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Takeaway: Mining capital spending is likely in for a multi-year decline even if commodities flatten. All construction is not US private construction.

Missed Our Mining & Construction Equipment Black Book?  Here Are 5 Key Charts

Below, we show five of the key charts from our mining and construction equipment black book.  You can access the full deck and replay here:

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REPLAY:  CLICK HERE

Since mining is a mature industry, capital spending does not need to add much capacity on average.  When capital spending shoots well above trend in a rising commodity price environment, a subsequent flattening (not decline) of commodity prices can lead to dramatic declines in resource-related capital investment.

Missed Our Mining & Construction Equipment Black Book?  Here Are 5 Key Charts - 1r

Currently, mining and other resource-related capital spending is well above depreciation and amortization, a rough measure of long-run steady-state capital spending.

Missed Our Mining & Construction Equipment Black Book?  Here Are 5 Key Charts - 2r

We highlight a number of reasons for the commodity bull market, but investor belief in the commodity bull market is likely a key factor.  Depending on the opinions of strangers may be a risky strategy.

Missed Our Mining & Construction Equipment Black Book?  Here Are 5 Key Charts - 3r

CAT placed emphasis on dealer inventory reductions for recent operating challenges.  The data from CAT dealer Finning and other dealers (as well as CAT itself) suggests that the draw-down may take longer than many expect.  At Finning, it has yet to start.

Missed Our Mining & Construction Equipment Black Book?  Here Are 5 Key Charts - 4r

For those who think of CAT as a construction equipment company (CAT's Construction Industries segment is a much smaller portion of CAT's operating income than either Resource Industries or Power Systems), the US private sector, where construction is actually rebounding from cyclical lows, is only a small portion of the global construction equipment end-market.

Missed Our Mining & Construction Equipment Black Book?  Here Are 5 Key Charts - 6r