotic, specialized parts produced for only one model year that can't be easily fabricated become especially scarce and costly to replace.
I'm guessing heavy equipment increasingly does involve more technology to hit modern performance expectations. So while in the past construction equipment was cost effectively rebuildable for decades, maybe modern stuff not as much.
You are generally correct about newer technology. A huge factor is fuel consumption. A 10% to 20% decrease in fuel consumption with modern systems pretty much pays for the new equipment very quickly. Likewise is durability and longevity. A machine that is in the shop, isn't earning any money. So it's not just the cost of the repairs themselves, downtime is also a huge cost.
People like ABanum think about heavy equipment the way they think about their own car or lawnmower, that it's only an expense, because they don't derive any profit from it. So rebuilding to them SEEMS to make sense, because it reduces the expenses.
Rebuilding equipment is fine and does save money PROVIDING you don't NEEED TO USE the equipment for 3 to 9 months while it's being rebuilt. And of course you have to finance the repairs while the equipment isn't generating any revenue.
Think about it this way, would you pay 60% of the value of a new car, for a car that's 30 years old with 400,000 thousand miles on it, but is "totally rebuilt"? Or would you buy a new car or a slightly used car?
Ass Fleas tells me that I think about heavy equipment like a car or a lawnmover. and then writes this:
"Think about it this way, would you pay 60% of the value of a new car, for a car that's 30 years old with 400,000 thousand miles on it, but is "totally rebuilt"? Or would you buy a new car or a slightly used car?"
Now who is thinking about heavy equipment like a car, moron?
Locomotives get "brutal treatment"????
HAHAHAHAHAahhaahhaha
Oh my, they bumped the train cars a little too hard when hooking up. Locos are diesel electric, no mechanical drives or tranmissions, no hydraulic systems, no huge moving parts like buckets, dump boxes, and no steering. The loco engines simply drive a generator. No stress, little vibration, the main things that go on locos are wheels and brakes. They do get "brutal treatment" when they DERAIL, other than that? Not much.
It's VERY obvious you've never been on a construction or mining site and seen how equipment is abused.
Also, Norfolk Southern has no choice but to buy used locos. There are no new locos with approved Tier 4 Final engines for sale. Locomotives are very simple pieces of equipment. Very easy to disassemble and rebuild.
Anopheles
You're right and Mr. Know-it-all is wrong. Locomotives run an easy life compared to earth-moving iron.
Apparently crystalizing steel has never crossed his path.
L
Another idiot without a conductor's certificate or engineer's license.
"Oh my, they bumped the train cars a little too hard when hooking up."
"No stress, little vibration"
Hey shithead. Ever been in a locomotive? I have. No vibration? Are you really that retarded?
Don't talk about stuff you don't know anything about. Hint, the old saw is 2mph is good hitch, 4mph is a collision, and that doesn't even begin to compare to the draft and buffer forces on locomotives pulling a 10,000 ton train on a percent and a half grade, but you are obviously to stupid to understand train dynamics.
"There are no new locos with approved Tier 4 Final engines for sale."
http://www.getransportation.com/locomotives/evolution-series-tier-4-loco...
"Locomotives are very simple pieces of equipment. Very easy to disassemble and rebuild."
Modern locomotives are complicated pieeces of equipment with microprocessor controlled systems to manage the prime mover, the brakes, traction motors and other critical subsystems.
The only simple piece of equipment here, that is easy to dissasemble is you.
"Also in places like California, you can't even use older, non emissions compliant equipment if you are a new purchacer of it. You need to repower the equipment with up to date engines."
Well, China ain't California. And on this subject, emissions, I'm wanting to get a newer tractor and I'm for sure staying away from all the newer Tier-4 shit. I wonder if anyone has bothered to sum up the costs associated with maintaining this "clean" shit, the up-front engineering costs + repair costs + replacement parts costs + reduced efficiency costs with that of the older stuff? Hell, this new emissions-friendly shit has a built-in de-rating system built-in! (sooner or later it'll clog up and shut things down)
"I have new heavy equipment and old heavy equipment. Old, cheap equipment is fine if you only need it a few days a year, and even then, it's usually cheaper (and more reliable) to rent."
Most of the world runs on old equipment. With new stuff you're paying for depreciation: granted, I think that it's important for long-term survival to build-in/account for replacements, but only the higher-end entities can really do it (and it's becoming more of a struggle as the days pass by).
CAT is simply realizing the limitations of the industry they are in. The equipment they sell is very expensive but also has a relatively long life - those loaders can easily run for 10+ years with a little maintenance. Once you have flooded the market with items the demand drops off.
No company is going to spend 2.5M for equipment that lasts 6 months - that is what CAT wants but CAT will never get. The only way you get companies to spend the money is if they think they can get 5-10x the cost of the item through use or more. This means it must have a reasonably long life and be able to be maintained.
Given enough time the sales trend will turn around - the issue is CAT likely built its business around the boom time expecting it never to end. China may NEVER go into that high growth again.
CAT's reputation is that it DOES last. Down-time is bad.
"Given enough time the sales trend will turn around - the issue is CAT likely built its business around the boom time expecting it never to end. China may NEVER go into that high growth again."
I'm not sure that things will "turn around." I've been saying that we're looking at "economies of scale in reverse." Lots of products subsidize other products, and those products that are the "winners" are really not seeing growth; as the "winners" become more stressed, due ot a lack of growth, those products that they help subsidize are going to be crushed. As it should be. But, it's a total package offering, and it's quite possible that the loss of the less-viable also resutls in destabilizing the "winners." It's going to be a lot more complex than many would believe.
