For Caterpillar, The Depression Just Turned Three: CAT Hasn't Had A Sales Increase In 36 Consecutive Months

Tyler Durden's picture

Earlier today Caterpillar reported its latest monthly retail sales statistics, and the numbers continue their deplorable trend: Asia/Pacific (mostly China) was down -17%,EAME dropping -5%, Latin America down -37%, the US down -5%, and global sales continuing their double digit decline for one more month down -11% in November.

But what is more depressing is that as the chart below shows, for CAT the global manufacturing depression just turned 3 years old as the company has now suffered through 36 consecutive months of declining annual retail sales - something unprecedented in company history, and set to surpass the "only" 19 months of declining during the great financial crisis by a factor of two!

 

And as we have shown previously, 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 - as we showed one month ago, 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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Clint Liquor's picture

The American economy doesn't need Caterpillar, it has Facebook.

847328_3527's picture

"Awesome, Dude!" I just heard the guests on National Propaganda Radio the other day claim the economy is so strong that ole Yeller will raise rates moar.

 

Relax, Bunky. It's all part of Barry's "Legacy."

The9thDoctor's picture

There's hardly anything left of Palestine that hasn't been torn down already so that's why CAT's sales have been sluggish, lol.

Syrin's picture

Catepillar f'ing deserves this.   In order to put their plants in China, they had to turn over all thier blue prints.   What did you think would happen?   China now makes the exact same thing for a fraction of the oprice under a different name.  All to avoid hiring US workers, who over priced themselves with greedy labor unions.

hopefulbutwary's picture

Remember Rachel Corrie. Buried alive by a CAT operator in occupied Gaza.

vq1's picture

ENERGY & TRANSPORTATION RETAIL STATISTICS2

Power Gen

UP 1%

Industrial

DOWN 24%

Transportation

DOWN 58%

Oil & Gas

DOWN 37%

Total

DOWN 29%

venturen's picture

Did they donate to the Clinton Fund? Did they annouce they are backing Hillary? How many people from Washington DC do they pay in excess of million doallar? Did they pay Bernanke to speak for million or so? I believe the answer is no...else the FED would would be buying CAT equipment like bonds!

Dragon HAwk's picture

Come on Tyler, those pictures are getting Old.. I mean at least put a little more rust on them, those things have been sitting on the Auction Block  for a while now.

are we there yet's picture

In Houston the Christmas shopping that I see in shopping malls is very thin. The economy is not recovering.

hibou-Owl's picture

I went to our local market today, what I saw was lots of lookers, and very few carrying shopping bags.

The watch repair man was doing well, and coffee shop was full.

 

Live chickens(10 euro), ducks(12 euro) and turkeys (6 euro per kg), all selling well as supermarkets prices stupid.

 

So retail is totally dead!!!!!

847328_3527's picture
Houston energy company delisted from NYSE

Dec 18, 2015


Paragon Offshore PLC (NYSE: PGN) confirmed on Dec. 18 that is has been delisted from the New York Stock Exchange.

According to a statement from the company, the exchange notified Paragon that its ordinary shares were no longer suitable for listing due to the company's "abnormally low" price levels.

 

Paragon is headquartered in the U.K., but its principal executive offices are in Houston.

 

http://www.bizjournals.com/houston/morning_call/2015/12/houston-energy-c...

 

Moar "Robust Rekovery."

"Change you can beleeve in!"

More_sellers_than_buyers's picture

Just went to a big mall in NJ a week before Christmas last night.  Parked right next to the handicapped spots...place was an utter ghost town.  Scary really

JustObserving's picture

We need another rate increase to jump start the economy. The banksters making more money will trickle down on the economy

nope-1004's picture

lol, you must read Martin Armstrong to come up with that kind of rationale.

 

JustObserving's picture

I hate to use the sarc tag.

That is so gauche.

cmkinusn's picture

The sarcasm detection is weak with this one.

KnuckleDragger-X's picture

Tsk, everybody knows that all that stuff is sooo 20th century. It's all magic electrons coming out of silly-con valley that will save us......

buzzsaw99's picture

layoff workers, take another bonus. ssdd.

Dr. Engali's picture

"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."

