By: Rob Wertheimer
Our thesis in mining: there is a powerful 10 year cycle ahead. Fleets doubled from 2004-2012, making replacement demand today higher than the total market in the early 2000s. Aftermarket appears to have recovered to normal levels, but could still trend higher with higher fleet utilization. Tight capital budgets mean mining fleet has been aging out more than any other machinery category. There is potential for accentuated demand growth on top of all that, if mines have been high grading and deferring stripping. Finally, relative to other machinery, there is a potential for data driven efficiency across all of machinery, where a 10% improvement in fleet efficiency means three years of trough sales, 30% below normal. Mining sales have already been hurt by this process, which may lie ahead for other categories.