Mining equipment companies hopeful about Trump

Donald Trump won the presidency by pledging, among many things, to restore economic growth and lost manufacturing jobs.

Trump said he would lift federal regulations and end commitments to environmental rules that have slowed oil and gas drilling and mining. He also pledged to slash corporate taxes and put the squeeze on America’s trading partners.

U.S. stocks slipped on Monday as a post-election rally fizzled. Yet, overall, Wall Street has been bullish on a Trump presidency.

“I think what the stock market is telling us, and the bond market, too, is we are moving into a more business-friendly environment,” said Bruce Bittles, chief investment strategist for Robert W. Baird & Co.

“With lower taxes, reduced regulations and spending on infrastructure, the economy is finally going to get out of this 2% rut that it’s been stuck in for almost 10 years,” Bittles said.

Ted Doheny, president and chief executive officer of Milwaukee-based Joy Global Inc., said he’s hopeful that Trump’s campaign comments about mining and infrastructure spending will carry over into government policies.

“It starts with setting the vision, the strategies and the direction. It’s pointing to positive areas, I believe, for the mining industry and for business in general,” Doheny said.

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The mining equipment industry has been mired in a deep slump for nearly five years.

Mine operators have slashed spending on new machines as commodity prices remain weak. A steep decline in U.S. coal production has compounded the problem, since coal mines are among the biggest buyers of equipment made by Joy Global and competitor Caterpillar Inc.

Joy has about 12,000 employees worldwide, including 1,000 in Milwaukee. The company has laid off hundreds of employees as its business has plummeted with the rest of the mining industry.

It feels like the industry is close to hitting the bottom of the downturn, Doheny said, as commodity prices have improved.

“This is the first time in four years where we have seen significant movement on the pricing of the major commodities. Our customers, though, are still quite cautious,” Doheny said.

It’s the most severe downturn that Joy has experienced in its 135-year history.

At some point, mining will rebound as the world economy improves and factories need more steel and other mined materials. For now, though, spending is still being delayed for the major mining projects.

“We think it will be a flatter, gradual recovery, vs. the last couple of (down) cycles that had sharp bounce backs,” Doheny said.

The job losses at Caterpillar, worldwide, were in the tens of thousands and included jobs in South Milwaukee.

The employment outlook for mining equipment manufacturers could improve in the next couple of years, however, provided the markets for mined commodities continue to improve with the overall economy.

Joy is being acquired by Japan's Komatsu Ltd. for nearly $2.9 billion.

“We think the relationship with Komatsu will be a positive because (Joy) will be aligned with another significant player in the mining industry, so the two companies together will have growth opportunities. That should also help with employment,” Doheny said.

Joy and Caterpillar make some of the largest and most sophisticated mining equipment in the world. Many of their employees have decades of experience building behemoth machines used in remote areas, where reliability is critically important because a breakdown can by costly.

Even with the layoffs, “we need highly skilled labor. … We will have to continue to work with communities where we have our facilities to develop the local talent,” Doheny said.

The United Steelworkers union might have found an unlikely ally in Trump, provided he lives up to his promises.

“Throughout his candidacy, he talked about bringing jobs back and being hard on trade. We are hoping that he works with us instead of against us,” said Ross Winklbauer, a subdistrict director for the United Steelworkers union that represents Joy and Caterpillar employees.

“Where we do disagree, we are obviously going to stand up with our members,” Winklbauer said.

The Association of Equipment Manufacturers, a Milwaukee-based trade group, is hopeful that Trump follows through on his comments about investing as much as $1 trillion in rebuilding U.S. infrastructure. The president-elect voiced that theme in his victory speech, which further underscored the point, said AEM President Dennis Slater.

“We feel really good about that part. I think the harder part now is getting it on the agenda with Congress,” Slater said.