Terex took ownership of Demag Mobile Cranes on 30 August 2002, 105 days after agreeing a deal with previous owner Siemens. After only two months, Terex has already been busy making changes… and making waves.

Terex Lifting president Fil Filipov is relishing his latest acquisition. ‘It’s really a nice place, good people, good quality product,’ he says.

Market conditions are not helpful, however. ‘Okay, the industry is slowing down and customers don’t have the money but I know that we have made the right decision,’ he adds.

There has been a lot of negative press in the local newspaper in Demag’s home town of Zweibrücken in Germany. Trades union IG Metall has been leading the fight to save jobs and defend labour agreements. Filipov, however, insists that nothing too drastic is happening at Demag. Most Terex acquisitions have been companies that are a little down on their luck – American Crane being a typical example. Not Demag, however. No radical action was required. ‘It is not slash and burn. We are just adjusting it,’ Filipov says.

There were 2,200 Demag employees on takeover. How many there are by the end of the year depends on the market. Filipov says it will ‘probably be 1,800 to 2,000’.

But early departures included notable names, including two of the three managing directors: finance director Wilfried Hubert and sales director Bernhard Düser. The third, engineering director Alexander Knecht, is now the general manager.

Knecht reports to Steve Filipov, Fil’s son and Terex Cranes group president Europe and International. Steve Filipov says that the run-in with the union is nothing new. In fact it is quite tame compared to previous battles, he says. ‘It’s always a negotiation. IG Metall have to do their job and we have to do our job. We will work with them but not for them. We’re all here to build cranes. It’s why we get up in the morning.’

Among the objections have been that Terex has cut the Demag apprenticeship programmes. Not true, Steve Filipov insists. Progammes have stayed in place and there are still 80 apprentices. ‘We think that there are enough so we are not bringing any more in next year,’ he says. He says that the apprenticeship programme has been misused sometimes and he now wants to get them away from the filing cabinets and onto the shop floor.

Meanwhile marketing plans are developing rapidly. These include:

• In Japan the Demag company store is being reduced to a minimum and negotiations are being held with IHI about a distribution agreement. The idea is that Terex will distribute IHI crawlers in Europe, Africa and the Middle East (as it does in North America) and IHI will distribute Terex and Demag products in Japan.

• In Singapore the Demag company store is to close and a dealer will be appointed.

• In Australia Demag’s operations are being integrated into Terex’s. Market coverage is given by the Franna factory in Brisbane and company stores in Sydney, Perth and Melbourne.

• In Italy the Demag operation is being folded into Terex Cranes Italia, which is having an excellent year. It is producing 222 Bendini rough terrain cranes this year, compared to 160 in 2001. Of these, half are for export and half are for sale in Italy itself.

• In Spain Demag will take the lead and Terex’s operations there will be integrated into Demag’s, which is being renamed Terex Cranes Spain.

• In the UK Terex Cranes UK has its headquarters in Demag’s offices in London. Terex’s facility in Bicester in the heart of England will be a service and spare parts centre.

• In the USA Heinz Ott, head of Demag’s US operations, was one of the first to go. Demag’s operations in Ladson, South Carolina may be integrated with Terex American’s facility in Wilmington, North Carolina where there is plenty of space for growth. This has not be decided for certain yet. It may be that Demag’s facility is retained for Demag telescopic cranes and only the lattice boom crawlers of Demag move up to Wilmington.

• Demag’s operations will also take the lead in Germany, of course. Demag salesmen in Germany will also be expected to sell a few tower cranes now. Last month 48 of the 100 employees were laid off at Terex’s German tower crane company Peiner. All sales and administration functions have been consolidated into Demag’s operations. Peiner’s factory in Trier has become simply that – a factory. Peiner’s range is reduced to just three models which represent 70% of Peiner’s sales: the SK 315, 415 and 575 top slewing hammerheads. The Terex Towers range is completed by Comedil’s range.

• Returning to the mobile crane business, Demag’s infrastructure will also take the lead in France. This is perhaps surprising given the presence in that country of PPM, but it is Demag’s Paris operation that will handle all Terex’s sales, service and marketing for France.

