Nov 09

Was: $2.9m | Now: $15,000: Caterpillar 992C wheel loader

Caterpillar 992C wheel loader

What An Industrial Depression Looks Like: Photos From An Australian Heavy-Machinery Auction:

Two weeks ago, when looking at the latest Caterpillar retail sales data…


… we said that “If Caterpillar’s Data Is Right, This Is A Global Industrial Depression.”

Today we get visual evidence of this, courtesy of an Australian heavy industrial equipment auction where machines such as a Caterpillar 992C wheel loader, which normally costs $2.9 million, can now be bought for just $15,000, a 99% discount!

As Australia’s ABC reports, now that the commodity bubble has burst for good, auctioneers are hard at work selling tens of millions of dollars of suddenly useless coal mining machinery for just a fraction of its original market value.

The reason is known: the severe downturn in the Australian resources sector (courtesy of China’s whose commodity imports are declining with every passing month) has led to a massive oversupply of equipment, and much of it is unsuitable for use in any other industry. This means unwanted excavators, trucks and sundry heavy machinery will end up as scrap, if not sold at auction.

ABC’s reporter visited just one such auction in New South Wales, which was owned by Big Rim, a mining services contractor which also collapsed after the miners it serviced also closed.

What he saw was stunning:

“At the moment we’ve probably got the worst downturn I’ve seen in 25 years,” said Chris Hassall, whose company is conducting the auction.

Peter Turner’s Gold Coast company Turner Engineering used to compete for contracts with Big Rim. “I’d be interested in at least 50 per cent of what’s here, and there are at least 100 machines here,” he said.

One of those machines was a large water tanker which Peter Turner was running the ruler over. “It’s not worth a lot. It’s worth $75,000 or something, but you can’t build the tank for that.

Worse, when the auction began the owners of a once-thriving business were hoping this fire sale would at the very least cover their debts. No such luck as the photos of the epic discounts on the equipment show.

“Some of the old equipment that was working in the last two years is now redundant, won’t go back to work,” said auctioneer Chris Hassall.

“We had 20 trucks in the Hunter Valley recently that 18 months ago were probably worth $600,000 each. We’ve just cut ’em up, returned about $40,000.

It’s prices like these which help explain why shares of the Kerry Stokes-controlled Seven Group are less than half what they were two-and-a-half years ago. Seven holds the largest Caterpillar franchises in both Australia and China.

Coupled with the mining downturn, with good second hand machinery so cheap, it is little wonder new sales have been hit hard.

For the sellers it was a bloobath; however at least some of the buyers were happy. “Contractor Peter Turner had been hoping to pay $75,000 for a water tanker, and in the end paid a little more at $77,500.”

As ABC concludes, “it was a day which displayed the stark reality of a coal mining industry which has gone from boom to bust in a very short space of time.”

Unless China ravenous appetite for all possible commodities returns, the industrial depression, already the worst Australia has seen in 25 years, will only get worse.

And this is what an industrial depression looks like in numbers:

Was: $2.9m | Now: $15,000: Caterpillar 992C wheel loader

Caterpillar 992C wheel loader

Was: $1.4m | Now: $50,000: Hitachi EX1200 hydraulic excavator

Hitachi EX1200 hydraulic excavator

Was: $2.7m | Now: $46,000: Caterpillar D11N crawler tractor

Caterpillar D11N crawler tractor

Was: $900,000 | Now: $47,500: Caterpillar 775D rear dump truck

Caterpillar 775D rear dump truck

Was: $200,000 | Now: $2,000: Large workshop with water tank

Large workshop with water tank


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2 Responses to “What An Industrial Depression Looks Like: Photos From An Australian Heavy-Machinery Auction”

  1. squodgy Says:

    But why are these gems being sold off so cheap when we are all benefitting from an economic recovery , low inflation & full employment?

    It doesn’t make sense.

  2. squodgy Says:

    This is a recovery, not a recession….just ask Obama & Cameron….

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