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Contractors World 2010 Volume 1 Issue 10
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  20 minutes with:

Jim McCullough, CEO and President of CNH Construction

Roger Lindley interviews

Jim McCullough,
CEO and President of CNH Construction

David Beattenbough, LiuGong - Vice President Research & Development

 

 

 

“Mr McCullough, there’s no denying that these are tough times for everyone involved with the construction and related industries – some say the toughest ever. In order to survive, companies have had to look deep into their structures, markets and the very ethos of their heritage and make some very hard decisions. It could be argued that being part of a large multifaceted organization offers greater protection, but is also harder to implement change as every division, understandably, fights for its corner. CNH has both construction and agricultural divisions and is also part of the Fiat Group.
    How is CNH coping with the current situation? What steps have been taken to reduce costs while enabling progress? And how different will CNH be as the global markets emerge from the recession?

“The recession in the construction equipment industry has been difficult for all manufacturers. Fortunately, CNH is a global manufacturer. As such we have had solid contributions continuing from Latin America and Asia Pacific. The North American market and European markets are just now beginning to improve. During this period, CNH has protected important strategic areas such as research and development investments. We have implemented cost reductions in many areas to control costs and reduce the break-even point.
    Our biggest concern throughout the recession has been the health of the distribution system. While we have had some challenges, overall we have been fortunate, with few losses. At the same time, all of us have felt the pain of markets off 50, 60 and even 70 percent, which seriously impacted revenues and drove losses.
    The good news from this period is that the construction equipment industry has an opportunity to rethink supply models. Inventories are now in relatively good shape, at lower levels and better turns than before the recession. Future distribution with discipline could save a lot of money for manufacturers and dealers, if done correctly. This ultimately benefits the contractors who buy the equipment.
    The agricultural industry held strong during this period and CNH benefited as a result.”

RL: “ I’ve often said that the construction industry is the first to feel the effects of a recession but also the driving force that brings economies out of recession. Governments around the world initially put the brakes on virtually everything but then came up with various initiatives to stimulate growth. In the USA, President Obama has implemented the long awaited highways bill but failed to renew expiring programs such as the federal surface transportation programs.
     The AEM, of which you are the Chair, said "Our members don't just make equipment, they make prosperity." Recently you made representations to the House Transportation and Infrastructure Committee. Specifically in the USA, what does the Government have to do and, looking further afield, what do governments around the world need to do? Are there any examples for others to follow?”

“Global investment in infrastructure is critical to the delivery of goods and services, and while some investment can come from the private sector, infrastructure is a shared resource with the potential to benefit entire populations. Countries that invest in infrastructure development will be more efficient and more competitive than those that don’t. They will be more prosperous for that investment than they would be otherwise.
     The impact of infrastructure investment touches a nation’s entire economy. Research cited by Association of Equipment Manufacturers (AEM) shows that every $1 billion invested in U.S. highways, bridges, water and transit infrastructure yields about 18,000 jobs. The investment in infrastructure yields savings, as well. Traffic congestion costs the United States economy $87 billion in wasted time and fuel.
     Earlier this year, the Chinese government approved a stimulus package in the range of US$550 million, and they have experienced a more rapid recovery than much of the world.
     Our future competitiveness as a nation is at risk without infrastructure investments and vision.”

[cont . . ]

 

 

 

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