The Light Is Green: Volvo and Ingersoll Rand take opposite paths: Part 3

May 21, 2007

Volvo and Ingersoll Rand take opposite paths: Part 3

Volvo Truck A recent post talked about how Volvo and Ingersoll Rand, two of the world's major construction equipment manufacturers, were taking completely divergent paths in their quest for improving results.

Volvo's decision has been to consolidate and focus on their two main divisions, trucks and heavy equipment. Meanwhile, Ingersoll Rand has decided the opposite as they try to diversify and shift to a diversity of industrial activities, such as refrigeration equipment, security, and others.

In trucks, Volvo has been making many acquisitions over the past few years. Recent Volvo Truck activity includes:

Acquisition of Renault's Truck Division (Renault Vehicules Industriels), a well-positioned truck maker in Europe (2001)
Acquisition of Mack Truck, the famed American truck maker, as part of the Renault deal (2001)
Joint venture with Shanghai Automotive Industry Corporation (SAIC) to create new bus company in China (2000)
Acquisition of interest in Mitsubishi Fuso Truck and Bus Company (2001)

Earlier this year, Volvo bought Nissan Diesel, formerly owned by the Japanese carmaker, for $1.07 billion (2007), in order to bolster their operations in Asia. Nissan Diesel has 9,000 employees with 2006 sales of $2.9 billion and a very strong presence in that continent.

Of the Nissan deal, Volvo said:

"... a joint study identified gains amounting to $263 million annually for the next five years, mainly as a result of increased purchasing volumes, but also from product development and access to each other's dealerships and service networks."

Volvo got out of the car industry in 1999 when they sold their auto division to Ford. With those funds tried to buy their main Swedish rival Scania. The deal was stopped for competition reasons by the European Union. Volvo sold their 20% stake in Scania to Volkswagen.

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