CATERPILLAR SEES AG TRENDS IN LINE WITH ITS CORE COMPETENCIES
Editor’s Note: Robert G. Strube’s career with Caterpillar spans more than 30 years. When he was named president of Caterpillar Agricultural Products Inc., DeKalb, Ill., in 1996, it was a return to his agricultural roots. Born in central Illinois, Strube grew up on a farm and was active in FFA and 4-H. He holds a bachelor of science degree in ag mechanization from the University of Illinois and a master’s degree in agricultural economics from Southern Illinois University.
AM: The customer base in agriculture continues to shrink and change, driving changes in equipment. What are you doing to meet the changing face of your ag customer?
RS: We’re doing what Caterpillar does best - providing machines, technology and service to help improve producers’ productivity and bottom line. As farm equipment has increased in size and weight, Caterpillar has helped farmers take better care of their soils and put more power to the ground with innovative technology like rubber-belted ag tractors. Track adoption is growing at a phenomenal rate. We’ve also aided farm productivity with the Lexion combine’s unmatched speed, capacity and grain quality.
Trends are very much in line with Caterpillar’s core competencies - industry-leading diesel engines; durable, efficient transmissions and power trains; operator-friendly cabs; and hydraulics and electronics that are second to none. We have a tremendous R&D investment in future products and continue to look at complementary lines like the recently announced tillage tools. From a distribution perspective, we’re working with our dealers to better serve today’s customers and to be ready for what farming will be like in a few years.
AM: When will the new Lexion combine plant in Omaha, Neb., be in full production? How will this affect your ag business and sales/marketing efforts?
RS: The Lexion combine plant is another important example of Caterpillar’s investment in the agricultural industry. Combines are scheduled to be rolling off the line by fall 2001. A facility in the heart of North America allows us to respond more quickly to customer needs and to get producers up close to the equipment. The new factory will feature a showroom where customers can see our unique technologies on display, as well as the existing demonstration track for our auto pilot and auto contour features. Allowing farmers and dealers to view these features firsthand can be an effective selling tool.
AM: For traditional farmers, red and green still represent a significant amount of equipment. What marketing tools are you using to bring more track tractors, combines and other products to farms?
RS: Our customers are asking for solutions that lower costs and risk. Durable, reliable equipment is a primary way to achieve those objectives. Leases can be effective at fixing risk because resale value is established upfront and many have warranty/service contract coverage for the full term. On the cost-reduction side, our dealers have been promoting longer term, lower overall cost of ownership. Risk is controlled through customized service agreements. Many dealers also offer extensive preventive maintenance programs.
AM: Because of the ag economy and decreasing U.S. customer base, are you focusing more attention on expanding domestic or international markets to broaden the appeal and sales of Caterpillar ag equipment?
RS: We’re focused on meeting the needs of innovative farmers on a global basis. While many customers are in North America, Caterpillar equipment has been an attractive answer to meeting worldwide need for improved bottom-line productivity in agriculture. We also need to realize that a decreasing customer base refers to the number of farmers. Farm size and farming practices determine machinery needs. We don’t focus so much on having fewer farmers as we do on the opportunities to help customers whose needs fit with our core strengths.
AM: How does Caterpillar, with its proprietary product technology, protect its market position in the face of ever-increasing challenges from competitors trying to market to fewer customers?
RS:It’s not so much protecting our position as it is raising the bar. We lead the way in track technology. We lead with the productivity of the Lexion combine. We continue to look for new ways to meet customer needs through a state-of-the-art dealer network and complementary product lines. Caterpillar is in the ag market to stay, and we plan to use our strengths to keep competitors trying to follow in our tracks. AM