international
construction
january-february 2015
EQUIPMENT
56
Terex
Executive opinions
D.AnnShiffler
asks
Terex chairman&CEO
RonDeFeo
what the
coming year has in
store for the company
and the construction
equipment industry as
awhole.
L
ooking back on 2014, it was
a tougher 12 months than
many would have predicted
at the start of the year.That is true
for Terex among others, with the
manufacturer seeing revenues slip
away from what was previously
predicted from the middle of the
year onwards, particularly in its
cranes business.
So one of
iC’s
first questions
to Terex chairman & CEO Ron
DeFeo was why did 2014 not turn
out as well as originally forecast,
particularly in the cranes sector?
“Of course, we are all business
people and we are optimists at
heart,” he said. “Sometimes our
optimism runs ahead of realism. I
think the end markets aren’t really
growing.There is sufficient work to
keep the current level of equipment
well utilised but non-residential
construction, which is a primary
driver of crane use, remains at a
fairly low level.
“Cautiousness contributes to
confidence concerns, and you don’t
buy large capital assets when you
have concerns about the future.The
goodnews is that our customers are
smart. Their equipment is highly
utilised, values are increasing and
eventually they will need more
equipment.
“The alternate driver of growth
is age and cranes last a long time.
Replacement can be postponed but
not forgotten. It’s our view that we
will see a bettermarket in2015 and
an even stronger market in 2016.
But it’s best for all of us to plan for
themore conservative case,which is
little or no growth.”
Greater growth
This of course prompts the
question, what needs to happen in
theUSmarket and further afield to
get thingsmoving?
Mr DeFeo said, “We need greater
GDP growth, which drives all
investment decisions. I’m hopeful
the current price of oil will act
as a tax cut and a stimulus for
the economy. Even though I’m
in manufacturing, we need to
remember that more than two-
thirds of the (US) economy is
service and consumer based.
With money in their pockets,
the evidence usually suggests that
spendingwill increase.
“That will eventually show up in
theeconomyandGDPwill increase,
whichwill increasepeople’sdesire to
invest in appliances, housing, and
the like. It’s historic andpredictable
and without +3% to +4% GDP
growth the economy will languish
and middle class incomes will
remain threatened.
“More precisely as it relates to our
industry, we need a longer term
vision, coupled with some political
courage.
“Regarding our infrastructure,
domestically, I’m not convinced
we will see a lot of either. But we
need it. The Highway Bill that has
been inplace for a couple of years is
way underfunded.The gasoline tax,
or user fee, of US$ 0.184 a gallon
(about US$ 0.05 per litre) hasn’t
increased since 1993.
“The lower gas prices present
an opportunity. Prices are down
US$ 1 a gallon and one might
hope that this is a great time to ask
the customer, you and me, to pay
US$ 0.15 [a gallon] to contribute
to better highways, bridges and
overall infrastructure. There is no
better time to do it than now, but
yet, there’s a real lack of leadership
withinbothpartiestofigurethisout.
The Highway Bill has historically
been a bi-partisan initiative, so
I’m hopeful the new Congress will
deal with this issue. But I’ve been
hopeful and disappointed before.”
AndbeyondUS shores,MrDeFeo
said he did not expect spectacular
growth in global equipment
markets this year.
“Overall, expect a fairly flat
market,” he said. “Not a lot of
growth, but with some pockets
of strength in the UK and North
America, and maybe India. There
will be substantial pockets of
weakness in Latin America, Russia,
parts ofEurope andmixed results in
China. Net, it’s not a bad market,
but not the growth-orientedmarket
we’d all like to see at this stage.”
iC
Terex chairman& CEO Ron DeFeo.
