When This Caterpillar Dies, We Don’t Get a Butterfly [UPDATE]

Unsold Caterpillar bulldozers lined up in Sao Paulo, Brazil. These are the caterpillars that signal what the financial winter is going to be like. (Photo by Roger W/Flickr)

Unsold Caterpillar bulldozers lined up in Sao Paulo, Brazil. These are the caterpillars that signal what the financial winter is going to be like. (Photo by Roger W/Flickr)

In order to have an industrial economy you have to build industrial things — roads, ports, buildings, power stations and their grids, airports, houses and shopping centers — and you have to replace them when they wear out. Such building is the activity on which an industrial society rests, the primary source of jobs and all the consequent economic activity that flows from people with jobs. What every one of these building projects needs, in addition to capital and workers, is heavy machinery. That is why the health of Caterpillar, the world’s dominant manufacturer of heavy equipment, and to a lesser extent England”s JCB, are taken as precursors of the world’s financial health.

Call hospice.

It’s bad enough the Caterpillar’s world sales were down 11% year-to-year in August, worse that they have declined by a similar amount every month this year. What is truly awful is that Caterpillar has a string of such sales declines — on average 10% per month —  going back almost three years. It’s the longest stretch of sales declines in the history of the company. To those who regard Caterpillar as a bellwether, and it has been reliable in the past, our future is going to be called the Second Great Depression.

The good news is, we’re not alone. In the UK, JCB has just announced it is cutting 400 jobs worldwide in the face of staggering declines in the economies of the countries in which it works. CEO Graeme Macdonald said in a press release, “In the first six months of the year, the market in Russia has dropped by 70%, Brazil by 36% and China by 47%. Parts of Europe are also struggling, with France down by 26%.”

Both of these companies are global operators; both are engaged in creating and maintaining the foundations of the industrial age. Their decline and fall is the decline and fall of the age.

This bull isn’t a dozer, he’s a goner.

[UPDATE: 09/24/15 — Caterpillar today reduced its sales forecast for 2015 by a billion dollars. and announced it will be firing up to 10,000 people in the next few years as part of a desperate cost-cutting program. It is facing, said its CEO, a “convergence of challenging marketplace conditions.”]

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14 Responses to When This Caterpillar Dies, We Don’t Get a Butterfly [UPDATE]

  1. Tom says:

    It’s all part of the fictitious “growth” paradigm businesses have been stuck to since economics was invented (to ignore any and all environmental concerns – well, except to turn them into commodities). We’ve brought this on ourselves throughout the ages, despite all the wise advice some have seen and written about. It seems that we can’t help ourselves with regard to greed and procreation. Now that we’ve gone way past the carrying capacity of the planet and, at the same time, destroyed it’s ability to balance the pollution we continue to dump into every aspect of the biosphere, what other result would we expect? Sad, nonetheless.

    [off topic comment] It’s going to be “interesting” to see exactly what actions the Pope suggests the world take regarding climate change. The church has been an opponent of birth control all along – and now look where we are!

  2. Rob Rhodes says:

    We seem as a culture unable to stop building stuff, so if we could at least acknowledge the future we face then we could put many to work using the last oil building new, or repairing old, sustainable infrastructure of permacultures, canals and railways for e.g. that would serve a post carbon world. Instead we will use it to blow up more people and things.

    • daniel reich says:

      To Rob Rhodes, I fear you are right. I’m 57 and after that many years living on planet earth, I know what you know. Human beings are hopelessly violent in nature and will undoubtedly destroy himself and everything else around him. Too few are capable of broad based thinking. Those of us that are able to think are shoved out of the way by the brutish majority. Too bad.

      • John Cook says:

        Daniel you are making a mistake that is very easy to make. Humans are not so bad, considering the concerted efforts to currupt us that have virtually drowned us in evil we are amazingly good. Stupidity and short range thinking, greed and violence are universally encouraged, almost Compulsary these days. This is not an accident.

        • Daniel Reich says:

          I’ve seen how easily seemingly good people resort to violence. Truly . Humans only need to be presented with certain uncomfortable facts, or perceive a threat and boom. Our true nature is revealed. We, my dear John, are an evolutionary dead end. Anyone can become violent. Anyone. Very few exceptions here. Not enough to matter. When tshtf, it’s gonna be a bloodbath.

        • Carlos Mansilla says:

          John, I´m afraid Daniel is right even more after reading yesterday in Tom Dispatch the ridiculous amounts the US goverment spends in technological companies dedicated to boost the already fearsome amount of atomic weapons you already have , too long to quote so you´d better read it.
          As for companies such as Caterpillar , Komatsu , or any other of the sort I wont drop a tear , since they have devastated a large part of the country included the Yunga forests , mainly to plant soy produced by Monsanto.
          I live in Argentina a poorly administred country and after 75 years , have retired to my ranch, a good 200 kms from the capital , grow my own food, and the dogs ( Argentine dogos ),and some Maria, receive, some mail , as this page, listen to good classical music and even some Beetles and the sort, have a large library and await the unavoidable in calm .
          There´s no solution for greed and violence so I recommend you do the same thing , besides you are welcome whenever you choose to visit

    • meat wad says:

      Here here. You knocked it out of the park in 65 words.

      I’d also add the farming component: (re)build local, sustainable agriculture systems that have the added immediate benefit of health outcomes. Rather than pissing away petro-fertilizers for nutrient-deficient 1000km salads and toxic Big Macs.

  3. Chwee says:

    I have been following this for a while. To provide more context, Komatsu (probably CAT’s main competitor worldwide) has also seen almost 3 years of sales declines. SANY – the main Chinese competitor? Almost 4 years. So it’s not an isolated phenomenon, took a while for commodity prices to collapse even as equipment sales went first.

  4. venuspluto67 says:

    That’s literally going to hit home. I live in a city where Caterpillar has a pretty major factory, which they bought from another company shortly before or after (I forget which) the previous economic kablooey.

  5. Carlos Mansilla says:

    It´s me again . I´ve just red a news of Volkswagen admiting to falsifying the data of the amounts of gases emited by their cars , in this case 8 million of them .
    The president of the company has resigned , and their shares have gone down by 37 % , the scam has been discoveres by two US citizens , with the aid of a University and the EPA . Their are expecting huge amounts of fines and demands only in the US.
    Take a read it´s everywhere . Isn´t it just GREED ?

  6. Tom says:

    Volkswagen’s cheating engines can’t be easily fixed (vw)


    Volkswagen is confronted with a monumental challenge.

    The company has admitted that 11 million of its cars used illegal software to cheat emissions standards.

    Now, many owners are demanding that the offending cars be fixed.

    That’s easier said than done, and Volkswagen’s already tried – and failed – twice.

    Here’s the issue, according to the Environmental Protection Agency: cars with Volkswagen’s 2.0 liter TDI turbo-diesel, four-cylinder engines include software that detects when the car is undergoing emissions testing and turns on a suite of pollution control systems.

    But as soon as the test ends the controls switch off, leaving the engine free to emit up to 40-times the legal limit of Nitrogen Oxide – a highly polluting gas. According to the California Air Resources Board, or CARB, Volkswagen admitted to using a defeat device during a September 3, 2015 meeting with the agency and the EPA.

    The problem for Volkswagen is that getting the engine’s emissions in line with pollution standards probably means sacrificing something else.

    [further down]

    “Whatever the fix is, it will likely sacrifice fuel economy and probably durability as well,” Fisher said. [more]

    • colinc says:

      Ah-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha-ha! ROTFLMFAO!!! Thanks, Tom, I needed that hilarity! :)) Perhaps we should all be wary of anything with a “W”!?