CHICAGO (Reuters) - The top executive at Manitowoc Co Inc (MTW.N: Quote, Profile, Research, Stock Buzz) said on Wednesday he's "not emotionally attached" to the shipbuilding business that gave the company its start but now accounts for about 10 percent of sales.
Speaking by telephone to the Reuters Manufacturing Summit in Chicago, Glen Tellock, Manitowoc's chief executive, said there was no urgency to sell the unit, which makes ships for the U.S. Navy, among others, because it makes few demands on management's time, requires very little capital and generates a lot of cash for the company.
But Tellock said he agreed the shipbuilding business "sits out there," becoming a smaller piece of the company's overall business as its crane and freezer and ice-maker units grow and not delivering the returns the other units do.
"There's always dialogue that's going on," Tellock said. "As I said, there's no emotional tie to it. If all the pieces fall into place, you're going to do what's best for the shareholders."
But he added: "There's nothing that says you need to go to a fire sale and get rid of this thing."
Tellock said that while Manitowoc had locked in steel prices from its suppliers for the first six months of 2008, any price increases in the latter half of the year could put pressure on its bottom line.
"From a margin standpoint, that's probably the biggest challenge," he said. "There's that exposure to the back half of the year."
He said that Manitowoc was not going back and repricing its crane backlog despite signs that steel prices could hit new peaks because of skyrocketing raw material, energy and freight costs, coupled with growing demand in fast-growing markets like Brazil, Russia, India and China.
Tellock said Manitowoc was also "looking at different suppliers ... looking at different materials ... looking at engineering changes" in an effort to reduce its steel exposure because it believes "steel is just going to continue to be a squeeze because of (demand from) emerging markets." Continued...
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