Will They Pass Along the Costs to You?

Terex Corporation manufactures aerial work platforms, cranes, and compact construction equipment. The Connecticut-based company also offers financial products and services to help buyers acquire new equipment. Terex shed its mining equipment business last year, but was unable to find another construction equipment manufacturer to acquire. But that may have been a good thing. Although Terex saw its fourth-quarter revenues rise by 31%, a combination of price discounts and higher material costs caused larger-than-expected losses during Q4 2010.

Terex anticipates additional orders for construction equipment in 2011 and is ramping up production. But will equipment buyers continue to the demand the type of discounts that cut into a company's profit margins so deeply? If so, how will manufacturers like Terex cope with the high cost of metals such as steel, copper, and aluminum? At what point do the discounts disappear and the high cost of materials get passed along to you?

Source: The Wall Street Journal