As a consistently top five-ranked original equipment manufacturer, Terex Corporation has absorbed its fair share of trials as a result of the turbulence across global markets, but it has also emerged as a consistently optimistic voice despite the downturn. Moving forward, with the group’s sale of its materials handling division (which has been dragging down the group’s overall profits) for $1.3bn to Konecranes we can only expect the group as a whole to increase in its optimism in the other segments as it refocuses on its profit drivers.
The man heading up Terex in the region as the groups navigates these developments is Sharbel Kordahi. While technically the managing director for Terex’s aerial work platforms (AWPs) and materials handling divisions in the region, Kordahi has taken on the role of something akin to the go-to-guy for team members from across Terex Corporation’s five divisions — which also include cranes, construction and materials processing.
Nevertheless, Kordahi’s is an AWP man, and with good reason, as he notes: “In terms of market share, Terex AWP is the strongest business in the region.” It also achieves the second highest turnover after Terex Cranes, which leads due to the price of the product.
However, in terms of strategy and market positioning, the maintenance of high market share is the achievement to which all brands aspire and which some even sacrifice short-term profit in a desperate bid to secure. This is because market share, more than anything, is seen as the gateway to long-term profitability through aftersales and brand immortality.
With the most recent product launches and developments in 2015/2016 and at Bauma, and with its Genie-branded range of AWPs in particular, Terex has continued to relentlessly pursue both the spoken and unspoken needs and desires of its customers — including those in the Middle East — by delivering ease-of-use, greater capability, productivity and flexibility.
One product creating a stir is the Genie Z-60/37 FE fuel-electric hybrid, articulated Z-boom AWP — a modest machine in terms of working height at 20.39m, but one that promises to deliver a devastating combination of productivity and flexibility in its size class.
Kordahi notes: “With the market increasingly looking at fuel-efficient and environmentally friendly products, definitely the battery-driven and hybrid Z-60/37 FE are very exciting products. There were a lot of nice things said about them during Bauma and now we see customers coming in with orders.”
Gary Cooke, Middle East sales manager for Terex Aerial Work Platforms, confirms: “The first orders have been placed for units coming into the region, so we just expect that to gather momentum as the year goes on.”
And both men testify to what they see as a shift in the region’s attitude towards hybrid machines, which have long been eschewed in favour of familiar diesel. Cooke comments: “I think looking forward, if you look at the UAE, especially where they linked the fuel prices at the very low dollar oil barrel. As the prices increase as people expect, the price of diesel will start to rise — so people will now start to look at the hybrid solution as a value option. We only see that demand getting stronger.”
A technological leap that has contributed to the increasing attractiveness of Genie’s fuel-electric hybrid machines, like the Z60-37 FE AWP, from the perspective of fuel efficiency is the use of independent AC motor technology.
Kordahi notes: “The big leap that was made in the past few years was the introduction of the AC motors. Earlier, everybody was using DC motors, and even if you were to get a machine equipped to be a rough-terrain electric machine, it would not have the same efficiency as a rough-terrain diesel machine. Now, with the technology of the AC motors, and with it becoming more affordable (because also earlier AC motors were very expensive), what you have is an electric machine with an efficiency that is 95% that of a diesel machine — so a full-electric rough-terrain machine.”
He continues: “The appetite was always there for fuel-efficient products, but it is about more than just fuel efficiency in the region; it’s also the environmentally friendly aspect of the latest machines. If you look at the government of the UAE and all other governments in the region, they are looking at companies that are reducing their carbon footprint — so definitely it’s a natural progression for the region to see more of these environmentally friendly products, whether they’re electric or hybrid.
“For us, it started about a year-and-a-half ago at The Big 5 — where we had a lot of customers walk into our booth and say, ‘what electric or hybrid machines do you have on the stand?’ —that’s when we realised people were becoming more cautious about the environment and fuel efficiency in their selection of products.”
