The Shock Waves Return

Aug. 1, 2002
As we are about to go to press with this issue, the industry is buzzing with the news that Terex has reached an agreement to acquire Genie Industries,

As we are about to go to press with this issue, the industry is buzzing with the news that Terex has reached an agreement to acquire Genie Industries, for what many in the industry consider a surprisingly low price. Genie, a privately held, family-owned business, was widely viewed as one of the leading independent manufacturers, one guided by a culture profoundly dedicated to customer service. Long the No. 2 player in the aerial work platform market, the consensus in the lift industry is that Genie reached a strong place in that market through a customer service culture that permeated the whole company. While few would argue that JLG is the leading innovator in the aerial industry, the consensus is that Genie set the bar for product support.

The initial concern I've heard is that Terex is not likely to emphasize product support to the same degree, nor support Genie's highly developed sales force, one of the best in the equipment industry. How many cranes has Terex sold with a minimal sales staff? A huge number. One of the equipment manufacturing sector's leading consolidators, Terex has its own impressive array of services, especially in the Internet arena, but a very different product support culture than Genie's.

I wouldn't underestimate what Terex CEO Ron DeFeo, sometimes called the wizard of Westport, could achieve. The acquisition enhances Terex' stature as a one-stop shop in the equipment marketplace. DeFeo likes to run a lean, disciplined ship, a far cry from Genie's modus operandi as many will attest. Many are concerned that Terex might cut retail prices, thus risking the devaluation of the inventories of quite a few rental companies and that may be an issue to be reckoned with in the weeks ahead. Some expressed surprise and concern that Genie became so highly leveraged that it couldn't survive this recession on its own, and that sent a shock wave through some manufacturers with slumping sales.

One of Genie's better customers is the company featured in our cover story this month, Star Rentals, a remarkable story in its own right. There aren't a lot of 100-year-old companies in this industry, but Star is one. Like Mount Ranier, the majestic peak that overlooks Seattle, its headquarters, Star Rentals' roots are firmly planted in the Northwest, with relationships going back many decades. With the region hard hit by the current recession, with high unemployment devastating Washington and Oregon, caused by heavy layoffs in the technology and aerospace sectors, Star has the kind of diversification to withstand such pressures. Sure, the big projects, such as the two downtown Seattle stadiums, have ended, but with 10,000 customers, with no single customer accounting for more than 1.5 percent of its business, Star is expected to continue to prosper. And after spending a day meeting many of its intelligent and experienced managers, I came away thinking that I wouldn't want to have to be its competitor.

But that task might pale compared to navigating the current torrential waters of the rental, distribution or manufacturing industries. Hold on to your hats — the ride senses danger.