Silence broken after Demag walkout

Hoist reported the story in February and revealed that Demag had initiated legal proceedings against the defecting senior managers. Since then, all concerned have remained tight-lipped.

Nikolai Juchem, head of corporate communications at Demag, did confirm that "during the early days of January 2007, five members of the senior management team of CAS resigned." But he added that they gave no specific reasons for their departure from the company.

Demag admitted it had initiated legal proceedings against the defecting senior managers, and others who appear to have acted in concert with them, "as a result of the circumstances and timing of their departure."

Former CEO Matthew Milton told Hoist this week: "We felt that these plans would dramatically change essential elements of the very successful CAS business model.  In addition to this issue, we had ongoing concerns over business practices conducted by Demag AG management."

In the months leading up to the departure by the management group that now owns Crane 1 Services, the German management of Demag discussed plans for changes in the business of CAS.

As it came more apparent that changes were imminent, five individuals, including three former owners and other individuals in executive level management decided it was time to go in another direction.

The timing of the departure coincided with the payout of management incentives earned in the prior year.  Milton insisted there was no walkout - all individuals gave at least one month notice "to help effect a smooth transition." Demag terminated employment with the five individuals on January 18 2007.

"It was best for both parties that we moved on to other opportunities," said Milton.  "We wish all the employees of CAS as well as the company that many of us worked to build over the last 30 years the very best."

CAS was one of Demag's largest and most profitable foreign subsidiarys in 2006 and is one of the largest distribution outlets for Demag equipment in the US.

In Milton's words, when the business was sold eight years ago, the business plan was compelling to the management group of both CAS and Demag Cranes and Components (then owned by Mannesmann).  After being acquired by Vodaphone, spun off to Siemens, then auctioned off to KKR, Demag went through an IPO in June 2006 to become Demag AG.

Crane 1 Services was started after the departure of this group from CAS.  "In order to focus our efforts on our business rather than fight over disagreements with Demag/CAS over our departure, Crane 1 Services agreed to some time limited restrictions with regard to sales to existing CAS customers and employment of current CAS employees," said Milton.

To date, Crane 1 Services has opened offices in five markets including Cincinnati/Dayton, Columbus, Toledo, Charleston and Chicago.  "Despite the agreed restrictions on our business start-up, we are pleased with the progress of our business growth.  The aggressive growth plans of 2007 will be continued in 2008.  We plan to open new locations in Indianapolis, Louisville, Knoxville and Pittsburgh," Milton added.