When you're under attack, you don't just close your eyes and wait for the battle to end. You fight back!

Beleaguered equipment manufacturer Terex (NYSE: TEX) is finally building its stronghold defenses to repel the onslaught of persistent economic malaise and uncertainty.

Even as investors punish the stock with a near-10% intraday decline following a bigger-than-expected loss for the third quarter, from the walls of Terex's emerging fortress I can begin to see the tide turning for Terex. That's not to say these earnings results were pretty.

Despite a 15% jump in net sales to $1.08 billion, Terex posted a painful $89.2 million loss dominated by tax-related and derivative-related charges.

I empathize with investors over the frustration of a $21 million charge relating to derivative hedges on the company's 7% equity stake (5.8 million shares) in Bucyrus (Nasdaq: BUCY). I see little point to a strategic investment of that type if gains are to be significantly eroded through gambles in the casino of over-the-counter derivatives. Meanwhile, that Bucyrus stake has grown to a value of well over $400 million on Terex's much-improved balance sheet.

Terex's consolidated order backlog expanded 8% sequentially from the second quarter, thanks in large part to a 45% surge within the aerial work platform (AWP) segment. Demand for Terex's telehandlers and other mobile lifting equipment emerged principally from South America and an $18.9 million supply contract with the U.S. Marine Corps.

By far the most encouraging development within Terex's overall response has been the company's effort to increase its overseas manufacturing presence in places like China and India. As we have seen through noteworthy success stories like Caterpillar (NYSE: CAT) and Joy Global (Nasdaq: JOYG), developing a strategic presence in emerging Asian markets may be the single greatest differentiator between survivors and victims of economic stagnation in the West.

Developing markets account for one-third of Terex's overall sales, and I look for that proportion to rise further as recent initiatives bear fruit. Citing robust demand for coal-crushing equipment in places like Australia -- think rapidly expanding miners like Peabody Energy (NYSE: BTU) -- Terex seeks to increase production at its materials processing facility in India. The company also boasts a 60% interest in a joint venture to produce similar equipment in China. Terex has also acquired a 65% stake in a Chinese manufacturer of lattice boom crawler cranes.

These and other international initiatives are building a formidable fortress for Terex against the onslaught of domestic economic malaise. I urge Fools to take a close look inside this fortress, and assess the long-term potential of Terex's shares accordingly.

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