of heavy-duty, high-capacity trucks and other mining equipment
continue to lag as miners squeeze more production out of
existing assets and are slow to invest in replacementsand
its hard to say how long the trend will persist,
Caterpillar Inc. executives said during a Jan. 27 earnings
Last year was "a tough
year," vice president of strategic services Mike DeWalt told
analysts during the call. Sales declined sharply in
Caterpillars resource industries division, which is
principally mining. "That substantial decline was the result of
both lower demand from mining customers and from changes in
dealer inventory," he said.
The depressed demand
trend has resulted in temporary plant shutdowns, rolling
layoffs and the closure, downsizing and consolidation of
several manufacturing facilities, DeWalt said. "Despite
prospects for an improved economic climate and continued strong
production at mines, we are expecting a sales decline in our
resource industry segment of about 10 percent in 2014."
improved in 2013 and likely will be up again this year, DeWalt
said. "The bad news is that orders for new equipment remain
pretty low. But that cannot go on indefinitely." Based on the
size and age of existing fleets, "miners are buying new
equipment at a rate thats well below the average
replacement level theyll need going forward."
The capital spending
strategy among miners "is not illogical," Caterpillar chairman
and chief executive officer Douglas Oberhelman said during the
conference call. "They are pulling ore out of the ground at
faster and faster rates. They are just pulling their horns in
with (capital expenditures). But they have cautioned us (to) be
ready at some point in the future. None of them can predict
when that is."
Group president and
chief operating officer Bradley Halverson said Caterpillar is
bullish on mining in the longer term and "we see that as a
great business for us."