Terex Corporation has introduced a range of measures to save costs and protect its financial future, in light of the challenges posed by Covid-19.
They include adjusting production, reducing the workforce and capital expenditure and extending its credit facility. It will also expand its worker safety initiatives.
Terex announced that it has temporarily lowered the salaries of its CEO John L. Garrison by 50 percent, the executive leadership team by 20 percent and other team members between 5 to 10 percent.
The company is also temporarily furloughing and permanently reducing its workforce, where necessary, and adjusting production in its businesses to align with reduced levels of commercial demand. “Also, we are working with our suppliers to ensure continuity when the market improves.”
In addition, the manufacturer is limiting orders of materials in line with current production levels and reducing its capital expenditure by 35% for the remainder of 2020.
“We are focused on successfully navigating through this unprecedented period and are implementing substantial cost saving and operational actions to enhance liquidity and maintain financial flexibility,” said Garrison, Terex Corporation’s chairman, president and CEO, “We continue to monitor our end market demand and supply chains and have developed contingency plans should future developments warrant further action.”
The company’s actions connected to liquidity include increasing current credit with its bank, which amounts to $945 million, including more than $500 million in cash and cash equivalents and around a further $430 million available, with the latter’s availability now extended to January 31, 2023. The renegotiation has also seen financial covenants this year waved, replaced with a sliding scale minimum liquidity requirement. Additionally, the board of directors has suspended quarterly dividend payments to shareholders for the remainder of the year and previously suspended its share repurchase programme.
Above all, Terex said its priority remained with safety. The company is following guidelines from the US Centers for Disease Control and Prevention (CDC), World Health Organization (WHO) and governmental authorities. It added that its systems enabling team members to work remotely are operating well. It is also further safeguarding team members in its facilities or at customer sites. At Terex facilities, these include, among other things, additional cleaning measures, suspension of all non-essential visitors, and directions to achieve social distancing.
“I want to thank all our team members for their commitment and resilience and recognise the support of their families as we continue to navigate through this challenging environment. We also want to thank our customers and suppliers for their support during these unprecedented time,” said Garrison, “We are confident that as a result of the actions taken and the support received from our team members, customers and suppliers, we will be well positioned to capitalise on the recovery.”