Is it starting to feel like 2008 anywhere else?

I wasn't a shop owner in 2008, but I was working in manufacturing. Things in this area are sure starting to feel eerily similar.

Caterpillar is forecasting declining sales for a 4th year (first time that's ever happened). Today they announced 5000 people will be permanently laid off by the end of 2016, possibly another 5000 by the end of 2018. Some 20 Cat facilities will be permanently closed.

Every shop I know that does work for Cat is laying off workers, cutting hours, or flat out closing the doors. I'm getting multiple phone calls a day of people looking for work. We have not advertised any positions ever, and keep a very low profile.

Mitsubishi is going to close the Diamond Star auto plant in Normal in November. No buyer has been found. 1200 jobs will be lost.

Corn prices are down to $3.80/bushel despite forecasts of a pretty weak harvest. We had one of the wettest summers on record. John Deere and CNH are both down 50% in sales from last year, and last year wasn't a good year.

I just bought some cold rolled bars last week. The price actually went down for the first time in 5 years. Aluminum seems to be pretty steady.

Oil is $40/barrel or something ridiculous. It nice that gas prices are low. But, now the company that picks up my waste oil is going to start charging $75 per trip (it's 5 miles away). They used to take it for free and even pay for it if you had a good supply of clean oil. They claim they can't get rid of used oil and are just stock piling it until the price recovers.

Scrap metal prices are below $100/ton for the best of the best. Chips are closer to $50/ton. My storage area is bulging at the seams.


So, what say you? It's not feeling too good around here. Everyone keeps talking about a recovery, but it's going to other way in central IL.

For the record, we're still reasonably busy. We're small enough that it probably won't really affect us. But, I know that is not going to be the case for many others.

ewlsey said:

So, what say you? It's not feeling too good around here. Everyone keeps talking about a recovery, but it's going to other way in central IL.

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Rust belt keeps on rusting.
Here the Western Slope is all a flutter...because they never have figured out that you can't have a stable economy based on oil and uranium.


OTOH, here on the front range we are rocking and rolling because 30 years ago we went out and diversified.

Two of my major customers are doing nothing. Sitting on several thousand raw parts for one customer; waiting for them to give me the okay to run them. Majority of work is replacement parts for local food manufacturer's worn-out equipment.

Aren't CAT skid steers made offshore?

My sales have dropped 30% this quarter the forth and final quarter of the year. Main problem with mining equipment oems at present is weaker demand from china no need to dig that extra copper or iron ore if no one's to buy it, and no need for a new digger if there's nothing to dig. But that's just the ups and downs of the economic cycle hopefully all our businesses is robust enough to hold until the up comes.

Also I read this a few weeks ago they just keep moving work out of here to.
://www.bbc.co.uk/news/uk-northern-ireland-34190921

Perry Harrington said:

Aren't CAT skid steers made offshore?

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It's a murky mess there. The small ones are 100% made by Mitsubishi. The bigger ones are sometimes made by Cat, but have Mitsubishi or Perkins engines. Some are made here. Some in Japan. Mitsubishi also makes the smaller excavators and some of the larger excavators.

However, Cat owns Perkins 100%. They also have about a 50% stake in Mitsubishi Heavy Industries. So, I guess you could say Cat makes them.

This is the same for others. Hitachi makes all of John Deere's smaller construction equipment. Some has John Deere engines, some don't. Hitachi also makes all the under carriages for all John Deere excavators.

John Deere skid steers were once made by New Holland and had JD engines. Now, I think they are all John Deere.

Bobcat makes all of their own, but they are owned by Doosan (Korea). Gehl owns Mustang and has some kind of relationship with Takeuchi. All the Gehl and Mustang track loaders are Takeuchi machines made in Japan.

The shop I work for has been terribly slow for the last four months or so. Our main customers are the big ag and heavy equipment companies. When the shop hired me back on in June I worked two 40 hour weeks, then everyone was cut back to 32 hours.

Since then, only the last three weeks have been 40s, and that's because of some orders from automotive and one of the big Diesel builders came through that have been rush jobs.

Thankfully some repair work from several customers has started to show up. But that indicates something as well- not re-tooling or needing new.

I know several guys that are ag (big green company) Diesel techs. They are saying they have customers bringing in equipment that they typically would have traded already, but are hanging on and fixing it instead.

It does feel like '08 here.

IeliteENGINEER said:

My sales have dropped 30% this quarter the forth and final quarter of the year. Main problem with mining equipment oems at present is weaker demand from china no need to dig that extra copper or iron ore if no one's to buy it, and no need for a new digger if there's nothing to dig. But that's just the ups and downs of the economic cycle hopefully all our businesses is robust enough to hold until the up comes.

