Terex Corporation (TEX) reached a new milestone by successfully manufacturing and supplying rough terrain crane in Brazil. The rough terrain crane is its first indigenously built crane in Brazil.
Geographically, the company intends to expand in the Latin American region which includes Brazil by increasing its manufacturing activities. It has plans to expand in the lines of crane product support along with aftermarket coverage catering to the needs of a wide customer base.
The expansion plans are in line with its long-term strategy to flourish in the emerging markets of China, India, Brazil, Russia and the Middle East. The company is increasing its manufacturing activities in these regions in response to the growing demand driven by increase in population.
Recently, Terex has entered into a joint venture with Russian Machines for producing construction and road-building equipment in Russia. The companies have agreed to manufacture, sell as well as distribute their products in the markets of Russia.
In 2011, Terex made the largest acquisition in China by buying 82% of the outstanding shares of Demag Cranes AG, which has been merged with the company by forming a new segment named Material Handling & Post Solutions (“MHPS”).
The collaboration will help Terex in capturing the growing demand for cranes in China. Moreover, a substantial improvement in demand in the emerging markets could offset the weaknesses faced by the company in the European markets.
Terex also inked a deal with China-based Sinomach Heavy Industry Corporation to make the latter a strategic partner for its troubled crane business, Sichuan Changjiang Engineering Crane Co. (SCE Crane).
Under the deal, Sinomach owned more than 50% of SCE Crane and Terex offered its overseas distribution and support channels as well as engineering capabilities for the business.
However, Terex is not the only company to start production in Brazil. One of its competitors, Manitowoc Company, Inc. (MTW) has also opened a new production facility called the Passo Fundo facility in Brazil supporting the energy and infrastructure activities in Latin America.
Currently, Terex retains a short-term Zacks #3 Rank (Hold). We have a long-term Neutral recommendation on the stock.
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