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<\/p>\nThe\u00a0new Panama Canal\u00a0opens for business Sunday June 26th. We are looking at what this means for the canal and the impact Caterpillar has had on the canal’s construction then and now.<\/p>\n
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Three-quarters of the steam shovels used to dig the original Panama Canal were designed and built by the Bucyrus Foundry and Manufacturing Corporation, first of Bucyrus, Ohio, later of Wisconsin. The company got serious money for these contracts \u2014 and serious branding. In a widely published photograph from 1906, none other than President Teddy Roosevelt was pictured down at the Panama Canal construction site in a white suit and Panama hat, sitting in a piece of Bucyrus heavy equipment.<\/p>\n
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President Teddy Roosevelt at the Panama Canal construction site, sitting in a piece of Bucyrus heavy equipment. Caterpillar later acquired Bucyrus. – Courtesy of Caterpillar<\/p><\/div>\n
Marketplace.org<\/a>\u00a0reports Caterpillar<\/a>, the American construction and mining equipment giant, bought Bucyrus<\/a> five years ago, so now it makes the case that, technically, Caterpillar equipment dug both the original and the brand new, wider lanes of the Panama Canal.<\/p>\n “To put it into perspective, with the expansion work that started in 2007, Caterpillar machines moved \u2014 and we know these numbers \u2014 over 100 million cubic meters of material,”\u00a0said Jessica Poliner, head of operations in Panama for Caterpillar.<\/p>\n CAT estimates it had 199 pieces of equipment in use during the locks phase of the Panama Canal Expansion Project in 2014<\/p><\/div>\n Caterpillar is doubling down on Panama, committing $25 million in investment there, including a new Caterpillar campus with a spare parts facility and a hands-on “ThinkBIG” technician training center.<\/p>\n An original piece of Bucyrus heavy equipment, used to dig the original Panama Canal. – David Brancaccio\/Marketplace<\/p><\/div>\n “We\u2019re forecasting, and the key word there is forecasting, 15,000 visitor days annually. We host visitors from our customer base, from global distributors \u2014 the kind of people that Panama wants to see brought to Panama,” Poliner said. “We\u2019re probably not at our peak right now with what\u2019s going on in the global environment.”<\/p>\n The environment beyond Panama is the real challenge for Caterpillar: China\u2019s shifting economy, low oil prices leading to a downturn in oil field work, and weak demand for commodities mined in places like South America have added up to tough times for the company.<\/p>\n https:\/\/www.youtube.com\/watch?v=1_vC8Guk0Qc<\/p>\n “The company is doing a very good job of dealing with those challenging end markets,” said Kwame Webb, who follows Caterpillar at the research firm Morningstar. “To give you a sense of how tough the trends are right now, the company is probably seeing revenue declines, demand declines that they probably haven’t seen since the Great Recession back in 2009.”\u00a0 Bucyrus steam shovels worked between 1904-1914 to dig the Panama Canal.<\/p><\/div>\n<\/div>\n<\/div>\n Caterpillar CEO Douglas Oberhelman\u00a0said this spring<\/a> that he thinks the company is close to the bottom, meaning it should soon cycle up.<\/p>\n “I think it\u2019s better to describe it as a new normal,” Webb said.<\/p>\n And if this analyst is right? What if it\u2019s not just a Caterpillar problem, but that growth in global trade and investment has run its course? Here\u2019s what we know: Global trade fell off a cliff during the great financial crisis. As the U.S. improved, China continued growing and Europe tried to sort itself out, global trade was supposed to come roaring back. But growth is way down. For a stretch last year, worldwide trade actually declined.<\/p>\n Bob Koopman, chief economist for the World Trade Organization, said one reason is that many of the big regions that could jump into the world trading system are already in.<\/p>\n “The big burst of globalization occurred during the opening of these large economies,” Koopman said. “When you look around out there, you just don\u2019t see that many big economies with that many workers that are likely to suddenly open up.”<\/p>\n Perhaps the big brass band of globalization over the last quarter century has transitioned into something that will still grow, but more modestly.<\/p>\n “We expect that [it will] start inching its way back up,” Koopman said.<\/p>\n Looking south at the first chamber of the Panama Canal’s new, wider set of locks. Caterpillar machines excavated over 100 million cubic meters of material to make way for the new chamber. – Bill Lancz\/Marketplace<\/p><\/div>\n So maybe we can say the era of hyperglobalization has come to an end, and we\u2019re approaching something that was more on the previous trend.\u00a0Koopman believes that’s a fair assessment.\u00a0Other economists focus on data showing world trade is no longer rising as fast as global economic growth, and use the term \u201cpeak trade.\u201d<\/p>\n Shipping companies that use the Panama Canal are hoping and praying the dip is just part of a cycle, but is it?<\/p>\n![\"caterpillar-panama-canal\"](\"https:\/\/cranemarket.com\/blog\/wp-content\/uploads\/2016\/06\/caterpillar-panama-canal.jpg\")
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\n<\/strong><\/p><\/blockquote>\n\n\n![\"Bucyrus](\"http:\/\/cms.marketplace.org\/sites\/default\/files\/bucyrus_0.jpg\")
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Follow\u00a0David Brancaccio\u00a0at\u00a0@DavidBrancaccio<\/a>.<\/div>\n