M&As, emerging markets key for big players
Updated: 2007-11-30 17:14
The growth target is 25 to 30 percent a year in China, and may be even higher with M&As.
He said although Chinese companies are valued high and the government is cautious about foreign investment in the construction equipment industry, Terex wants to build a long-term partnership with Chinese firms, including helping them enter the global market.
The Chinese market has become integral to Terex's sustainable growth.
Currently 80 percent of the Westport, Connecticut-based company's revenue comes from North America and Europe, but DeFeo hopes that the rest of the world, especially Asia, will account for one-third of revenue in the long term.
The company plans to grow its global sales to $12 billion in 2010, from $7.6 billion in 2006.
"China is a core market and we want to develop a mentality of China as a domestic market for us," said DeFeo, who has been to the country twice this year and plans to return next month.
He said he hopes sales from China reach $1 billion to $2 billion in the coming years. The figure for last year was about 2 billion yuan, industry sources said.
Besides exploring M&A possibilities, Terex wants to consolidate its Chinese businesses in what it sees as a strategic step for future growth. The company, which has over 50 subsidiaries worldwide through acquisitions, has six different locations across China.
The equipment maker is establishing a holding company in Beijing, trying to pool its resources.
Expanding production is another priority to serve local needs and increase the firm's global competitiveness with Chinese cost advantages.
Terex, which already has a strong presence in cranes, aerial work platforms, compact construction equipment, and mining equipment, wants to bring more products to the local market.
"As the country's economy develops along the coast where you have the highest development, China will need to increase productivity of labor and find aggressive ways to improve safety," said DeFeo. This means increased demand for equipment, he said.
The company's products have been used to construct the National Stadium, the Three Gorges project and the Qinghai-Tibet railway.
Last year, Sinopec, Asia's largest oil refiner, bought four of Terex's most powerful cranes, which can lift 3,200 tons, for its offshore oil-field construction.
This year, Terex opened a factory for mini excavators in Sanhe, close to Beijing, and added a factory in Tianjin.
DeFeo said the company is still evaluating a location for its aerial platform products, but construction of the factory will start next year.
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