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Here you have the main problem.

We're as slow as I've seen since I started workin for my pop. But I'm busy and my dad is enjoying the extra time fishing... It's not so bad not having the boss around all the time

We're slow.

We're pretty diverse, here. Our "top 10" customers, by percentage of sales, has fluctuated a bit, changed order, for sure. Last's years #2 customer is down 40% in work, and they're still giving us more work than anyone else in the state, so they say. Where some customers have tanked in work, we've managed to get others to send us more, and our sales folk have managed to get us some new customers that hopefully rise up. We've managed to land a couple significant new customers. We've encouraged a couple existing customers to "take a risk on us" so to speak, and they offloaded some real fast turnaround stuff on us and we knocked that ball out of the park - now we got regular production from them, too (aerospace)

We're pretty diverse though... got some power industry customers, defense, aerospace (some up, some down), optical/laser folk, agriculture (way down), oilfield (minor), and medical tools are steady as ever though work fluctuates with buyouts and acquisitions.

I dunno about 2008 though. I was in South Louisiana doing oil/gas design work and bidness was a-boomin! Then... uh... it really did boom and that moratorium happened... anyways, yea.

We have only endured some customers dips in production by going hard for opportunities with other customers, and getting some new ones. Don't ask me how to do that, though. I brought in 5 RFQs/RFPs from people I knew in a prior life, and only one sent us any work. I'm no salesman.

I,m very surprised by this discussion. We have been getting more and more work all year. The main product is booming and all other work we take in has doubled. Can't seem to find workers to help out.

Please don't let the nay Sayers change a good thing.

I guess the big difference from 08 is the automotive industry. As far as I know, most car makers are doing really well at the moment.

Slow all year here. Only work we are seeing is replacement parts for some local plants and repair work. I am hoping to break even this year.

Caterpillar economists and forecasters have a nearly faultless record in sniffing the demand for their products up to five years out. Since they are an international concern in both production and sales, it follows that their numbers indicate a significant drop in demand, world-wide. The U.S. economy is hopping along on two crutches, low interest rates, and low oil prices. I would guess that "08" will look like a party when the ball drops. Regards, Clark

Things are way slow here, but then again we were and are into oil/energy. Didnt see that comming

sealark37 said:

Caterpillar economists and forecasters have a nearly faultless record in sniffing the demand for their products up to five years out.

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This might be the funniest thing I've ever read.

I've done a lot of work directly for Cat over the years. In my experience, Cat hasn't got a clue what the market will do. In fact, it's breath taking to me how poorly they can predict their own sales.

I remember back in 2010 when they told all the suppliers to build build build. They demanded huge increases capacity and promised all kinds of work. A year later, no orders. Suddenly the market was "soft".

Every shop I know of has slowed down appreciably in the last few months, including mine. We are about half coal related, so it makes sense that we're down.

One of my main customers, a chain hoist manufacturer, is down to three days per week in their machine shop. Chain hoists are a primary capital equipment item, and are a good gage of economic activity.

Yes, a big part of my regions's economy is linked to coal, but also to automobiles, defense, chemicals, and other industries.

Most people don't realize how fragile an economy can be. For years now it's been a house of cards, with near 0% interest rates, and the federal government priming the pump continuously averaging about a trillion dollars per year in printed money.

The only thing that has truly benefited from all the printed money has been the stock market.

Economists have been baffled as to why with all the continued stimulus that we have relatively no inflation. The true benchmark of a robust economy is inflation. As bad as it sounds, you want inflation, because it means companies are busy, that there is robust demand, and are able to raise prices accordingly.

The auto industry has been cruising along benefiting from 0% interest rates, but sooner or later that's gonna catch up with them.

The entire medical industry is funded 70% by Medicare and Medicaid, so basically it's socialism, and thus don't reflect the true fundamentals of a capitalistic economy. Also, defense is almost 100% taxpayer-funded.

I think the shops that are busy are into some niche, some hobby industry, or such. Anyone who says they are wide open these days should be honest and say what industries they serve.

I guess we can all sell each other hamburgers and insurance.

ToolCat

we (day job) are seeing an increase in military work. Existing contracts are ramping up.

Seems to be some bad news around here as well ,the firm that makes yellow diggers up the road has just announced major declines in orders and big redundancies as a result ,it's no time since they were booming.

On the news a big (Taiwan owned) steel works has stopped making steel with 2000 workers waiting to see what happens next.

I am pretty busy but my workload doesn't ever seem to follow the general economy.

Interesting, I don't recall any "beginning to feel" back in '08.
It was more like a light switch.
One day everything's OK, the nex day the customers have closed their doors with millions of dollars worth of parts unpaid for in their warehouses.