Business Strategy

In 2005, the Company introduced the “Terex Business System” or “TBS.” The Terex Business System is the framework around which Terex intends to build a superb company and achieve its long-term goals. TBS is the next phase of the Company’s internal improvement plan, which builds upon the Terex Improvement Process that the Company launched in 2003.

The foundational elements of the Terex Business System are:

• Customer Driven Business Processes, evidenced by continuous improvement in quality, speed and simplicity;
• Superb Human Resource Practices;
• Leadership Commitment for Competitive Advantage; and
• The Terex Improvement Process.

The TBS base supports the activities of:

• Achieving Intense Customer Focus;
• Planning Excellence and Annual Deployment;
• Developing Operational Excellence Across the Entire Value Chain; and
• Rapidly Delivering New Products and Services.

Lean principles and lean thinking are applied to every aspect of business and are key concepts that work in conjunction with the Terex Business System. The core applications of lean thinking involve the Company’s promotion of a culture of continuous improvement and the removal of waste (anything that does not add value) at every organizational level of the Company. The Company has established Terex learning centers with the purpose of teaching these principles to key personnel throughout the Company. This project will be the cornerstone of the Company’s activities for years to come.

With its mission, goal and vision in mind, and using TBS as a framework, the Company has focused on a number of strategic initiatives to move Terex forward.

Terex will continue to focus on streamlining the Company’s interface with its customers. The Company remains committed to becoming more customer-centric and making it easier for customers to do business with the Company, with the goal of Terex being the most customer responsive company in its industry. The Company has added staff at the senior level in the marketing area to better address customer needs and to present “one face” for Terex to the customer. To this end, the Company is in the process of building a franchise under the Terex brand name by migrating historic brand names for many of its products to the Terex brand, including in some cases using the historic brand in conjunction with the Terex brand for a transitional period of time. The Company is continuing to work on ways to streamline its customer interaction, before, during and after the sale of a product. The Company remains dedicated to providing its customers with products that improve their performance and productivity.

All of the elements of the Terex Business System focus the Company to “Think Terex.” “Think Terex” is about operating as a unified company, rather than a portfolio of individual companies that have been acquired over time to form Terex. A unified Terex will combine the strengths of many different people, products and technology under one global umbrella. This will allow Terex to realize synergies across its operations. One example is the Company’s effort to improve manufacturing facility utilization around the world. Each Company business location, while geographically separate, will be connected by the goal of doing what is best for Terex as a company in every application of its individual business. In this regard, there will be more integrated use of the Company’s facilities, as a facility cannot be viewed as belonging to a particular segment, but needs to be understood as a Terex facility, one that may be used by multiple segments of the Company’s business for the greater good of the Company.

For the Company to be successful, it will need a talented and energized workforce. The Company remains committed to retaining its brightest minds, in addition to improving its talent base and attracting top level talent to the Company both from within and beyond the Company’s industry. The Company’s goal is to be the preferred place to work in its industry, and to attract the best people by creating a Terex culture that is exciting, creative, fun and embraces continuous improvement. Terex team members are viewed as an expandable resource and an asset of the Company.

In 2005, Terex established a new corporate operations group, with the goal of developing and implementing world-class capability in supply chain management, logistics and global purchasing. Historically, Terex supply chain decisions have been made site by site, which provided limited opportunity to leverage Terex’s size. Now, Terex will focus on gaining efficiencies with suppliers based on the Company’s global purchasing power and resources in a way that transcends individual business units. While local responsibility will be retained, there will be a comprehensive effort to reduce cost, improve quality, simplify operating systems and optimize new product development to market time. Terex is dedicated to leveraging its size and consolidating vendors in an effort to remove waste throughout the organization.

Terex has focused on growing and improving the operations of its core business segments. The Company has expanded the size and scope of its core businesses both through acquisitions and through development of new products to increase its market share. In addition, Terex is focused on expanding the geographic reach of its products, emphasizing developing areas such as China and India. Management believes that these initiatives continue to help to reduce the effect of potential cyclical changes in any one product category or geographic market. These initiatives have also expanded the Company’s product lines and geographic reach, added new technology and improved Terex’s distribution network.