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Konecranes takes the helm
With the acquisition of Terex Material handling and Port Solutions business now complete, Konecranes now has the broadest product offering in the port equipment industry.
Konecranes and Terex Corporation completed the S & P agreement for the sale of Terex Materials Handling and Port Solutions division to Konecranes on January 4.
The deal, said Konecranes, creates "a focused global leader in industrial lifting and port solutions," with aggregated sales (2015) of around €3.5B, adjusted EBITDA of €267M and a global workforce of around 19,000. Terex Corporation is now a 25% shareholder in Konecranes after receiving 19.6M class B (non-voting) shares. Konecranes’ Port Solutions Business is now much larger, and becomes its own business area, alongside Industrial Equipment and Service, managed by Mika Mahlberg as Executive Vice President.
The deal is one of the most important industry transactions at the supplier level for ports and terminals around the world. Speaking with WorldCargo News, Tuomas Saastamoinen, Senior Vice President Sales and Marketing, said the acquisition not only brings together two very strong product lines, but unifies several port equipment businesses with a strong engineering focus.
While Terex is a US company, its core port products have their legacy in the Noell and Gottwald companies from Germany. Like Konecranes, said Saastamoinen, these are engineering-led companies with a history of research and development to create their own new products, and the cultures are very similar.
The line up
To minimise any disruption Konecranes announced its new product offering the day the transaction was completed. Saastamoinen said product decisions at this stage have been guided by Konecranes’ desire not to interrupt ongoing equipment sales, or leave uncertainty in the market, after the long transaction process. Konecranes will honour any bids or offers for Terex products that were valid before the sale closed.
The sale means that Konecranes has added the mobile harbour crane portfolio of Gottwald, and significantly boosted its offering in horizontal transport with Gottwald’s industry-leading AGV products, all of which will be marketed as Konecranes Gottwald products.
Coming from the Noell legacy, Konecranes has added the Terex Noell straddle carrier line and production facility in Würzburg, Bavaria, and Noell’s STS and RTG crane business, which is now mostly concentrated out of the former Noell China plant in Xiamen China (a JV with China Merchants). Konecranes’ primary offering in straddle carriers will now be the Noell machines, labeled as Konecranes Noell.
In lift trucks Konecranes has opted to preserve most of the Terex line up alongside its own designs. Konecranes will retain the “Liftace” range of reach stackers Terex manufactures at Montceau-les-Mines in France (ex PPM) under the Konecranes Liftace product label. This facility was used by Terex to build both reach stackers and four models of all terrain crane. In December, Terex announced it would move the all terrain crane production to other facilities, and the Montceau-les-Mines facility would be sold with the MPHS business to Konecranes.
With regard to reach stackers, Saastamoinen said the separate Konecranes and Konecranes Liftace machines sell in geographically different markets and customers, with the Liftace machines being strong in South America and Africa in particular. The same can be said about RTGs and STSs, where the Konecranes Noell Xiamen plant offers “workhorse” machines that sit well in the market alongside Konecranes’ own designs. The Terex terminal tractor, acquired by Terex in 2H 2016 from CVS, is now under the Konecranes brand.
Some further consolidation should be expected – Konecranes has stated that the acquisition will achieve synergies of €140M /year at EBIT level within three years. Saastamoinen said that “naturally there will be some fine tuning”, but he stressed that there is no firm plan yet. Discussions between the two companies at this level were strictly prohibited during the transaction process, and the product line up that is being announced now had to be developed separately by Konecranes.
Clearly there are opportunities, in particular the Konecranes Noell plant in Xiamen could be used to fabricate a wider range of cranes, including the Konecranes STS and yard gantry cranes now fabricated in China by sub contractors. There is of course a challenge here in bringing in the Terex businesses along the, more centralised, Konecranes organizational lines.
Saastamoinen said that while keeping owned facilities like Xiamen highly utilised is important, decisions about manufacturing arrangements for larger equipment will be made at the contract stage.
Automation
One of the areas where Konecranes is most excited about the benefits of the acquisition is in port automation, and Saastamoinen emphasized that adding Gottwald strengthens Konecranes’ automation depth considerably.
On the yard gantry side, Konecranes is strong in ASCs, and recently completed its first automated RTG project in Indonesia. The Konecranes ASC is very different from the Terex Gottwald ARMG design with a rigid lifting tower (as used at Rotterdam World Gateway and Antwerp Gateway), which will still be offered if needed. The Konecranes ARMG design is the standard, primary offering.
Konecranes is also gaining important automation depth through Noell, which has developed its own technology for automated straddle carriers, which it will soon implement in Auckland. There are clearly opportunities for Konecranes to leverage Noell’s footprint in the straddle carrier market, combined with Gottwald’s horizontal automation experience to expand its automated horizontal transport offering to encompass straddle carrier, AGV, and terminal tractor solutions.
Terex MPHS also includes the software, consultancy and training business of TBA Netherlands. TBA’s equipment control system, TEAMS, is used with AGVs in Hamburg, with ASC cranes at Antwerp Gateway, and at ECT Rotterdam where it controls AGVs, as well as at Euromax, LBCT and MVII (AGVs).
The port market is still at a stage where terminal operators want software to be hardware agnostic. Recognizing this, none of the TBA software is being marketed as a “Konecranes” product. Furthermore, not listing TBA in the product offering, Saastamoinen emphasized, sends a clear statement that Konecranes does not intend to package hardware with TBA software or interfere with its consultancy work, which is crucial for the market to maintain faith in the company’s independence.
With regard to the TOS, WMS and other applications developed by Terex MPHS’s UK companies, Central Systems and Automation and DBIS (which are included in the sale), Saastamoinen said that the intention is also to keep these businesses at arms’ length. Konecranes has not yet fully analysed where CSA sits in the TOS market or developed a strategy for its future.
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