By Sarfaraz A. Khan and Gohar Yousuf
The weakness in commodity prices, particularly coal and iron ore, which
caused the slowdown of the mining industry, has hit the growth of mining
equipment firms. The mining equipment is a $1 trillion market
that employs hundreds of thousands of people around the world. But due
to the slowdown, the mining companies have laid off thousands of workers
and temporarily closed their facilities. The leading mining and
construction equipment maker Caterpillar (CAT)
alone has cut more than 13,000 jobs. Overall, the sector’s annual
capital expenditure for 2013 is expected to fall by 24% to $76 billion.
Meanwhile, increasing competition from Chinese manufacturers, who
mainly compete on price, has made things worse. Nearly 50% of the global
demand for construction equipment comes from China, where Caterpillar
is engaged in a battle for market share against the local rivals.
Earlier in October, Caterpillar released its quarterly results that
disappointed investors.
