12.01.2017

Terex to close China plant

Terex Cranes has started the process to close its crane manufacturing plant in Jinan, China which was scheduled to build the new 300 tonne LC 300 lattice crawler crane, originally due to be unveiled at Conexpo in March. The plant ceased production on Tuesday and will wind down over the next few months.

It has also been confirmed that the LC300 will not make it onto the company's Conexpo stand, not particularly due to the pending plant closure, but as a result of the crane falling foul of the company’s tougher stance on not launching products until they are proven to be fully market ready. That policy was spelt out by Steve Filipov in an interview with Cranes & Access in November when he said: “In the past, we have had a very bad experience by bringing products out too early, and much as I want to push for new products, they have to work, be competitive, reliable and top quality. Unless they meet these requirements they will not be launched.” See Big changes planned for Terex Cranes- Steve Filipov interview

As to where the new crane will now be produced, we understand that nothing has yet been decided, but that there is room and the relevant expertise at the Terex plant in Oklahoma that has already taken over production of the Terex cranes previously built in Waverly, Nebraska.
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The Terex LC 300 on test at the Jinan plant in China

Terex acquired the Jinan plant when it purchased a 65 percent majority stake in Shandong Topower Heavy Machinery Company in August 2010, which built lattice boom crawler cranes in the 70 to 360 tonne class. See Terex acquires in China The joint venture became fully operational in March 2011, See Terex Cranes celebrates start of Topower agreement and then in November 2014 the company took over the rest of the Topower equity See Terex Cranes takes all of Topower

Vertikal Comment

This news is a little surprising given the effort that the company has put into this facility and the fact that it has been so recently chosen as the global production facility for the new 300 tonner. Although this is the second time that Terex Cranes has pulled out of Chinese manufacturing business. It acquired a 50 percent stake in Sichuan Changjiang Engineering Crane Co. of Luzhou, Sichuan Province in 2006. After struggling with the business for many years it passed on most of its stake to China Sinomach Heavy Industry in 2012.

While the Chinese market is large and still has enormous potential for more growth, it is tough for foreign companies to successfully compete on a local level.
It requires an extremely long term approach, but then it may be better to leave well alone for now and try to re-enter the market a few years down the road.

This would have been a hard decision for Terex, but in the cold light of day it probably makes good sense allowing it focus more on part of the business where it has more control and shorter term prospects.

Terex could even exploit the situation and win some 'Brownie points' with the new Trump administration by claiming it is closing its Chinese plant and moving production back to the USA!