Terex

Critical Issues

Normalization of the credit markets is one of the top issues facing the construction industry in general as well as the construction equipment industry. The inability of smaller contractors to get credit is putting a significant damper on the few signs of recovery we have begun to see lately. We shouldn't encourage irresponsible lending, but the pendulum has probably swung too far the other way. The other major issue facing our industry is meaningful investment in infrastructure that will drive long-term economic growth, making the movement of goods and people more efficient and effective. The Federal Highway bill currently awaiting re-authorization by Congress is the most immediate opportunity we have, as a country, to begin making the required investments.

Current Trends

I think that with access to capital constrained, we are going to see development of innovative equipment ownership strategies.  Why should a contractor be forced to choose between short-term rentals, which are expensive, and outright ownership, which is capital and cash intensive and forces the contractor to commit to a single type of equipment?

Looking Forward

While I believe we are at the bottom of the cycle, 2010 promises to be as challenging as 2009 because the pace of the recovery is still an unknown.  At Terex Construction we are making focused investments that enhance our business today and also position us for the future. We have more new and refreshed models of construction equipment being introduced in 2010 than in the history of our participation in the U.S. market. We are also investing in our people in both skill and overall resource levels to enhance our ability to serve our distributors and end-users.

Government Compliance

As a construction equipment manufacturer, the biggest regulatory change we face is in the area of engine emissions, specifically Tier 4. Our engineering and supply chain teams have been working on this challenge for a long time. There are competing technologies and it is unlikely there is a one-size fits all solution for all types of equipment.  Since Terex sources engines from engine manufacturers, we have the ability to select the right engine and technology for the right application. Simultaneously, we are reducing the overall number of engine suppliers to reduce product complexity.

Best Practices

A few months ago I probably would have said conserving cash was the best practice to adopt. Today, however, companies that will be successful in the long-term are also beginning to prepare for growth and putting the investment into place to capitalize on the recovery when it occurs.

Tags: 2010 January Issue , Executive Insights