The global leader

07 May 2008

It has been almost a year since Eric Etchart was named president of Manitowoc Cranes. During that ti

It has been almost a year since Eric Etchart was named president of Manitowoc Cranes. During that time the company has posted impressive sales numbers and further expanded its reach around the globe

In one of the smaller meeting rooms at Manitowoc headquarters in Manitowoc, WI, I met with Eric Etchart, president of Manitowoc Cranes. It was a cold and blustery morning in late November, just a day after the Green Bay Packers had defeated the Carolina Panthers, securing home field advantage for the playoffs.

Everyone at the company seemed to be in ajoyful mood, what with their football team in the playoffs, their company enjoying a stellar year selling cranes, ice machines and ships. In particular, those associated with the crane division were especially jubilant. The crane manufacturing plants were running at full tilt around the world, several major plant expansions were under way, and the order board was still overflowing.

On this occasion, Etchart had just moved into his new home in Wisconsin, and he was looking forward to celebrating his first US Thanksgiving with his wife and son.

Moreover, he seemed very pleased to at last be “at home” at Manitowoc, ready to dig in and help lead the company to a new level of success – financially and in terms of product quality and innovation, market share and global acceptance.

With his elegant accent, calming demeanor and sharp business acumen, Etchart is easy to talk with and intensely knowledgeable about the cranes his company produces. While he may be a newcomer in the industry to those in North America, he has long been a major player on the crane scene in Europe, the Middle East and the Asia Pacific region.

You have been with Manitowoc now almost six years. How has the company changed from the company you started to work for when Potain was acquired by Manitowoc?

At the time, the Potain (acquisition) brought the company a more international footprint. But the Grove acquisition came a year later, and that added a lot to the puzzle. Grove was a global company, too.

Since then there has been a tremendous amount of change. If you compare the size of the crane segment then with the size of the crane segment today, well it is significant. We did $930 million in cranes in 2002. We should be (close to) $3 billion in cranes in 2007. Every region has enjoyed very good growth, around the globe. What is outstanding is that the amount of business we are generating in emerging markets - China, Russia and the Middle East - that amount of business equals the size of the crane group alone in 2002, to give you an idea of how the business has changed.

When you start breaking into those markets, you have to develop a different 'go to the market approach' and that changes the way you do business.

(We have also seen) a new commitment made to innovation and bringing new products to the market. We have launched 15 to 18 new products each year for the past five years, covering three product lines. I must say these products are bringing in much of our success, when you look at how we have improved market share in general terms.

Another change I see is in the people at Manitowoc Cranes, they have a more global viewpoint today. I worked in the Asia-Pacific region and was closely related to the European operations, and I think we have seen the cultural meltdown happen. All of the sudden, you put 10 different nationalities in a meeting room and you see how well these teams are working together.

We have been through a learning curve and we can now see the benefits of our becoming truly a global company. We have been able to identify the best processes that existed and tried to apply those processes to other product lines.

We are able to combine our strengths. We are able to leverage the organization by capitalizing on our strengths. Overall I would say of the changes, the most important change is the people and the mindset of the people. We can now see the opportunities in working for a global company. Our people see that they have a career path and want to gain some international experience and we can offer them that. There have been a lot of positive changes as we have become a global company.

We are also an EVA company, and I must say, EVA as it was deployed and understood by managers, we are able to see the legacy of Manitowoc. This has brought a lot of good things the way we manage our business. We make very good business decisions because we are a good EVA company.

The financial reports for Manitowoc Cranes over the past three years have been very positive. How do you view the next year in terms of sales for Manitowoc Cranes?

We have to be consistent in the way we forecast the market. We have traditional factors that needed investment as well as to cope with market strengths and the way we believe the market will continue to be strong.

Over the past six months, Manitowoc has announced major expansion and renovation projects in the US, in both Shady Grove and at the plant here in Manitowoc. What will these improvements bring to customers and the machines that are manufactured in the US?

We needed to add capacity to cope with the strength of the market. Some of these factories have been for the pig and the trough in the past and we needed to invest in those factories to produce a higher quality product. We are committed to producing first class equipment and high quality manufacturing, and that means investing more in the factories. The investments in the facilities in Shady Grove, Manitowoc and Port Washington revolve around expanding capacity and to get up to speed in terms of the latest modern equipment.

Grove has a very good track record of being able to produce several product lines in one plant. Shady Grove used to produce RTs and truck-mounted cranes. Right after the acquisition the decision was made that the National product line would be built in Shady Grove, which we did. That factory and the people there have been bold and flexible enough to be able to produce and assemble different products. We have now purchased Shuttlelift industrial cranes, which will be produced there.

Recently we decided one of our crawlers, our workhorse, the Model 999, will be produced in Shady Grove as well. Again, this is because we have the people there to be able to do this. By moving the Model 999 to Shady Grove, this will free up capacity in Manitowoc so we can produce more of the large crawlers like the 16000 or the 18000 and 21000, for which we anticipate demand to be very strong.

In that respect as well, we had started to produce the 15000 in Europe and Germany.

This again, is the benefit of being a global company. Big crawlers will continue to be built in Manitowoc.