Meanwhile, CAT's subsidiary Electromotive Diesel can't sell a new locomotive in the United States due to the lack of a Tier IV qualified engine. What are they doing about it? Recycling their disasterous four cycle "265" (for 265mm cylinder bore) engine as a "1010" (EMD traditionally identified their very successful two cycle engines by the cubic inch displacement of each cylinder, 567, 645 & 710).
We'll see if the railroads buy it.
Off road emissions regs have ben very, very good to the rent-seeking, crony capitalist General Electric, who now enjoys a monoply on line-haul locomotives.
GE lives in 0bama's butt
I'm not familiar with how CAT Product Link is installed, or functions. I DO know how OnStar is installed and functions in Caddy and Corvette (at least up to 2012, the newest I've "worked with") which has many of the same features. Such as tracking, position coordinates, and ability to disable engine function. OnStar is ssimple to make "go dark". Pull 4 connectors, and jumper two pairs of wires to each other. Takes <5 minutes after gaining access to the box. No doubt even a Chinaman can figure it out how to bypass Product Link, if it's anything similar to OnStar.
This is an announcement to appease shareholders that CAT can "do something".
How long might it take for China to counter that threat with a Cat CEO kill switch?
If your livelihood depends on a piece of equipment[,] Get new (or nearly new) and spend the money to maintain it.
ESPECIALLY if you can get the manufacturer to finance it for you at lower rates than you can get on your own, because their cost of borrowing is lower than a 'privateer' can expect.
Sorry. All of the money and credit usually spent on construction and infrastrucure has been diverted to interest payments and weapons. The rest of you are shit out of luck.
Don't forget the colleges and universities, you thik a "Vice-Chancellor of Diversity" comes cheap?
A lot cheaper than a football coach, who is likely the highest-paid employee on the entire state payroll.
you forgot pensions. As of this year we will no longer be building or repairing anymore roads. We will be paying more folks, retired at age 50, pensions for the next 30 years. We have more of them on the books than we have actual employees. We will resume building and repairing in 30 years. at that point we will be able to afford actual working staff.
Heh, and because life will be cheap and work will be scarce, contractors will hitch up teams of construction "interns" to pull the graders. Maybe CAT will make the whips and harnesses and recover their March, 2011 valuation.
I can't seem to convince the horse people around me that the future lies in draft horses (not their lawn-ornament horses).
Sounds like CAT is preparing the market for the next shoe to drop.
Reposessions and resales.
I love Cunning Stunts!! (title of an Album a Long Time Ago...)
And oh YES, lest ZH'ers forget former greats, please review the story of Marvin Heemeyer, who is "most known for his rampage with a modified bulldozer":
https://en.wikipedia.org/wiki/Marvin_Heemeyer
and:
https://www.youtube.com/watch?v=NWi8FvHiVOE
but it wasn't a CAT who done it...
And when you don't pay the bill on your GM car, the finance company will pull the plug on it and collect it. And when you don't pay your insurance corporation protection money, the insurance corporation will use its command of state law to have the bureaucracy pull the plug on your car and collect it. And when you don't meet Green religion emissions standards, which is inevitable as a car ages, the state will pull the plug on your car and collect it. All these have the side benefit in the minds of the control freaks that these practices will drive loans and consumption back up.
Too bad everyone is broke. 8 year car loans won't be enough to save their system.
Caterpillar lays off hundreds more, announces plant closing in North Carolina
http://www.equipmentworld.com/caterpillar-lays-off-hundreds-more-announc...
Geez, what happened to the good old days of the Repo Man?
I wonder if shutting down the computer stops acetylene torches?
I think that's why, secretly, they'd been working to drive down steel prices...
The race against entropy always ends in a DEAD-END[ing].
They are comparing new equipment with obviously well-aged machinery. I am sure the situation is bad but not as extremely bad as the article makes out.
You're right, negative growth in a positive-growth-only game isn't a problem...
Again, "economies of scale in reverse" is going to be really ugly.
Green shoots.
Bailout time.
15k is less than a used Ford. However the gas using it to commute and finding parking will kill you.
For 15k it's like getting the best lawn tractor you could ever get. Imagine the cutting deck you could put on it.
Let the heavy equipment manufacturers implode. Serves them right for completely fucking over their customers by selling them products that are designed so that they are IMPOSSIBLE for their customers to repair.
"Aside from using it, there’s not much you can do with modern ag equipment. When it breaks or needs maintenance, farmers are dependent on dealers and manufacturer technicians—a hard pill to swallow for farmers, who have been maintaining their own equipment since the plow...."
http://www.wired.com/2015/02/new-high-tech-farm-equipment-nightmare-farm...
The Digital Millennium Copyright Act—a 1998 copyright law designed to prevent digital piracy—classifies breaking a technological protection measure over a device’s programming as a breach of copyright. So, it’s entirely possible that changing the engine timing on his own tractor makes a farmer a criminal.
I'd be happy to take it to court. The Act is intended for protecting the REDISTRIBUTION of material. If I hack my own, PAID-FOR, shit and I can demonstrate that I have not redistributed such a change or otherwise profited off the copyrighted material itself then I don't see how the ACT can prohibit my actions.
Any more it's the money from the intellectual patents that enables further innovations: China can pump out stuff that's based on old technology, but the low price-point really doesn't provide for a meaningful R&D budget. In my opinion I think that we've pretty much hit the peak for innovations (the complexities are starting to become more and more liabilities); I figure we'll start seeing a bit back-pedaling going on.
We must bail out CAT or at least provide an unlimited credit line at 0% interest to promote stock buyback!
The market is great except for that end stage capitalism thing called Keynesian crony capitalism.