Terex was created by acquisitions. Its genesis can be traced back to the old General Motors off-highway truck division based in Motherwell, which still exists today, albeit under Volvo ownership. But just about every brand within the group has been bought rather than created.
After it listed on the New York Stock Exchange in 1991 Terex embarked on perhaps the most sustained acquisitions spree that the construction machinery sector has seen.
At that time the company consisted of not much more than the off-highway truck division in Motherwell, along with Unit Rig, Fruehauf Trailer and Koehring Cranes in the USA.
Driven by Ron DeFeo, who joined from Case in 1992 and took over as president the following year, Terex spent the next 10 years taking over Clark Material Handling, O&K Mining, Simon, PPM mobile cranes (including P&H and Italian manufacturer Bendini), American Crane, Peiner and Comedil tower cranes, Fantuzzi, Noell, Franna, Fermec, Benford, Powerscreen, Cedar Rapids, Finlay, Atlas Weyhausen, Schaeff, Fuchs, Jacques, CMI and Bid-Well.
In 2002 came two significant acquisitions that changed Terex: Genie (aerial work platforms) and Demag (more cranes). Unlike previous acquisitions these were not distressed or niche companies but major players in their sectors.
Until now, the Terex model had been buying struggling businesses, stripping out cost and trying to rebuild something out of them. Terex was the Poundworld plant firm, piling high and selling cheap. Its adverts proclaimed that you could buy three Terex cranes for the price of two competitors. While German and Japanese manufacturers promoted their technological superiority and bullet-proof reliability, Terex’s slogan was ‘Simple, available and cost-effective’. They aimed to disrupt the markets in which they operated, and often succeeded.
The addition of Demag, and to a lesser extent Genie, changed this. Terex acquired the Demag mobile crane business when the giant Mannesmann industrial conglomerate was taken apart by Vodafone and Siemens. Demag cranes were more technologically advanced than most. Terex had joined the big league, no longer making just rough terrains and truck cranes – “commodity products”, DeFeo and Filipov called them – but now all terrain and heavy-duty crawler cranes, both highly engineered products.
And if Demag (along with Schaeff and Fuchs, acquired the same year) taught Terex to think like the Germans, Genie taught it to think like the Japanese, introducing Terex to the Toyota Production System management philosophy.
By now laden with debt, it was time to take stock and digest, and the acquisitions slowed.
Then came the global crash in 2008 that reduced Terex’s annual revenues from US$8bn to less than US$4bn and saw it plunge to a loss of nearly US$400m in 2008.
Time for a new strategy: diversification from construction equipment into industrial machinery. It bought the factory crane and port equipment business Demag Cranes AG (initially 82% in 2011, then all of it in 2012). This had originally been part of the Mannesmann group along with Demag Mobile Cranes but by this stage was wholly unconnected except for a common brand name.
Read more: The transformation of Terex