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COVER STORY
CLAAS: THE HARVESTING SPECIALISTS
Now headquartered in the rolling hills just west of Omaha, NE, CLAAS North America is finding success by tightly defining its potential markets and working hand-in-hand with its dealers, customers and prospects.

Celebrating its 25th year in the North American market, CLAAS has grown to be the industry leader in the niches it has identified the very large (Class 9) combine and the forage harvester markets.

CLAAS' entry into the U.S. and Canadian markets in 1980 could have been better timed both markets were coming off the boom of the '70s only to be faced with the farm financial crises which set in the early 80s. However, the company persisted and while many of the other farm machinery manufactures were focused on selling out or merging with their rivals, CLAAS remained independent, identified the market niches they viewed had potential and aggressively began attracting dealers and customers.

"The North American farm machinery market is a mature one ... so it takes a different approach to crack into it and be successful," says CLAAS North America General Manager, Russ Green. He should know he has over 30 years of experience in the machinery marketplace, working for several of the major manufacturers before joining CLAAS in March 2005 as their executive vice president of Sales & Business Development.

Green was promoted to general manager last fall when Dr. Theo Freye, president of CLAAS North America was named a director of CLAAS KGaA and took on the additional responsibility for the company's worldwide marketing and strategy.

Green manages the company's LEXION combine division and its hay and forage division. "The opportunity for CLAAS is huge," Green says. "CLAAS has a committed owner, world-class products, talented employees and an aggressive dealer organization. The platform is strong here to grow our business in North America and I look forward to that challenge."

Kelly Monroe, the company's new head of marketing communications explains, "CLAAS is privately held, under the direction of only it's second leader in 92 years, we can make decisions that are longer reaching, rather than on a quarterly basis." Monroe joined the company this past summer after serving in a variety of marketing management positions at AGCO.

"Our approach to the market," Green explains, "is instilling PASSION for what we do, TEAMWORK, and bringing ADDED VALUE to our dealers and customers. Because of our position in the marketplace we are neither the largest, nor the oldest we know that we have to prove ourselves every day. We realize that the first machine we sell into an area will make the second, third and fourth sales for us, since word of mouth among satisfied customers is extremely important in this type of marketplace."

ABOUT ITS PRODUCTS AND PROGRAMS

Craig Hoskinson, CLAAS North America service manager says, "Roger Parker, vice president of parts has a sign in the Columbus warehouse that reads 'At the end of the day is our machine still running?'

"That pretty well sums up our philosophy when CLAAS designs and supports a piece of equipment," Hoskinson continues. "Harvesting is the most time-sensitive operation on a farm, so we want to make sure that when the operator shuts down for the day that it was by his choice ... not because of a failed piece of machinery."

Hoskinson has been with the company since 1997 and first worked out of the original headquarters in Columbus, IN, prior to moving to Omaha, NE, the current base of operations. "CLAAS is the world's fourth largest manufacturer of farm equipment," Hoskinson reports. "When we first came to America, we thought we could take existing equipment which were market leaders in Europe and succeed with them in North America. Along the way, we found out that significant modifications are necessary to meet the needs of U.S. and Canadian operators."

Among those modifications are the larger sizes of equipment that are needed and their ability to operate in the drier conditions that exist in the U.S. and Canada. "Coming out of the depressed '80s, we decided to concentrate on growing our forage harvester business ... a line of equipment that we felt was being underserved by the majors," Hoskinson said.

"We launched a line of high capacity choppers and started concentrating on the custom harvesters which were emerging as farming operations began changing their scope and size," Hoskinson said. "This customer base is typically more open to new technologies and willing to try new products. They were willing to give us a chance to prove ourselves.

"In addition, we introduced the 'On Your Farm' parts program which was designed to provide piece of mind to customers new to the CLAAS product line. The program basically offers extended payment terms, through a participating dealership, to customers when they buy a large order of fast-moving wear parts. The customers can use these parts throughout the season and pay after the harvest is over, when their cash-flow is at its peak," he said.

The result of these efforts: CLAAS forage harvesters are the world-wide market leader!

In 2000 when Caterpillar decided to exit the farm
equipment retail business, it sold its 50 percent share of the joint venture for LEXION combines to CLAAS, giving CLAAS 100 percent ownership. (its Challenger tractor business was sold to AGCO). Cat had concentrated on the larger size units (Classes 5-8) and the LEXION line now boasts the world's largest combine. In fact, the behemoth model 590 (a new Class 9) was recently featured on the History Channel's "Modern Marvels" TV show sporting its 16-row head and 360 bushel grain tank. The 590 can harvest 80 bushels of grain per minute 4,800 bushels per hour on an average Iowa farm that equates to harvesting over 20 acres per hour!

"Caterpillar manufactures some of the components that are contained in the LEXION," said Maury Salz, CLAAS technical manager. "Cat may have exited the farm equipment retail business, but they still want to sell their engines, transmissions and other technology to those of us who are in business."