 

Some how I think this works both ways. I'm looking at you defense industry.  

jerry_theking_lawler's picture

Nice. When I worked in the mine/quarry business we used to have to keep these massive pumps running to keep it from flooding.  So, if this nice piece of equipment is stuck in the mine/quarry and they turn off the pumps, how much value is in that equipment then?  This is one of the dumbest things I have ever heard....you should have tracking on it (that can't be easily removed) and a way to repo the equipment. That is how you get the value back out of it....just shutting it off is pretty absurd (it will get pushed down in the quarry to get it out of the way, it will be sunk, it will be left to rot, etc, etc). Way to go CAT...ingenious.

overmedicatedundersexed's picture

CAT can return to profitablity, make a CAT virtual D9 put it in a neat on line game, and let the players run it in a virtual construction site.. maybe bull doze facebook pages and twitter postings - go after amazon and most of all cia google..I'd sure like to run a big D9 cat over them in the vitual world of course.

astoriajoe's picture

Or maybe an aftermarket drone kit. Then we can have some real fun. 

astoriajoe's picture

"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.

So not only will we not get paid, we will reduce further the customer's ability to pay us in the future. 

flysofree's picture

That's because we haven't been asked yet to buy government bonds to help to re-bulid the Miiddle East.

Ghost of Porky's picture

Business will pick up when FedGov starts contracting out mass graves.

I am Jobe's picture

We need more WARS . Also this will help the Yellow Ribbon Sales 

Iam Yue2's picture

Hey not to worry as part of the military-industrial complex the company will be set to play a big role in Syria's post-war reconstruction; Libya's post-war reconstruction, oh and Iraq's post-war reconstruction................

cmkinusn's picture

I actually think China and Russia will get dibs on what company gets to help rebuild Iraq and Syria now...

hound dog vigilante's picture

Furthermore, if CAT wants it's equipment back, CAT will have to eat the cost of re-possessing lapsed-lease equipment.  The logistics cost of moving/transporting heavy equipment is not insignificant... logistics is a business that CAT had leaned-upon as a profit center (their logistics ops were once a profit margin darling) but it is now (or will be) a significant cost center if CAT is serious about enforcing their lease-centric business model...

surf@jm's picture

aaahhhh!......All that stuff causes global warming.......Obama has plans to convert all that rusty metal into windmills.....

Paul Ryan just funded it.......

roddy6667's picture

There a lot of Japanese, Korean, and Chinese heavy equipment companies that are doing fine.

CAT is going into the history books with the buggy whip makers.

Al Tinfoil's picture

No worries.  CAT can always go back to building highway truck engines.

Oh, wait.........

ZeroPoint's picture

I am sure mine operators are thrilled that CAT builds in the ability to brick the machine any time they want to. Even if the machine is paid off, the tech doesn't magically go away.

 

thethirdcoast's picture

CAT has lots of competitors out there - SANY, Shantui, Hitachi, Hyundai, Liebherr, HidroMek, just to name a few.

Turdy Brown's picture

CAT machines: not the best. 

As someone who has owned hundreds of pieces of CAT equipment in the past, I can tell you that other manufacteres (Komatsu, Deere, Hyundai, Volvo, etc.) make just as good products as CAT, but at a 30%-40% discount compared to CAT!

I don't understand why the people at CAT don't get this.  Their attiude (at least in Florida, where I am) is "screw you, we don't need your business!"  The CAT dealer that I deal with has pretty much pissed off all the civil construction companies around here and no one will buy from them.  When we do end up buying something, and it breaks down, the dealer sticks it in our #$@es!, every single time!

I think that CAT will be out of business in the next... say ... 5 years?

57-71's picture

Try being in a region that has about 5 billion dollars worth od CAT mining equipment and have the dealer reduce inventory and warehouse people.

Now, half of the parts that was available in several hours to maintain machines, takes 4+ days to get to the shop.

Customer gets it in the ass again!

Stick in the Mud's picture

Surely the Fed could use some of these CAT loaders to move all those dollars out of the banking system? Let's see: one loader can lift 25 tons, that's $25M in one-dollar notes. Assume one loader can make 4 round-trips to move dollars from big NYC banks to NY Fed. That's $100M per day or $3B per month. To move $100B per month you'd need 33 loaders! Is that right, or is that Yellenist math?   Or should the Fed just create a subterannean network of pneumatic pipes? C'mon Fed, you can create some jobs!