Something is amiss at Terex Corp.
Last month, investors were buying on rumors of a possible takeover. Soon after, Terex sent out a curious memo of its intentions to pump up one of its core infrastructure businesses, Terex Roadbuilding. All this comes more than a year after Chairman Ron DeFeo told Reuters that he would “fix, merge or sell” underperforming units.
DeFeo has been making good on all three promises: Last year, it merged the road unit into Terex Construction. It also is expanding capacity. “In March, we hired a new district manager, and our plan includes more hires in the near future,” says Don Anderson, general manager of the road unit, which also is building a new factory in Guaiba, Brazil. It is set to replace an older factory and start cranking out machines next year for the expected infrastructure spree ahead of the 2014 World Cup and 2016 Olympic games.
All the while, Terex has been selling off minor assets and major ones, such as its mining division to Bucyrus International Inc., and raising a cash hoard that may lead to new acquisitions, the company says.
As historic Terex looks into its industrial future, sources say that its 650,000 sq-ft Roadbuilding plant in Oklahoma City may be too precious to give up. “The fact of the matter is that Terex Roadbuilding and the Oklahoma City factory is really a focus area for Terex,” says Mike Bazinet, company spokesman. Terex has “invested a tremendous amount of money in this business,” Anderson adds.
All this comes on the heels of a tough year for Terex and other equipment manufacturers who have suffered depression-like losses in jobs and sales. Terex’s annual revenue dropped more than 51% last year to $4.04 billion while it booked a net loss of $450.7 million.
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