The experience of equipment maker Caterpillar highlights
the need for understanding/forecasting long-term global macroeconomic trends:
How Caterpillar’s Big Bet Backfired – WSJ
“Doug Oberhelman
spent his first years as Caterpillar Inc.’s chief executive plowing billions of
dollars into factories to build more of its familiar yellow machines and move
the company deeper into mining equipment. It was a bold bet, spectacularly
mistimed.
The world was
gripped by a global commodities boom in 2010 when he took charge, along with
strong post-recession demand from developing markets and the energy industry.
The world was ordering excavators and bulldozers and giant dump trucks at a
rapid clip….
The year 2012 would
prove to be a peak for Caterpillar. Soon after, miners began shelving
equipment-buying plans as commodity prices fell. China’s growth slowed. Then
oil prices fell, along with demand for related equipment. Caterpillar now faces
its fourth straight year of falling sales, the longest decline in its history.
Its stock is up 29% this year—the best-performing in the Dow Jones Industrial
Average—but trades 25% below its 2012 peak.”