The other significant advantage of the hybrid-electric functionality of the Z60-37 FE is that the choice between its electric and hybrid modes provides great flexibility for operators depending on the jobsite. Run just off the batteries, the unit can go for a full day without charge — allowing project sites with a mains connection to recharge the unit overnight and forgo the use of diesel entirely. On the other hand, if placed on a remote jobsite, the unit can maintain its charge for a full week in its fuel-electric hybrid mode.
In both instances, however, if the battery runs down and unit is depowered, it can still drive to a charge point, as the diesel engine can recharge the battery at a sufficiently high rate to drive the independent AC motors. Once reconnected to the mains, it then takes four to five hours to restore the battery to 25% charge.
Many of these features speak particularly to the rental segment, where customers may only want the unit for the day, or may be keen to cut down on their fuel costs, as well as reduce their storage of diesel on-site and transport costs.
Kordahi confirms: “Currently the market is rental, but that will change once that market penetration is there. Efficiency is the reason that they are coming to us: they see the value.”
He notes that on top of this, projects from across this region, like Dubai Expo 2020 and the 2022 FIFA World Cup in Qatar, and the broader objectives of all the Gulf’s authorities are all demanding greater sustainability — so products that comply will naturally succeed.
He adds: “It is also driven by company culture and social responsibility, including for Terex: our mission is zero harm — which we seek for our employees and the environment.”
A final victory for machines like the Z60-37 FE, with its efficient and cost-effective AC motors, is the power of the unit. Cooke adds: “It’s very powerful in terms of the torque it generates, so driving around a construction site is no issue, whereas in the old days, with the old DC motors, you’d struggle.
Kordahi notes: “Most of our electric rough-terrain products, whether scissors or booms, have AC drives. That started with the 69 range, but now we are bringing it to other products. As an end user, if you can have an electric machine that can go on a 30° slope, why not? Earlier, the DC motors couldn’t even go on a 10° slope — so that has made a huge difference.”
Plenty of range
While it is easy to get swept up in the bright future of hybrid machines in the region, Kordahi notes: “It is still predominantly a construction and oil and gas industry for AWP — so while we are always excited about new and/or smaller products, the biggest impact we see is with bigger products and bigger booms.”
Particularly exciting for these segments are Genie’s recently launched SX-150 Super Boom, and the larger SX-180, launched three years ago.
Once again tailored to rental, the SX-150 not only fills in a gap in Genie’s pre-existing range between the SX-180 and the SX-125, but delivers a novel system of pre-programmable operational settings that restrict the working height of the machine to the height requested by a rental client as per the rental contract.
Kordahi notes: “The fact that you can have the SX-150 programmed to different heights helps rental companies avoid the problem of having this machine stuck in their yard. Instead of them not sending it out, because an end user only requests a height of 41m, they can programme their SX-150 to only go up to 41m, and give it to the customer and price it accordingly.”
Comparing the two Genie models, the maximum working height of the SX-180 is 56.69m, and the maximum horizontal reach is 24.38m, while the Sx-150 has a top working height of 48.33m and 24.38m horizontal reach.
Kordahi comments: “Previously there was a big gap between the SX-125 and Sx-180. From a price perspective, there was at least a 40% gap between the two models, and not everyone wants to go to 57m — so it made sense to bring in the SX-150. There is definitely a market for both, particularly within oil and gas industry.”
Room to rotate
With Genie’s telehandlers, as with its Super Booms, the demand from the construction and oil and gas segments is for larger models.
Kordahi states: “The Middle East is predominantly a high-reach market, so the GTH-4014, GTH-4018 and GTH-4018B are the dominant products, and what we now see is the region becoming more excited about telehandlers that are rotators, which become more like mini-cranes — so there is a big push towards the GTH- 5021 machines, which are again geared towards the construction sector.”
