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 AGCO CORPORATION: REORGANIZING FOR THE NEW MARKET October 2006 Name: Bob Crain Title: Sr. VP and Gen'l Mgr — North America Career: Started with Ford's tractor operations and has held various management positions within New Holland and CHH Global. Education: B.S. degree in Business Administration and Marketing from the University of Alabama. Responsibilities: Oversees the implementation of all business strategies within the U.S., Canada, and Mexico, including sales and marketing, manufacturing, product mgt, materials, engineering and dealer organization. AM: Why does AGCO have a new structure in which AGCO and Massey Ferguson will be its lead brands? BC: It is important to remember that AGCO Tractors and Massey Ferguson are brands with a rich history in the U.S. farm equipment industry. In an effort to strengthen the more traditional dealer distribution networks typically associated with these brands, we are implementing numerous internal and external initiatives. AGCO Corporation has an equally important initiative to build the Challenger brand through the non-traditional distribution network represented by the Caterpillar dealership organization. The strength of the CAT Dealer network more effectively targets the professional or commercial farm segment. Internally, we have restructured our marketing teams to focus more strategically on the market segment these brands impact. The larger professional farmer makes purchasing decisions differently and approaches farming differently than the smaller lifestyle farmer, so we'd be remiss if we didn't embrace these differences and evolve with the market. Our goal is to achieve a larger market share, improve overall product and brand value in the minds of our customers, improve shareholder value and continue delivering some of the highest levels of customer service in the market. AM: What legacy brands will not be used? BC: A common occurrence in the agricultural, automotive and consumer brand sectors is the retirement of older brands and products in order to make way for a newer generation. AGCO is following a similar pattern to companies that have accumulated multiple brands and eventually phased out older, legacy brands. However, it is an unwise practice to discontinue a legacy brand without careful deliberation, extraction of its best technologies and an understanding of its marketing success/demise. We are carefully looking at all brands produced by AGCO Corporation and are prepared to consolidate or retire certain brands in order to provide the best technologies and products that support our customers' growth and profitability. We will continue to offer more than one brand as we believe one of our greatest strengths is our multi-brand strategy. Ultimately, our customers will benefit from the technological advancements in our products, no matter the brand. AM: How does this impact the Ag Chem brand of sprayers and floaters? BC: At this time, the Application Equipment Division including, SpraCoupe, RoGator and TerraGator, will remain unchanged in almost every respect. As a benefit to application equipment customers, numerous Caterpillar dealers have taken on parts and service contracts, providing them with high service and product support levels in, and out of, the field. AM: How has this change been announced to the dealers? What was their reaction? BC: AGCO Corporation fosters open and constant communication with its dealer organizations through several practices. Annual Dealer Interface meetings provide AGCO and Massey Ferguson dealers with a forum for candid discussions and feedback on a variety of topics. The Dealer Panel program engages selected dealer representatives in detailed conversations about corporate policies and strategic plans with key product managers and executives. The Challenger brand also has similar programs for the CAT dealers. The reaction from dealers at our recent product launch in St Louis was very positive and, quite honestly, they have been receiving information about this new direction and market strategy throughout the past year. Dealers crowded into breakout sessions to learn all they could about the new products and future market strategies. Even more telling is the number of orders placed onsite — more orders than at any dealer meeting in the history of the company. Likewise, the Challenger dealers (CAT dealer network) positively responded to the new market strategy, which we announced to them in Las Vegas, NV, last month. AM: Regarding dealers, how many does AGCO have and how many does it expect to have in the next five years? How do you expect that this change will take place? BC: In the U.S. and Canada today, AGCO Corporation is represented by more than 1,500 Massey Ferguson and AGCO dealers, and the CAT dealers add more than 40 dealers to this robust distribution network. A need exists to restructure the ag equipment distribution network throughout North America, as the industry as a whole is shifting toward fewer, and larger, dealers. These larger dealers may have more than one location with larger equipment and parts inventory, as well as on-site mobile service capabilities. We expect to experience consolidation within our North American dealer network, and the exact shape of this new distribution system is difficult to address in precise numbers. For example, in order to better access and serve the lifestyle consumer, dealer numbers may increase in some geographic areas, while the number of dealers might consolidate in the most rural and agriculture-dominated geographic regions serving the professional farmer segment. AM: What major new technology is AGCO introducing to the North American market place this year? BC: Our new series of Class VIII combines (Challenger, Gleaner and Massey Ferguson) provide tremendous opportunities for AGCO Corporation due to higher horsepower, larger grain tanks and faster unloading rates, and provide some of the best technology available in the industry. Precision agriculture features are becoming more standard on our combines and tractors including, electronic terminal control yield monitoring with GPS-guided yield mapping and Auto-Guide satellite assisted steering — which will be available in our combines by year's end. Our AGCO Global Technologies group continues to advance Auto-Guide technology offerings with the addition (this year) of contour cropping and center-pivot-irrigation satellite guidance. Precision farming ag technology will expand to include a wide variety of towed implements and the majority of our balers and tractors currently meet international ISOBUS standards for connectivity. For example, a baler now plugs into the tractor with one cable that provides a much more advanced level of machine control and monitoring, as well as, harvest record keeping than was available before. All of the collected information is displayed and controlled via the armrest in the cab, eliminating the need for additional wires and black-box controller monitors. These improvements are the result of increased Research and Development (R&D) spending by AGCO Corporation — from 2001 to 2006 AGCO R&D doubled. We will continue to increase and optimize investments into R&D annually in order to offer high tech solutions that provide our customers with increased productivity through improved accuracy, efficiency, operator comfort and overall environmental conservation. Tweet |
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