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May 07, 2012

Mining truck, tyre supply to reach balance in 2015 onwards

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Caterpillar CEO Doug Oberhelman discusses the global mining truck supply bottleneck. Camerawork and Editing: Nicholas Boyd & Darlene Creamer. Recorded: 04.05.2012
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Mining truck and tyre production should be on equal footing by around 2014 to 2015 onwards, as both tyre and truck manufacturers are spending big money to ensure the increased availability of both, says Caterpillar CEO Doug Oberhelman.

“We have been playing catch-up with the mining industry for a decade or more,” he adds.

Current lead times on securing a mining truck could be anything from 18 months upwards.

A disinvestment in the mining supply business in the 1990s was followed by an exploding mining market from 2002 onwards as China and India opened up their markets, leaving tyre and capital equipment suppliers short of production capacity.

“We are pouring cash into our mining business,” says Oberhelman. “In 2009 and 2010 we doubled our capital expenditure every year. We have doubled truck production already and we will double it again in the next few years.

“We are spending $4-billion in capex this year and the biggest chunk of this will be for mining – and this is on top of acquisitions.”

Oberhelman says customers have already placed truck orders with Caterpillar for mines opening in 2014, in an attempt to circumvent long lead times.

He notes that specialised mining tyre supply is very much in the same boat as mining truck availability, with only the recent recession providing somewhat “of a breather”.

However, Oberhelman says the major tyre manufacturers have indicated that they are investing heavily in the production of 32 inch tyres and upwards and that the supply-demand situation should be in balance by 2015 onwards.

However, he warns that a rapid increase in mining truck demand could again upset tyre and truck supply-demand dynamics.

‘TECHNICAL TRAINING FAILING US’

“Technical training at schools is failing us [Caterpillar],” says Oberhelman.

“We reject 60% of the applicants at our production facilities.”

Apart from “highly stressed education systems globally”, Oberhelman also attributes this situation to the death of “tinkering” as kids used to grow up with farm equipment, but are now raised on a diet of “joysticks”.

He notes that the US capital equipment manufacturer has “an insatiable demand for technicians.”

“The only, but only competitive advantage a country has is its education,” he emphasises.

Oberhelman says Caterpillar would need to hire 20 000 people up to 2020, with its 12 000-strong Chinese employee contingent expected to more than triple over the next ten years.

Edited by: Creamer Media Reporter
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