Summary
KoneCranes has experienced a 40-50% decline in orders year over year and a restructuring plans in not only warranted but a must. The demand for cranes both in the industrial as well as construction and on/off-shore has declined so rapidly that unless drastic actions are taken companies as Kone and others including Demag and Terex are at risk for survival.
Analysis
The actions that Kone Cranes is taken ,including those at its headquarters , are not strategic action but rather mandatory and must have at its headquarters and elsewhere. The writer is a turnaround CEO in the industrial space and know the red flags before they even appear. I believe that Kone has been a bit lax in taking actions and reducing its headcount by 10-15% would not cut it. A decline of some 50% on the top will require more concerted efforts by management to reduce capacity and increase utilization while keeping and eye on the market place. Kone headcount reduction would not cut it, the company must address its structure and make plans for the long duration as the Cranes market has been declining for over a year and I would not expect it to be back until well into 2011. Kone and others must act and act decisively now in order to survive.
George Dorkhom consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
