Under the longtime direction of Ron DeFeo, Terex Corp. has recently refocused product lines to curtail exposure to general equipment markets while increasing its global footprint in higher-end machinery, such as cranes, aerial work platforms and port equipment. Expecting Terex to achieve annual revenue of $7.3 billion to $7.5 billion this year, DeFeo spoke with ENR over the phone shortly after last month’s Bauma China exhibition wrapped up.
ENR: What are the business prospects of Terex in the next two years?
DeFeo: We expect Terex business to be relatively flat because our end markets are uncertain around the world. There are obviously some positive markets, such the United States and India and perhaps the U.K., but many of the European markets are still uncertain, and many of the developing markets are in poor shape, if not in decline. That is a somewhat challenging outlook for machinery, but we believe at Terex [that] we can improve our performance through a significant number of internal conditions, such as projects, products and cost reductions.
Are you going to invest more in research and development?
We are planning to move some of our core R&D away from engine conversions and into product development. As you probably know, as much as 50% to 70% of R&D budgets of most machinery companies are focused on engine conversions due to Tier 4 engines that are required in western Europe and North America. That's taken away an incredible amount of engineering resources. With that ending, we think we can devote some of our efforts to real product development.
What kind of product development?
I want to be careful—we don’t like to tell our competition what we are working on. But each one of our businesses is looking at innovative approaches. Let's take materials handling—that is one area.
In China, some say there is a lot of potential, while others say nothing is happening. How do you see it?
China is a challenging market, and I believe there are still very good opportunities in China. I think Terex is well positioned in China. We are not going to compete in its domestic market with the likes of Sany and XCMG in their core products. In many respects, they have overproduced and are in a very difficult period because they were too liberal with credit.
We will focus on our areas of specialty, such as aerial work platforms, above-600-tonne cranes, materials-processing products and materials-handling products. We think that these are areas where the Chinese customers and the region will benefit from our investments in China.
Will you opt for collaboration with Chinese companies?
In general, no. We have some collaboration in a limited way. But future major collaborations, we think, will be difficult in this situation.