Another in a series of byte-sized one-on-one visits with construction industry insiders. Terex president of construction, George Ellis, was at The Rental Show. I asked Ellis about Terex’s plans for the rental market.
1) The TRB840R backhoe loader is positioned for rental, with features removed that “add cost but not value.” How does this reflect your focus on the rental channel?
Coming out of the crisis of 2009 and 2010, we had to step back and look at our traditional distribution through dealers. We had tried for years to grow a robust distribution channel to compete with the many players in the compact [equipment] world. It was obvious to me that the capital, the desire, was not there.
As it began to recover, the rental space was growing at a rapid pace and certain products within that space were growing more than others. So we focused on those products [where] the volume would be there. “The rental rate is the rental rate.” If I heard that one time, I’ve heard it a thousand times. I have to make something that is attractive for a rental company or customer to buy a machine from me, to differentiate myself from everyone else.
At the same time, we had the Tier changes going through. The competitors are going to blindly go to Tier 4. I took a different tack. I need to dig a hole; what can we do with a tool to accomplish the same thing with a much lower cost point? So we designed a machine with the largest engine we could at a price point below a higher-end T4-Final type engine that could basically do the same thing yet provide some of the things that a rental customer would expect.
Similarly, with my other compact equipment, we are going through a design phase where we…will use the same thinking. We will produce a line of products, for the rental market, specifically for North America.
2) How will you take advantage of the existing Genie distribution structure? Do you see it as a channel that can complement or even supplant your existing distribution channel?
Absolutely. That’s why we’re focusing on the rental fleet. We’ve gone to our distribution and discussed this with them. We understand that if we want to grow our product to support their dealer-distribution stores, we have to have more wallet share of the people buying these pieces of equipment. And we’re just not successful in the traditional model of distribution.
3) Do you have any plans to partner with a Chinese manufacturer, as Volvo has done with SDLG, to provide a lower-priced machine?
From a construction equipment standpoint, we do not. [We’re doing our own.]