Our manufacturing ability is a strength of our company. We have a factory in Italy and that factory was primarily producing self erectors, and then we decided to break into the rough terrain market in Europe and we determined we needed to produce RTs in Italy. This has been very successful to produce more RTs and to start to serve the European market to assure the consistency we are trying to produce.

Do you envision producing a tower crane in the US?

We do not have plans for this. If we have to add capacity of tower cranes we will do it through the new factory in China or in Slovakia. Right now we anticipate we don't have the need for a tower crane factory in the US.

If one day the market size justifies for us to move forward and produce towers in the US, one of our strengths is that we can do so. We know the right processes (if that need arises).

Has the alliance between Kobelco and Manitowoc Cranes been successful? Do you envision a continuation of this alliance? Can you envision other such alliances?

It has been successful. We are very happy with the relationship we have with our Kobelco friends. It's a very good balance. It's a good product and Kobelco is producing the small crawler cranes under our specifications and we are selling them through our strong distribution channels.

Conversely, there is a market in Japan for all terrain cranes, and we never had been able to break into this market through the Grove line. So Kobelco has a distribution market in Japan. So we build our GMKs to the specs that Kobelco requires to break into the market and this has also brought good results for us. They are branded Kobelco. So yes this relationship, as long as it works, will continue. We started the relationship in the American market and now based on the success we decided to expand in Japan, Europe, Africa and to Southeast Asia.

As far as other alliances, we don't have anything that comes to my mind at this point in time, but based on the experience with the alliance with Kobelco, if we find one that makes sense we will certainly look into it.

What do you envision as the biggest challenges in your new job?

I would be lying if I said there would not be challenges for me. This is a big challenge for me. Many aspects of this job are challenging. Before, I was running a growing business but that was still fairly small compared to the size of the total crane group. I was driving a small plane, a Cessna. Now I'm driving a Boeing 777.

I have been working in the US in my previous experience, but being based in the US is a change and a challenge. But my wife and I are looking forward to it.

Besides that there is the challenge of course to take the spot of your boss who has been very successful in the last five years. I have the pressure to at least equally perform to Glen Tellock. From 2002 to 2007, I would be very proud in 2012 if I can look back and see the same success story. I'm looking forward to that actually.

Do you envision future products like the GTK and the 21000 in the design pipeline? What types of lifting machines can you see on future horizons?

We have a pipeline of new projects and part of our process is (to listen to) the voice of the customer and identify where the market is going. When you look at nuclear power plants and general trends and heavier loads at higher heights, obviously we've given our leadership position. We have to continue in the high hand of each product line.

At ConExpo, we will have updates of existing products. The GTK has been very successful. The first product was out in November on a jobsite and we have sold out to 2009 this model. The success has been tremendous and we know a lot of potential customers are looking at this product for erecting and maintaining wind farms. There are not 25,000 customers around the world for this product. We will continue to identify who are the potential customers.

How do you think Manitowoc Cranes is positioned globally? Do you have plans for more acquisitions? Expansions? Any plans to acquire any other companies?

We have enjoyed very strong organic growth and we are very positive overall with the outlook of the market. We will continue to enjoy I think very good organic growth. Now we remain very open to acquisition as long as it fits our business model and as long as it covers product voids whenever we have them or some geographic expansions that makes sense for us to become more global.

To answer the acquisitions question, we are open to acquisitions but they have to fall into a certain set of criteria. They should have either good leadership positions or the ability to get to this leadership position under our management, synergies and the technologies we use or the distribution network. That type of synergies, and again look at adjacent markets where we have the ability to apply to our business models.

Manitowoc Cranes competes with a wide range of companies, both domestically and worldwide. How do you assess your competitors?

We certainly have strong competitors and we recognize this. I think we have a lot of respect for what they have done as well. We have a business model and philosophy on how we want to continue to grow, and while we certainly look at what our competitors are doing and we have a strong belief that what we are doing is the right thing to do and we are focused on implementing our strategies and our business plan.

Our philosophy is different (from our competitors). We want to have factories next to the market and we want to produce close to the customer base. That is why we have a factory in China to produce tower cranes. It is good for us and why we are strong in China and also in the Asia Pacific region.

If you look at what we do in India, we just made an acquisition and we produce a range of tower cranes in India. Why, because this is a market where we believe the market will be strong and there is a growing customer base. We have the same philosophy in Eastern Europe. We put a new manufacturing plant in Slovakia because in our forecasts, we know that eastern Europe will be a huge market and we want to produce locally for this market. That is our business model. Other manufacturers, they may prefer to have one factory and export world wide from one central factory. But with our business model, we will stick to it (in order to) bring value for us. All our indications show we should continue this way.

Our company is on the move and we will continue to be on the move. If in two years we have this interview again, we will be an even more global company and we will have more people from Europe working in America and more people from the US working in Europe and Asia.

What do you do when you are not at the office, when you are not on the road at meetings or working?

We've been living in a lot of different countries and we always see things very positively when we move somewhere. We meet new friends. I'm not sure I will become a Green Bay Packers fan. I am more passionate about basketball. I will go see the Bucks play. And we will visit as many places as we can. We will enjoy life here.

I enjoy exercise and basketball. We are looking forward to a different life here and meeting new people and the lifestyle here. It will be fun.

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