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Turfscape (41.21)

Manitowoc's Rough Road Ahead

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November 18, 2011 – Comments (0) | RELATED TICKERS: MTW

I was surprised to not see the recent developments surrounding Manitowoc Company's (MTW) crane division among the news stories here at the fool. I feel a duty to bring this to the fool community:

Machinists Strike at Manitowoc Company

Manitowoc Furloughs Workers

I'm not looking to open up one of those banal arguments about organized labor. Rather, I find this development concerning because Manitowoc Company is still in a bit of a precarious position...and as an investor, this is one of those flags that should make you re-evaluate MTW.

A strike, and subsequent furlough action, will impact results for MTW for a least a few successive quarters. Even with the company stating that they have a contigency plan in place, there is no realistic situation in which these events don't impact inventories and supply chains. The question I'm looking at now is: how wide will the effect be felt?

I'm bullish on MTW. I think, as a whole, management has taken great strides in transforming the organizational structure of the company for greater efficiency. I think they're committed to the right course of action for growth. When trying to improve a company's culture and change its manufacturing environment for greater efficiency and flexibility, it is inevitable that there will be a clash with Union labor (see HOG, F, GM for further examples). I'll be watching this closely, though. The next actions may decide whether investors will need to weather through 2 bad quarters....or 2 bad years.

Disclosure: Turfscape owns shares of MTW and HOG...and has a tendency to favor Wisconsin-based companies (what can I say, I'm a homer).

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