Volvo and Ingersoll Rand take opposite paths: Part 1
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Volvo and Ingersoll Rand have long been staples of the construction equipment business. But their vision for growth is taking them down diametrically opposite paths.
Chosen path: Consolidation.
Volvo AB left the car business in 1999, and has since been focusing on their two main divisions:
- Trucks. They are #2 in the world behind DaimlerChrysler AG.
- Construction equipment. Here they compete with Caterpillar and Komatsu, the world's two largest makers of heavy equipment.
Volvo thinks the global market for road construction equipment is worth $4 billion a year, and that it will grow as governments spend more money on infrastructure. So they have been investing very heavily in their construction division.
Volvo recently obtained approval from the Chinese government to buy a 70 percent stake in Shandong Lingong Construction Machinery Co.
Chosen path: Diversification.
Ingersoll Rand has for many years been known around the world as a construction and mining equipment manufacturer. As IR themselves proudly state, their technology "... has been instrumental in creating many of the world's most remarkable engineering feats and enduring symbols of economic progress, from Mount Rushmore and the Hoover Dam to the English Channel and China's Three Gorges Dam."
And though this claim will never cease to be true, it will soon be irrelevant as the company firmly moves away from the construction business.
(You probably didn't know that Ingersoll Rand also makes refrigeration equipment, biometric security systems, locks, tools and even golf carts.)
Ingersoll Rand recently stated that they want to move away from cyclical businesses, and shift towards climate control, industrial and security businesses. Part of this entails selling off their well-known construction equipment divisions, which we'll talk about in upcoming posts.
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Tags: Ingersoll Rand, Volvo, Volvo Construction, construction equipment
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