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Terex boss calls for end to hirer boom and bust

PLANT Terex's Ron DeFeo says UK plant needs discipline in hire rates to avoid periodical downturns

THE UK hire market needs more discipline when it comes to pricing and equipment purchase to avoid being blighted by periodical downturns, according to Ron DeFeo, chief executive of Terex.

Mr DeFeo said: 'The UK hire market is well developed, in fact its ahead of the rest of the world, apart from maybe Japan.

'It offers a terrific economic option and flexibility to users of plant. But the challenge for hirers in the UK is to maintain discipline in pricing of hire rates and when purchasing new equipment.'

According to Mr DeFoe, without this discipline it will not be possible to eradicate the boom-bust nature of the industry, as witnessed most spectacularly in powered access over the last few years.

He explained: 'Hirers buy too much kit on the expectation that customers will continue to pay for it but the market becomes saturated. Hence the cyclical nature of the industry.'

But this does not mean that Terex plans any direct involvement in hire in the UK. He said: 'Absolutely not.

We've no plans to purchase a hire company or get involved. It's not our business.

'We sell direct to rental companies, and we sell through dealers to end-users.'

Finance for leases to mining and quarrying customers is provided externally.

On the future of Terex dealers in the UK, Mr DeFeo said the approach would be pragmatic.The company has said it needs to thin out its network, which numbered 131 distributors last year, and reduce its singleproduct dealers.

He said: 'In principle, consolidation is good but finding people to spend money on construction equipment is difficult.'

Terex investment TEREX is backing up its claims to be leaving its asset-stripping past behind with a series of major infrastructural investments, in addition to the new, £35 million Terex Compact Equipment factory in Coventry:

n £1.41 million for a new roof at the Terex Equipment Limited factory in Motherwell, as well as plans for a £500,000 test facility and a £100,000 service school;

n £1.8 million on a total upgrade of the paint facility at the Powerscreen factory in Dungannon, and a £300,000 office refurbishment programme;

n A 50,000 sq ft factory expansion scheduled for 2005 at Terex Finlay in Omagh.