Opinion

Terex, Konecranes tie-up looks like a smart move

While the number of strategic tie-ups and divestments in the construction machinery industry can at times seem epidemic, at first blush the announcement by Terex and Konecranes of a planned “merger of equals” looks to have promise.

In recent years, Terex has focused on its presence in the lifting segments, including aerial work platforms and construction cranes, as well as materials processing. Meanwhile, Konecranes has a strong presence in the Middle East, especially in the ports sector and in industrial overhead cranes.

READ MORE: Terex, Konecranes merger to create $10bn cranes giant

Combining complementary businesses will give the merged firm a broader offering. Customers will be able to select from a wider range of machines, while the sales team will have more opportunities to convert existing customers over to new segments.

If the merger goes ahead – regulatory approval is expected next year – the larger firm will have a bolstered and responsive service organisation, says the outgoing CEO of Konecranes, Pekka Lundmark. This isn’t just about boosting existing service levels, it’s also about winning new service contracts globally, which is picked to be a growth area, as more and more customers look to have their servicing outsourced. That will be significant in the port industry, a sector of growing importance in the region.

All in all, it looks like there are plenty of savings and synergies for the new company, including supply chain efficiencies and lower costs. But real savings can emerge in the longer term, with the combined research and development of the two companies. Efficiencies on the production side, such as greater commonality of components and spare parts, may take longer, but will also produce benefits for the company and its customers.

READ MORE: Terex, Konecranes merger to create $10bn cranes giant

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