Battling the backlogs

17 April 2008

Tom Riordan, president and COO of Terex

Tom Riordan, president and COO of Terex

All manufacturers in all parts of the construction industry have had to deal with lengthening order backlogs over the last five years, as demand for construction equipment has shot up around the world.

Industries using particularly heavy equipment - mine operators and lifting contractors - have been among the worst affected, and Terex readily admits that lead times for its cranes are too long.

"We've got a very strong business that we think is going to continue for a long time to come. But backlogs are extending, which is never good for customers. Our concern is how we get backlogs back to reasonable levels - we've got products that are unfortunately booking orders in 2010 already," said Mr Riordan.

He continued, "We haven't announced any specific new plant plans. One of the things we're very much focused on is the application of lean tools - what call the Terex Business System - into our different facilities as it relates to assembly capacity, welding fabrication, machining and so on.

"One of the things we found is that with the use of some analysis tools, some of them very simple tools, you can significantly change the output of the plant. Take welding torches as an example - you want to make sure they're burning more, and that people aren't wasting time looking for parts or looking for a supervisor, which is a waste of time in terms of throughput.


"Our Demag business, which is a very significant part of our cranes business, is busting at the seams. There are a lot of capacity constraints despite the capital we've put in over the last couple of years. We‘re looking at a significant expansion in facilities with that business - potentially putting some manufacturing capability here in China."

As well as the constraints of its own factories, Terex, like everyone else in the industry, has had to contend with a lack of crucial components such as bearings, tyres and hydraulic systems, and this to is an area Mr Riordan says Terex is working on.

"We've spent a lot of time on improving our internal planning processes and spending a lot of time on our supply base. For example, our cranes business has got over 20 people who, for most of the last six months, have been dedicated to supplier production and quality management, who were not in place a year ago," he said.

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