Since the Merger of Case IH and New Holland in November 1999, the formed company of CNH has become a global force in the agricultural equipment business. With total revenue of $13 billion in 2006 (60% of 2006 net revenues were generated by agricultural equipment sales), the company markets and distributes equipment through two distinct product lines. On the next pages, company executives from New Holland and Case IH discuss the strategies for their companies and explain what makes each company unique.
Q&A with Lorenzo Sistino, New Holland Ag Equipment
SERVICE IS TOP PRIORITY FOR NEW HOLLAND
By Mark Moore
WHILE NEW HOLLAND shares the same ownership as Case IH, it has worked to maintain a unique and separate brand identity. Lorenzo Sistino, president of New Holland Agricultural Equipment, shares his insights about the company's new programs and marketing strategy. (After this interview took place, Sistino was appointed CEO of Fiat Automobiles S.p.A.)
FIN: What message are you delivering at this year's farm shows?
SISTINO: We are pleased to announce Top Service, our new customer care program that has New Holland technicians available 24 hours a day, 7 days a week. Our technicians have the authority to find the best way to deliver necessary parts to get the customer up and running.
This program was modified using our existing program from Iveco [a Fiat-owned commercial truck manufacturer]. We brought over the information technology platform and adjusted the program for the agricultural group. It is a process that allows us to have immediate feedback on how our service programs are operating and how we can improve each step. We have tested the program in Europe for nearly two years, and it will become operational in North America soon. This is a major investment for our company.
We are giving a lot of decision-making authority to those people working directly with the customer.
Why are you focusing on a customer service program?
Customer service will be a strategic advantage for New Holland. We have a large lineup of products and a strong dealer network. Service is critical, and in order to improve our sales and results we must improve in this area.
Where do you see the growth markets for New Holland?
The cash grain markets in North America will remain strong, and we expect to see continued growth. As a whole, the agricultural equipment industry has seen a 4% growth in 2007, and New Holland has seen double-digit growth. We have invested a lot in the past year to ensure that we have a complete product lineup.
In the future, we want to grow our market share for both tractors and combines. So far, the North American region has been growing faster compared to other areas.
How do you view the competition from Case IH?
New Holland and Case IH are two leading names in agriculture equipment. And while we are under the same ownership, we are two separate brands and we have two different missions and two different customers.
We do have certain synergies, and we can share technologies. But we offer different products to the customer.
But aren't you competing for the same customer who wants a 4-wd tractor?
We do have similar products. But we want to ensure that the customer who wants to buy a baler from New Holland also has his needs met with a New Holland tractor.
Q&A with Randy Baker, Case IH Ag Equipment
CASE IH STRIVES TO EXCEED EXPECTATIONS
By Mark Moore
RANDY BAKER, president and CEO of Case IH Agricultural Equipment Inc., talks about the state of the agricultural equipment industry, how Case IH differs from New Holland, and the future of Case IH.
FIN: What's the main message Case IH wants to convey at this year's farm shows?
BAKER: Our main message comes back to our roots. Back in the 1950s, the International Harvester piece of this company conducted demonstrations throughout the country. The whole process focused on spending time with the customer.
I personally spend at a minimum one week a month within a sales territory visiting with producers, ensuring that we are producing products that meet and exceed their expectations.
We also use these events to highlight our full line of new products available.
Both Case IH and New Holland are under the CNH umbrella, yet they have maintained a distinct level of brand independence. How has this been accomplished?
Case IH and New Holland are very different companies, with a different customer base and different dealers. And we have dramatically different strategies on how we go after these markets.
The International Harvester business is such a strong legacy around the world. And Case IH is well positioned for our cash grain customers. Our two brands really complement each other well, since there are markets in which one company has a stronger presence and image. And with our combined manufacturing strength we can improve engineering and be more cost effective.
But don't you compete for the same customer in the Corn Belt?
To a certain extent. But we also have competition from other equipment manufacturers. This is a tough market with a lot of competition. It comes down to who provides the best product and service. Case IH and New Holland push each other, but there are other companies pushing as well.
FIN: How is Case IH positioning itself in light of higher commodity prices?
There's no question that it's a good market right now, but we remain cautious. Producers are seeing commodity prices that they haven't seen in many years, and that is expected to lead to a significant amount of equipment purchases. We are working to ensure that we have more inventory in our dealerships, but we also want to be careful that we do not overstock our marketing channels. We are gearing up to respond to any market demand by turning up the capacity in our plants when we need it.
What's going to be the driving force in equipment in the coming years?
Higher horsepower and automated driving systems will be big items. But another factor will be equipment that can help producers do a better job of controlling input costs.