PPM, it seems, is winding down and for cranes the name is being dropped. Steve Filipov confirms that PPM will no longer manufacture three, four or five axle cranes. It will continue to make reach stackers for the ports industry, but the only crane to be made at PPM’s Montceau-les-Mines factory will be the two-axle 35t ATT 400-3 all terrain. Its name will change, however. It is to become the AC 35, to fit into the Demag line up.

‘It’s still the best two-axle on the market,’ Steve Filipov believes.

Only the reachstackers will continue to carry the PPM name.

At least the PPM name went out on a high note in Germany; in the 35t class more PPM ATT 400s were sold there in the first six months of 2002 than Liebherr LTM 1030/2s. ‘We sold 20, Liebherr sold 18, which is pretty good for the first six months,’ says Steve Filipov.

Product development

There is no shortage of new product development planned at Demag.

  ‘It’s a very encouraging scenario in my opinion,’ says Fil Filipov. Development work at Demag before the takeover is being continued. New cranes in development include the AC 200-1, the AC 160-1 and the AC 130. The AC 200-1 is a five-axle 200t all terrain with a 68m boom. Deliveries begin in March or April 2003. This machine will be exhibited at the Intermat show in Paris next year. Alongside it will be the prototype of the 160t capacity AC 160-1, for which deliveries will not begin until probably August next year. This machine will have a special carrier with axle spacings designed to meet the highway regulations of various US states. The AC 130 is an upgrade of the AC 120.

The first combined Terex-Demag engineering meeting in Zweibrücken in September – at which engineers from both sides came together to see how they could combine and what they could learn from each other – confirmed plans for two other new models.

A highlight of the new product development programme is the CC 1500, a 300t crawler crane designed with the North American market in mind. The CC 1800 is already marketed as a 300 tonner but it is ‘a little too beefed up’, says Steve Filipov, to compete effectively against the Manitowoc 2250, which together with the Manitowoc 999, rules the 200t to 300t crawler crane market segment in North America. The CC 1800 is in fact more like a 340t class crane, Filipov says.

The CC 1500 will have the same carrier as the CC 1800 but it will have a new boom system.

Also now planned is a fourth city crane model, to head off Liebherr’s planned LTC 1050/1. It will be on three axles and sit in the range between Demag’s AC 40-1 and the four-axle AC 60 city cranes.

Terex’s Compact Truck project is officially still alive and has been handed over to Demag engineers.

  ‘I am going to have my German friends revive it,’ Fil Filipov says. They will explore whether any aspects of Compact Truck technology that Terex is licensed to use can be transferred to enhance any Demag product. For example, the feasibility of offering all Demag city crane models with the option of hydrostatic drive is being investigated.

Terex intends to follow Liebherr into the used equipment business. ‘We are going to have a reconditioning centre fro Demag cranes in Zweibrucken and most likely for PPM in France,’ says Steve Filipov. But unlike Liebherr, Demag will only refurbish brands within the Terex stable, not competitor brands.

Before all this though, the Filipovs have cleared the decks at Demag. Some 125 cranes were sold to Dutch trader Van Adrighem in a deal worth more than E20m. ‘We needed to clean up house and get ready to do battle,’ explains Steve Filipov.

Terex has set very ambitious sales targets for its Demag division. Steve Filipov says that for the next few months the target is E40m in sales every month. In previous years that number would have been about E25m and the market is significantly down this year. In Germany, in particular, Demag had a terrible start to the year, selling just 29 all terrains in its home market in the first six months, compared with 86 units in the first six months of 2000.

The Filipovs are reasonably confident that the targets can be achieved, one way or another.

‘If the orders can keep coming in we should be okay. But we are not counting on that. People are pretty morose out there. Generally the market is tough. We’re going to have to go out there and beat up the competition and take it away from them. We’re going to have to be aggressive,’ Steve Filipov says.

‘It all depends on sales,’ he stresses. ‘Unless we can go get market back from Faun in Germany, from Grove in the US, from Liebherr in France and Spain… if the sales don’t come in, we’re going to have to take a different strategy.’