CT: This global development position: Why you? Will you keep a focus on cranes?
When my dad retired, and I took over the business in 2003, one of the first things I told [Terex chairman] Ron DeFeo was that I don’t want to be Mr Crane for the rest of my life. I want to look for other opportunities and broaden my experience. This was the opportunity to do that for a variety of reasons.
First, we started working on strategic maps—$12bn in revenue, 12% profit in 2010. As we started to roll up all the segments, we realised that a big piece of growth was from developing markets. We have an office in Moscow, we will start a facility in Dubai in the fourth quarter of the year (in Jebel Ali Free Zone), and we have a sales office in São Paolo, Brazil, selling all of Terex’s equipment through our own network. In China, we have multiple projects going on. As we step back a bit in the business, we’ve seen there isn’t enough firepower behind growing markets.
Are cranes still on my scope? Yes, a big part of growth in developing markets is going to be cranes, and we are going to continue to push that ball down the field. Whether a joint venture, acquisition, local manufacturing, they will all be in my scope.
The key is a local team working on potential greenfield developments, local manufacturing, a potential joint venture, local distribution is another piece of this: how you go to market in Russia, China. All of those things are similar to Changjiang [in which Terex bought a 50% stake of Chinese truck crane firm Sichuan Changjiang Engineering Crane Co., Ltd., and set about modernising it]. I think we have about ten new Terex people on the ground in Luzhou working on the Terex operating system and working on integrating the company into the Terex philosophy.
The business has been great, it is now a different period to when I took over. Then it was less than a billion-dollar business, and I leave with it closer to a $2.5bn business with a good operating profit. As I pass the baton, I’d just say I am never too far from the crane business.
Q: Was it a bad idea to close Peiner?
A: We still manufacture the product. It was the right move to get out of the facility, and we made good money on the real estate. In cranes, we had ten global manufacturing locations worldwide, one more was not the right thing. We market it mainly in North America. We have good orders now, and business growing in the Middle East, and with longer backlogs at Comedil and some of its competitors, people are looking into Peiner internationally. I don’t think it was a bad decision, but the transition could have gone faster.
Q: Whatever happened to your plans to integrate RT production in the USA and Europe that we talked about at ConExpo three years ago?
A: As business picked up, we had some availability in Italy, and sold some Bendinis in the USA. The problem today is availability worldwide; the backlogs are full in both facilities through 2008. Right now the focus is selling the Waverly product in North America and export where it is needed; the same with Bendini, to sell it in Europe and the Middle East. We are looking to sell the RT 1120 into Europe. It is a size that is not available in Bendini. I do think that over time these two groups will get closer together. We are already looking at a worldwide RT strategy—not just US- or European-based product—that we are working on and refining.
Q: What about plans to centralise your US crane operations?
A: From a service point of view they have been. We have 24/7 hotlines in the US, our service team is based in Wilmington, North Carolina, and we have field techs out everywhere. In sales, one team is selling all the different products. There are different territories, but one point of contact in different regions. Scott Smith is leading that. When I took over in 2003, we didn’t have a sales force. Today we have sales and service—20 field techs and five regional salespeople—that we didn’t have a few years ago.
Q: Do you see the Terex-IHI partnership continuing?
A: It is a good partnership. I was just over in Japan for a ceremony marking the 300th machine bought from them. It is a great product, successful in the USA and we do a substantial part of our business from them. Unlike some of our competitors’ partners, IHI doesn’t really sell product outside North America.
