Rick Nichols has guided Terex Cranes through one of the toughest downturns in the history of the crane business. D.Ann Shiffler reports on how he has led the company through tough times and his plans for the company to emerge from the economic slump stronger than ever.
It was January 2008 when Rick Nichols was asked to take on the role as president of Terex Cranes. At that time, the crane business was fun and engaging. Backlogs for cranes of every make and model were huge, and the company's plants were running at full tilt.
Nichols had been with Terex for a little more than seven years, making his way through the ranks of the materials processing and mining division. Transitioning to a new product wasn't difficult, he says. There were some similarities in terms of machine components, and learning the crane market was pretty easy when the market was booming.
"It's certainly different today than when I took over Terex Cranes in 2008," says Nichols. "The market was going very strong, and we as an OEM were in a position that we weren't truly serving our customers due to the sheer volume of demand."
Nichols said in his 25 year career he had never been in a business situation where demand outstripped supply. "2008 was about how fast you could continue to spool up production to meet customers' expectations."
But by 2009, the boom went bust. "In 2009 and into 2010, with both the financial crisis and recession in the US and then the challenges with the European market to some extent, it's a matter of how to control costs and reduce capacity and still being very cognizant that you don't want to push inventory into the chain."
Through Nichols' leadership, Terex Cranes took a very aggressive stance in controlling inventory and stopping or slowing production in each of its factories while working to manage in a much tighter industry.
While the job has been tough, Nichols says there have been lots of highlights. "I joined a fantastic crew of people and a fantastic industry," he says. "The crane business is unique, and people are very passionate about the business. They are really engaged in the uniqueness of lifts and they want to learn and grow and see the capabilities of these machines. This industry is full of great people."
Nichols is proud of the job his team at Terex Cranes has done managing through a tough cycle. He points to what he calls a "the start of a tremendous transformation of Terex Cranes."
Nichols says the company has worked to communicate across its legacy brand operations and to share expertise. "This integration goes farther than the brand," he says. "Look at our new RT 100. This product was a collaborative design effort of our American team and our Italian team. We're beginning to be able to leverage real strength of all the products in our portfolio to pull together a better and stronger franchise."
Among his biggest disappointments this year was not being able to get to Bauma. Like hundreds of crane industry folks in the US, Nichols was grounded by volcanic ash over Europe during the big show in Germany. "I was very disappointed," he says. "We missed a lot of key meetings with customers."
While he missed the show he is proud of the job his team did, he says. "They did a great job in adversity. A lot of executives were not there. While attendance was down, we had very solid attendance from the European region and by the end of the week we saw stronger attendance by people who could finally get in.
"We did a good amount of business at Bauma. We set up video on the stand which allowed those of us who were here to participate in some of the meetings that went on. It wasn't as good as being there and shaking hands, but it was a creative effort on the part of our team."
Altogether, Nichols said his team felt some positive signs at Bauma. "We showed a significant number of new products and we got some traction on some deals."
I had the opportunity to talk with Nichols at a Terex Open House and product demonstration in Waverly, IA back in May. I was very impressed with the entire event and with Nichols' genuineness and passion for assuring the success of Terex Cranes. Following are answers to more of my questions.
What is the strategy for Terex Cranes in terms of getting through the downturn and emerging from a down market? Which cranes are selling best in the US market?
I think it depends on the product and the category of cranes, and it depends on how our competitors position 2010 with respect to feeding the channel and feeding the chain. We are a strong Number 1, 2 or 3 player in all our product categories.
I think our competitors are strong players also. We are using a bit of our freshened product line to push ourselves further [in the market.] We are continuing to look at, from a US standpoint, our distribution channels and determine how to best develop our distributor network's capabilities and how to further penetrate the market.
What are the current and long range plans for the Waverly plant?
The Waverly plant has gone through a transformation. We went from a non lean manufacturer to what I would call one of the leading businesses in the Terex portfolio that is a very lean and flow-oriented facility.
I think a facility typically stands on its own merits, and the Waverly team has done a fantastic job at improving the manufacturing processes and in turn the quality of the product.
I think the lean processes enabled the Waverly facility, in a very difficult market, to ramp up and ramp down quickly, and enabled it to do with an 80 percent reduction in the rough terrain market. Waverly was able to deal with the downturn much better than a traditionally oriented organization.
At Waverly, and throughout Terex Cranes, we are using this economic time to begin to really refresh the portfolio of products. In a time when the market isn't as strong, it's an excellent time to aggressively pursue our portfolio of products and re-position ourselves for the next cycle.
We are showing and demonstrating several new products. This is the first in a successive string of products in both the RT and boom truck classes that we will be releasing over the next 12 to 24 months.
We will have the same type of product pipeline for our tower cranes, all terrain cranes and crawler cranes. We are really taking this time as a great opportunity to try to push the envelope in refreshing the Terex Cranes portfolio.
In part, smaller capacity cranes are tied to the residential market, which has been down for almost two years. Do you envision the market for smaller capacity cranes coming back any time soon?
I don't have a crystal ball. I wish I did. I think we will see the residential market come back. I don't believe it's coming back today or really soon. The smaller end boom trucks have certainly been affected by this downturn, and we are not forecasting a significant improvement in this market.
We are now looking for new market share by fielding new products in that space. It's actually a good time to reinforce our position in the market and be ready for the time when it moves back in our favor.
Will Terex start building higher capacity boom trucks and truck cranes?
At this point, we are not committing to saying what we are doing in this area. We have developed an aggressive design program to freshen these products and there's a very specific timeline for new cranes in these categories.
Terex Cranes recently announced a new warranty program for cranes built in the US. What was the reasoning for extending the warranty coverage on RTs, boom trucks, truck cranes, crawlers and tower cranes built in the US to a two-year factory warranty?
What we've done in the US and specifically in the product quality arena for our cranes through the lean manufacturing process has enabled us to control our quality in a much better manner.
It is now incumbent on us, as we improve our systems and processes, to begin to pass some of that value back to our customers.
We thought it was the right time to begin to say that we stand behind our product for two years because we believe in the design integrity of our products and the manufacturing process that delivered the product to the customer.
What is it about your job that you like?
I think it's all elements of business. I like the customers and the people in the Terex organization. I like the technology and the uniqueness of the technology.
I've always enjoyed being a part of the materials processing and mining divisions, whether you are building big trucks for mine applications or big cranes to lift heavy objects. I guess I'm still the kid in sandbox [with the toy trucks and construction equipment]. I guess I've never gotten completely out of the sandbox.
This is a business that I believe in for the long term. It's a great franchise that we can only continue to build on and grow. There are many things I enjoy about this business. It's exciting to integrate a new product and new portfolio or products into the crane business.
What's your favorite thing to do when you are not working?
I have a wife and two boys. My boys are fairly young, one just going into high school and the other in junior high. I travel an awful lot with my job so when I have time off, I like to be with my family.
The boys are engaged in sports and sporting events and I enjoy being a part of that. So most of my spare moments, I spend with the family. If there's that odd opportunity, I like to play golf.
I grew up out west, between Arizona and California. Today we live on the East Coast. There are good things about every place you live, but I enjoy getting back out west.