The GTH-5021 R rotator telehandler can equip a range of mini-attachments, including forks, winches and man baskets, and Kordahi notes: “We sell the high-end, proper man baskets, which means they are EN 280-certified, where the operator in the basket has the main controls. Many competitors just use a cage, which is very dangerous, because the person in the basket has no control and the guy in the cabin doesn’t know what’s happening up there. We have the man basket operator controls on all our telehandlers.”
The provision of man baskets on models like the GTH-5021 R is seen as complementary to Genie’s dedicated AWPs, as Kordahi explains: “They have different applications. The main idea behind having a man basket is to make the telehandler more flexible on site, so instead of having a customer waiting for an AWP machine to come on site for a two-hour job, he can just equip his man basket and do the job.”
A Fond Farewell
Aside from Genie, Kordahi has been heavily involved with Terex’s Material Handling division, which handles the Demag range of industrial cranes. Terex acquired Demag in 2011, so comparatively recently — but assuming all goes smoothly, the Terex business unit is all set to be sold to Finnish crane giant Konecranes for $1.3bn by the end of the year.
In the Middle East, Kordahi played a big role in helping to integrate the Demag business unit with Terex’s broader operations, and he notes: “Demag is a fantastic brand. I visited a customer in Kuwait who had a 10t crane that is 36 years old and still running, and the customer said he wouldn’t change it for anything — so it’s a very reliable, well-rooted product.”
However, Terex has had to face some harsh realities in the current economic climate, and one of these has been fierce competition and aggressive pricing in industrial cranes that have hit the sales of its Demag products.
Kordahi explains: “It’s not that the division is doing badly, but the competition is very high at the moment. The market is in a predicament when it comes to payment and payment conditions. A lot of our customers are coming to us and saying, ‘We used to pay you a 20% down payment and 60% on delivery and 40% on installation and commission; now we only want to pay you a 5% down payment and the rest throughout the cycle of delivery and installation’ — which for us is sometimes a no-no because the Demag product is never the same from one project to another. If someone places an order for a 5t crane and cancels, we cannot simply give the crane to another customer, because the specifications — the span, the height — are very site-specific.”
Eyes forward
While Terex Middle East has seen a slow start to 2016, looking to the rest of the year, Kordahi is optimistic that things will pick up. He states: “We now see a lot more orders or quotes being turned into orders now, and we will have a very busy September through to December.”
Overall, more than a lack of projects and customers who needs equipment, a persisting problem for Terex’s Genie range and it’s rental customers is the prevalence of late payment.
Kordahi explains: “The fact of the matter is that when people do not have enough CAPEX to buy machines, they will go to rent — but what we are seeing in the region now is a little bit of a different story. Rental companies are not struggling to find jobs, but they are struggling to find jobs where they get paid for their services, and that’s why it’s holding a lot of rental companies from investing.”
He continues: “The whole machinery industry is now in a down cycle, there is no doubt about it — look at anybody’s result and you can work that out. Some companies are less affected, depending on how much business they have in markets that are heavily exposed to the down cycle —so it’s a mixed ball game —but in general, the whole industry is affected.
Markets that are less exposed including the smaller electric Genie products for indoor applications, which see a constant demand from the service industry for use in hospitality, retail and airports. But Kordahi admits: “I can’t say that any of our segments are flourishing, and we are being very careful in our spending, and very careful towards the markets.”
Cooke adds: “There are companies that are ready to take heavy risks, but Terex is not one of them. There are customers that we trust enough to take risks with, but we are not just going to dump machines into the market in the hope of being paid for our machines.
“There are opportunities out there with companies are looking to pay further down the line, or get you to finance things, but then your working capital gets used up. We will take calculated risk, and others willing to take more risks than us are welcome to carry on.”
Kordahi ends: “If we look at our total pipeline, the number of quotes we have in, and the conversations with our rental customers who haven’t spent capital in H1 of the year, the appetite is definitely there to order in H2 — but more for fleet purchase, fleet replacement or fleet add-on than for single units.”