Assembly of the LEXION begins at the CLAAS plant in Harsewinkel Germany, from there, it ships by boat to Baltimore, MD, unloads onto Union Pacific trains and is railed and un-loaded in Omaha, NE. Its last journey is a short 10-mile truck trip to the Omaha plant where final assembly and modifications for the North American market are completed. "The LEXIONS we receive in Omaha are basically 80-90 percent assembled and we finish the work here," Salz says.

Green reports, "LEXIONS are available only through select dealers. When Caterpillar exited the farm business, there were several of their dealers who wanted to stay in it and had developed world-class expertise in serving the agriculture market."

The result of this technology and service: The LEXION 500 series was successful in its introductory year including establishing the first Class 9 machine, the LEXION 590.

THEIR MARKETING SECRET
"To be successful," Monroe says, "we must go to the market with a different mind set. Because of our size, we have very few layers, allowing us to make decisions on the spot when they are needed. All of our top-level managers have hands on product knowledge. We are constantly in the field meeting with our dealers and customers, driving the machines, and looking for innovations.

"That legacy comes from August CLAAS, the company's founder," Monroe explains. "At the end of the work day, he would ride his bicycle to the fields near the factory and discuss the day's harvest with farmers who used our equipment, asking for their ideas and improvements." His son, Helmut, is our current chairman and an engineer by trade. On a recent trip to North America, Helmut visited with rice farmers in Missouri and took the opportunity to get in the drivers seat of a LEXION combine working in the field. This same level of commitment can be found in all CLAAS employees.

FINDING ITS PROSPECTS
"We have an extensive customer/prospect database," Monroe reports. "We work with many suppliers who provide us with updated farmer databases, including some demographics which are unique to our type of customer."

In addition, the company asks its sales representatives to assemble a list of their top prospects. Each prospect received a direct mail piece that has multi-purpose uses. Last year's piece was a wooden stationery box which contained LEXION information. "Instead of just throwing the carrier away," Bob Armstrong, product and marketing manager says, "most recipients kept it and used it to store things, like cards, tools etc. The box, of course, sported the LEXION logo and our contact information."

The company also utilizes extensive print advertising, dealer co-op, and exhibits at major farm shows. "My goal this coming year," Monroe says, "is to increase our co-op advertising. Our branding advertising is very specific to the geography in which our machines have a fit and we have good dealer coverage."

Central to the company's marketing activities is the hosting of dealer and customer trips to their plant in northern Germany, "We started the trips many years ago," reports Armstrong. "The trips are designed to give the participants an in-depth knowledge of the company, its products and the global influence of CLAAS. You see much more 'CLAAS green' (the color of most of the company's equipment) throughout Europe than in North America.

The trips have worked well ... the company reports a much higher close rate among prospects after having participated in the travel program.

THE FUTURE
"When I think about the future," Green says, "the first thing I think about is our distribution network. We need to have our dealers be profitable, so we try to limit the number that we have to avoid in-line competition between them. We have many requests to handle our equipment and those discussions can be the testiest ones we have each year. We want CLAAS dealers to be the most professional in the business, offering comprehensive parts, service and support while, at the same time, being well capitalized."

Next, he thinks about the product line-up that CLAAS will be offering in North America. "Many of our dealers and customers have noticed that the company entered into a purchase agreement with Renault Agriculture and sells its tractor in Europe today. It will be a while before you see a CLAAS green tractor in North America, but it is on our radar screen. For now we will continue to offer a complete line of harvesting equipment," he says.

In fact, in most European countries, CLAAS is either the number one or the number two harvesting equipment supplier. Also, while the Lexion is the largest supplier of Class 9 combines, "There are still the other classes to be served which look very appealing and customers could benefit from our technologies," Green says. "There is definitely room for us to grow in North America and we are looking forward to reaching more customers."

"Finally, I think about the people we will be able to attract as employees of CLAAS," he says. "We are now of the size where we can attract the best talent in the country, and intend to do so."

So even in a market space that some companies are a bit giddy about playing in because of its maturity, its cyclical nature, and its high capital requirements, CLAAS has found its niche and has a bright future in serving the North American market it has found so desirable.

HISTORY OF CLAAS
1913: Business established by August CLAAS in Clarholz, Wetphalia, Germany
1919: Begin manufacture of straw binders
1930: Develop first combine harvester
1934: Manufacture of first pick-up baler
1936: Markets the first combine built in Europe
1946: Construction of the first self-propelled combine
1973: First self-propelled forage harvester
1976: First CLAAS round baler
1980: Enters the North American market, establishes headquarters in Columbus, IN
1995: Launch of first Lexion combine resulting from the Caterpillar/CLAAS joint venture
2001: Acquires Caterpillar's 50 percent of the LEXION combine joint venture
2003: Relocates North American headquarters to Omaha, NE
2004: Launch of the LEXION 500 Series, winner of 4 ASABE Awards


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