Forklift News - Acquisition opens up Asian market for Terex

A Terex HC 60 Lattice Boom Crawler Crane

Terex’s purchase of Italian port equipment manufacturer, Fantuzzi, as reported last week (Forkliftaction.com news #374) will allow the company to diversify its manufacturing base with particular focus on Asia.

Terex is excited about the opportunities this acquisition offers its existing business to increase its product range and services, and to fill what it perceives as "skill gaps" within its own organisation.

Ronald M. DeFeo, Terex chairman and chief executive officer, says it is a great opportunity. "(Fantuzzi) is a company that had some difficulty in the Italian marketplace, but it has great businesses in Germany and China."

Ron DeFeo

"It is a growth business and provides an attractive growth opportunity in the intermodal transportation area of infrastructure (and) is a logical extension of what we do.  It fits our strategy of expansion in key product-related areas."
Terex believes it can make a big difference in the management of the Fantuzzi business.

"We just think, operationally, this company could use Terex’s leadership," says DeFeo.

Terex’s purchase of Fantuzzi raises the question of global competition.  Forkliftaction News approached a number of port operators including  NOL, DP World, APM Terminals and PSA International but all declined to comment.

Neil Davidson, Drewery Shipping Consultants director, says any consolidation will naturally affect the choice that port operators have.

"But consolidation is the watchword in so many sectors, including port ownership and also liner shipping.

"As to the effect on port operators of consolidation of equipment manufacturers, I think a lot depends upon there being at least two or three choices of major suppliers. If this is the case, then there will still be a degree of competition as all suppliers are more or less equally able to supply equipment to any particular port."

Fantuzzi has been seeking a strategic partner since early in the year.  According to Ron Nichols, Terex Cranes president, the purchase came through an auction process. Other companies involved in the process were Konecranes, Manitowoc and Kalmar.

Despite earning EUR447 million (USD 658 million) last year, Fantuzzi has had some difficulties in the past few months. It missed a bond repayment of EUR55 million (USD80 million) in July and the Italian business has been struggling with cash flow.

DeFeo says it is a business that has been run by a family and although they have done a great job over the years, it is "a business that is out of balance".

"However, we do not believe this business is losing market share. The Chinese and Germans are gaining some share with very strong businesses and excellent backlog," he says. "Maybe some of the Italian businesses are losing market share because they do not have enough cash to run the business effectively and get production out the door. "

Terex acknowledges that it must first "fix the Italian business" before it can access the opportunities in China and Germany.

"It’s going to require some work but this is not work that we feel ill-prepared for," says DeFeo.

Terex and Fantuzzi have common businesses in the cranes division and subsidiary PPM's reach stacker lines.

"The reach stacker product lines fit well with the broader Fantuzzi equipment," says DeFeo. "There are minimal customer and geographic overlaps, so (there are) a lot of nice synergies between our existing businesses.

"This acquisition helps us solve an ‘orphan’ product category in our family."

Fantuzzi is considered a global leader in port technology.  It has a diverse product line – ship-to-shore, rail and rubber-tyred gantry cranes (34% of its product mix), straddle carriers (30%), reach stackers and forklifts (28%) and harbour mobile cranes (8%). Revenues are split between Europe, the Middle East and Africa (56%), Asia (27%), North America (11%) and Australia/New Zealand (6%).

It has three manufacturing facilities in Italy and one each in Germany and China.

From a technology standpoint, Terex sees the lifting side of Fantuzzi’s business as complementary, with technology from Noell and the Chinese business to have significant financial operational developments that will be deployed in Terex’s other crane businesses.

Nichols says there are a number of key leaders at Fantuzzi that Terex will continue to rely on.

"We value these people tremendously and we will work with them.  We welcome them to the Terex family and we will blend them into our business.

"Terex has had a skills gap. Our business in the crane side has been stretched at the seams and we have had trouble finding talented people."

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