Manitowoc Crane Group (MCG) passed a major psychological milestone when it announced that its annual sales had topped a billion dollars for the first time to reach $1.25bn ifor the financial year ending 2004. Cranes now account for 64% of parent The Manitowoc Company Inc’s group $1.96bn, with the remainder coming from shipbuilding and food service operations.
For Glen Tellock, the fresh-faced president of MCG, these figures represent the fulfilment of a carefully thought out plan, and are no accident.
He says: “When we brought together Potain, Manitowoc, and Grove and went through the transition in 2002 we sized the business to be $750m to $800m. We are now into $1bn and climbing… I look at how we manage the upside and leverage the resources because we got to keep the best resources when we went through the tough times earlier.”
Tellock joined the Manitowoc group in 1991 as director of accounting when the entire group had sales of a mere $250m. He went through a corporate restructuring in 1993/94, and on his way to the top job, was corporate controller, vice president finance, chief financial officer (1999), and senior vice president (2000). Before joining Manitowoc he was in public accounting at Ernst & Whinney, and then in financial control at the Denver Post newspaper.
Unsurprisingly, given his strong financial background, Tellock is a passionate advocate of economic value added (EVA), the financial tool at the heart of Manitowoc’s strategy. EVA essentially measures how much more valuable a company has become during a given time period and, by that measure, Tellock has reason to feel good.
Winning the numbers game
For example, MCG’s operating profit for 2004 was $57.8m, up from $33.6m the previous year. It posted record revenues and strong profit growth, while improving EVA by $18m over previous levels and exceeding its net debt-reduction goals.
In his time at Manitowoc, Tellock has seen a great deal of upheaval, first with the Potain acquisition in 2001, then with the Grove buy a year later. But he insists that the group is past its transitional phase (notwithstanding hints that there may well be more acquisitions to come – see Phil Bishop’s piece on page 61).
Tellock says: “The biggest opportunity we have is to leverage the global platform that we now have in place. We have manufacturing in Europe, China, and the Americas, and we also have engineering expertise in all those regions. We have an infrastructure in place to do business around the world, and what we need to do now is leverage those resources. Not only do we need to leverage the manufacturing and the product side, but we also need to leverage our human capital, in other words, our knowledge.”
And that means employing the people with the most knowledge about MCG’s products in the areas of the business that are growing the most, he says.
A good example of leveraging is the recent MCG deal with Amquip for the sale of $30m worth of tower cranes announced at Conexpo in Las Vegas earlier this year. Tellock explains: “[For this contract] we have a US-based customer with relationships in the United States with a product manufactured, for the most part, in Europe where all the engineering talent lies…
“We brought in the engineers, people with the product knowledge, sales people, support people – all operating as a team. We will bring people in from anywhere in the world to make it happen. For example, if you, as a customer, have the relationship with one of our people in North America, you know you can go right to this specific person. But if you want to talk to somebody different, you can. We give our customers a point of contact that they may not have had before. That’s leveraging our resources without adding a whole engineering group of people in the Americas.”
Tellock believes that his company’s global experience is a prerequisite for success, but is not the end of the story. MCG’s real differentiators, he claims, are its distribution base, product support through its Crane CARE service programme, and a commitment to innovation.
“One of our strategic initiatives, which we continue to meet on an annual basis, is that 80 per cent of our revenue will come from products introduced within the last five years. In the last five years, for example, our entire RT range has been redesigned,” Tellock says.
MCG is also determined to put quality first. “Quality is not a differentiator; everybody expects it. However, it is when you don’t have it that it becomes a problem. You can’t afford to become complacent,” says Tellock.
Quality inevitably comes under pressure in a price driven market. Indeed, Tellock identifies commodity pricing as the biggest challenge the crane industry faces in the coming year.
He says: “It is going to be all about how to maximise growing markets in a period where the supply base may not be structured well enough to take on the big increases we have had – tyres, steel, and so on. The question is: How do we take advantage of the opportunities we now have?”
Tellock insists he won’t accept shortages as an excuse for not meeting customer demand. “You have to come up with other ways to meet those demands. It could be alternative suppliers, alternative material, or engineering changes. There are a lot of ways to mitigate the effects of shortages.”
Tellock is upbeat about the future, but ends with this warning: “People have been managing their businesses in a down market, and all of sudden it has started to grow. You manage differently in a down market than an up market and you have go to get people to make that shift. Not all of them will.”
