All this consolidation in the industry over the past few years, climaxing with the Manitowoc-Grove and Terex-Demag deals, has got me thinking what it is exactly that makes a company an attractive takeover prospect. It seems to me that there are four factors: physical infrastructure (land, property, facilities); financial infrastructure (revenue stream, profitability – actual and potential ); human capital; and brand.
The value of the first two can be quantified by accountants with reasonable accuracy. The latter two are more subjective.
People are clearly of enormous value (fiscal as well as moral). How valuable would Demag be to Terex without all those engineers? This brings us to our cover story this month, which includes some startling statistics on the value of simulator aided training for operators. Even if your budget doesn’t stretch to anything so grand, training is a function that cannot be neglected. Those companies with the best trained workforces are those that are best placed to succeed.
Like people, brands too have a value that cannot be accurately measured objectively. There are reports available that claim that certain brands are worth so many thousand or million dollars, but these are about as provable as reports identifying the greatest living sports star. I attended a lecture recently by Wally Olins, co-founder of the international brand consultancy Wolff Olins. He described brands as being ‘about emotions and attitudes’.
This came firmly to my mind when learning of Terex’s branding plans. Terex has bought many strong brands (but ailing companies – P&H, American…) and, with so many to juggle, it has generally phased out the acquired brand, albeit pragmatically, and reverted to the Terex name. PPM is now being ditched as a crane brand and I wonder how long the Demag name will last. How long before Demag follows Krupp into the mobile crane history books? Wally Olins spoke of the four vectors of branding: product, environment, communication and service. Demag scores high on product and communication (the brand ‘says’ something) and I see it as a stronger brand than Terex. What Terex hopes to do is use the strong Demag product range to strengthen its own brand (and finances, of course). But ditching or even downgrading the Demag name would be a mistake. There is too much value there. Would you feel as good about your Demag crane if it had the name Terex on the side instead? Would Ford drop the Aston Martin name? Would Fiat drop Ferrari?
