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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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Are other heavy equipment builders having the same problem? When I drive by construction sites, it no longer seems that CAT is the dominate brand in the US, admittedly and anecdotal observation.
'But fear not, the company has a cunning plan how to stem the bleeding...'
By ramping up the bloodshed & providing D-9's to every new settler that moves into settlement houses built by the zio's in the Israeli Gov't., after confiscating Palestinian land and water rights & booting their inhabitants.
CAT will need to do the armor plating and hardpoint mods if they want to profit on that "redevelopment" effort.
The chips to shut them off where likely made in China.
Back door?
Surely it would be better just to have them come home. A bit like a drone, they just return to base :D ..
If they were a bank they wouldn't fail. The Fed would give them all the money they need.
A couple of clarifications:
Engines driving generators can be loaded just as severly as an engine driving a mechanical output such as a driveshaft or propellor. I'm not a railroader, but I'm certain that the loads on a locomotive's engine when pulling a long-ass train from a stand-still, prticularly with some of the train down-grade from the locos is very high, only limited by available traction at the drive wheels.
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.
But if you need additional equipment NOW, waiting for delivery of new doesn't get the job done either, as new specialized equipment such as locomotives and the stuff CAT sells have long lead times for delivery. At least a year or more. Purchasing say 100 SD90MAC's from another railroad with the intention to eventually refurbish all of them doesn't mean you can't place the servicable as-is units in service immediately. Which I'm sure Norfolk Southern wil do.
Engines on earth movers are only one wear point. Blades, buckets, dump boxes and frames are all hammered around and have direct contact with grit and rock.
A locomotive has a candy ass job in comparison.
And 2- cycle engines? Are there really old GM/detroit 2-cycle oil and fuel puking engines still in trains ? Whodathunkit.
Gawd- those old pieces of shit would even run backwards until they vomited out all their oil thru the air filter before seizing up.
Seems odd that Obama wouldn't have given an EPA pass to Buffet though...
2 cycle engines such as the EMD 645, 710, etc., are not particularly 'dirty'. They are nothing like 2 cycle petrol engines. The EMD 645, 710 use a special type of turbocharger/supercharger hybrid which basically operates like a supercharger (ie: Roots blower) at low RPMs, but disengages the blower at higher RPMs and goes to pure turbocharging.
Yes, clearly evident you have no understanding of how modern locomotives work...
The DIESEL motors do not take the pounding earth movers take because the DIESEL in a train is used to generate electricity to energize ELECTRIC motors that provide the
tractive forces that make the train move. It's easier on a motor to turn a generator rather than the harsh beating of constant sharp changes in torque that is needed when digging.
Get the picture?
But very few heavy earth mover engines operate at their absolute maximum output for potentially hours at a time. Like a heavy diesel locomotive would on a drag freight.
I guess it depends a lot upon what is considered a 'worse' kind of service. Full power output for long periods of time, or rapid cycling between zero output, and medium power engine output, with the rare increase to full output all day long?
Most construction equipment is really about hydraulic pumps, which are driven by diesel engines.
Diesel engines like to be run at a higher-level of workload, and are most efficient staying on that plateau. I'd figure that the use in locomotives is easier in that the work output is pretty much concentrated to one kind of work- propulsion, whereas with construction equipment there's almost always propulsion along with some other kind of work (digging, lifting, pushing and much more). Further, the environment that construction equipment has to operate in is much more severe.
Isn't the issue with the SD90 chiefly that it was originally delivered with some abortion of an EMD 4-stroke engine, and the 'rebuilds' involve removing that engine and replacing it with a proven/reliable EMD 710?
A generator driving an electric motor of fixed capacity can never be overloaded. The engine, generator and electric motors are designed and matched, "extra" loads can't be attached to the generator . Heavy equipment can, and is easily overloaded all the time, both by load capacity and mechanical abuse.
Putting a locomotive on an overly long/loaded train will still not overload that locomotive. The diesel engine will never exceed it's output, neither will the generator or the traction motors. Nothing gets overloaded, the train just doesn't go anywhere quickly.
Actually traction motors can be overloaded if they're pulling at abnormally low speeds for a prolonged period of time. Particularly DC motors. AC induction motors, not having windings on the rotor, are significantly more immune to the problem though.
Does anyone know if other heavy equipment manufacturers are gaining market share at the expense of Cat and their shenanigans? It could be an interesting and informative chart to see.
For parts back-up nobody can hold a candle to Cat. If you want to keep your iron running and want to see it running for years ahead of you, with a few exceptions in excavators, nobody beats Cat. Period.
There was an old sales tool that Cat dealers used with selling D8's. They would ask the customer if they died tomorrow, would they rather leave their widow a D8 or a TD25 (the International Harvestor equivalent). Everbody knew you could always resell the Cat but damn few were in the market for used KornBinders.
K
Due to a Rachel Corrie haunting?
I am literally laughing my ass off.
Cunning? Bawwwhahahahahahahaahhaha
I say Chinese Hackers.
Go short CAT.
Sometimes I wonder how these dumbfucktards get into positions of power at the .gov and corporations.
(facepalm)
I am literally laughing my ass off.
Cunning? Bawwwhahahahahahahaahhaha
I say Chinese Hackers.
Go short CAT.
Sometimes I wonder how these dumbfucktards get into positions of power at the .gov and corporations.
(facepalm)
adopt a CAT today!
Why would Cat mention its ability to remotely turn off a machine? Just a stupid move by management. They have done damage to the customer trust, public relations , and the security of their own product.
A few hackers and disgruntled employees later , and...
Trump will give CAT a boost when he begins bulldozing stateside Muslim settlements.
"we have the ability to derate the engine or turn the engine off"
All cars have a 3g connection now providing the ability to shutdown or take control of the vehicle. This means that it's not a manmade emp that's going to shutdown the grid or fry computer chips, it will be planned. Surface nuke tests never affected the power grid either.
Thank goodness cash-for-clunkers got all the safe reliable cars off the roads.
"All cars have a 3g connection now providing the ability to shutdown or take control of the vehicle."
If you get cell reception!
"Thank goodness cash-for-clunkers got all the safe reliable cars off the roads."
Yeah, I'm hoping that that's what they think... Just hope they don't actually come around to my neck of the woods (and find out otherwise).
And exactly how long till your little chinaman figures out how to wire around the black box and get back to work while still making no payments. Duh.
Might be longer than you think:
The Great Fall Of China Started At Least 4 Years Ago
When there's no demand for the resultant work that the machinery performs then there's little incentive to hack...
From the headline, I thought they were introducing a line of weaponized front end loaders.
They are obviously not very forward thinking. There are lot of mass graves need to be dug in the next 10 years, and the operators will need to be protected.
Just when you figure you have things figured out...
Compost. Think "killing fields."
I want to buy one of those dump trucks ...
(and drive it to work)