As mining stocks shudder through the commodities rout, spare a thought for Bell Equipment, which has just pulled off a 67% rise in first-half profit. That's mainly due to right-sizing, efficiency gains and help from the weak rand. What does the second half of the year hold? BT spoke to CEO Gary Bell ... As you made clear in the results, there was very little in the half-year to suggest much growth - where is it toughest?It's generally the global mining markets that are in poor shape - Africa, Southern Africa, Australasia, South America, Russia - but fortunately we've got a fair amount of business coming from the northern hemisphere, which, other than Russia, is predominantly the construction business.story_article_left1The US is doing fairly well and we're doing well in the UK.You opened a manufacturing plant in Germany over a decade ago. With hindsight, was it an inspired move?Very much so. But a greater portion of our business is coming from the northern hemisphere, and with large machinery one should really be producing closer to the market. In time I see us manufacturing a lot more of the product closer to our major markets.We're very concerned about the increasing cost of doing business in South Africa. You mentioned the unstable labour situation, I guess it's the unstable political situation as well that's an issue. Electricity [is ratcheting up] and impacting our global competitiveness, so we're weighing it all up ... we don't have to take a big bang approach ... certain components, where it's economic to produce closer to market, we'll certainly do so.You said in your results that "further initiatives are under way to ensure that our cost structures are appropriate". Does that mean further cost-cutting and, if so, where?Logistics costs are a very big input for us. We have adjusted production rates and we have released some people in the first six months of the year ... we may have to release a few more.How many?We haven't figured out exactly what the requirement is. It's difficult for us to make a decision like this because it costs us a huge amount of money to bring people back up to speed as production rates increase. So we tend to hold on to people a lot longer than [in] other parts of the world, where they have social security and various other things that enable them to be a bit more flexible.story_article_right2How many people did you retrench in the first six months?We released 190 people. About 95% of them took voluntary packages ... so it wasn't a case of having to put people on the streets.How much did it cost?It cost us just under R50-million.If you don't cut costs further, would Bell survive?We would not survive. We absolutely have to. There's very little in the way of support for the industry. There's no protection, unlike the automotive industry: the machining business is duty-free access from all over the world and we've got 20 or 30 competitors.Would you consider lobbying the government?To be honest, there are not many players in our industry in this country, so it's very difficult for us to go as an industry because we are kind of the only manufacturer here making this sort of product.You were criticised in 2013 for having high inventory levels, [and] that was again a problem in your results this time.In 2014, we did reasonably well in the second half in bringing the inventories down, and that had a fairly positive impact on cash. We'll probably do the same this year.We've got a fairly long lead time on product and components - up to six months - so we're planning quite a long way ahead, and if the market's slow or we read it wrong, we can get an increase in inventory, which is what we've seen at the half-year mark. We have adjusted production rates accordingly.What capacity are you running at?Our German plant is at about 70% of capacity and here in South Africa we're probably running at 55% to 60%.John Deere is still a 31.5% shareholder, and you said at the results you were ready for them to let go - but do you anticipate any sort of sale while your share price is depressed?story_article_left3They're not in any hurry. We continue to work closely with Deere ... we're a fairly big distributor of their products - the products we don't make we buy from them, so they're a big supplier to us and likewise we supply components for certain of their products, so we've got a fairly good relationship and it works well for both parties.But is this a bit of a dampener on your shares because they're expected to sell?Not really ... I think Deere have been in business 125 years or something, so they take quite a different view of things. I think they would look at the cycle and decide when it's appropriate for them, if they do intend to exit. But right now I don't see any change.As far as your shares go, do you think they will ever see their heyday peak of R59 that they hit in 2007 again?Absolutely sure of it. (Laughs) No, clearly we are continuing to grow the global footprint in distribution and coverage. We've only covered about a third of the US market, so the next two or three years we'll increase our coverage there. We've made some moves to increase coverage of the South American market. We continue to build the distribution network: where we used to invest in our own distribution, today we've got a pretty well-recognised brand and it's fairly easy for us to find capable dealers to handle our products, so the investment is fairly low.Business is tough ... but we're confident we've got what it takes to grow the business rapidly when things improve.Talevi is a BDTV anchor..