How does machinery maker Agco address the farming future?
RICHENHAGEN IN A MINUTE |
Where do you live? Near Atlanta, Georgia, USA. Tell us about your family? I’m married with three children – an agricultural engineering graduate Stefan, aspiring journalist Mechthild and student Martin Junior. How do you relax? Music, sailing, driving my Porsche, judging international equestrian dressage. What did you study at University? Theology, philosophy and French politics at the University of Bonn, then economics via a correspondence course. |
It’s a big day for the top man of one of the world’s top companies. Princess Anne arrived by helicopter to open the new office and training facilities that will serve Europe, the Middle East and Africa. Hundreds of employees and their families are still enjoying the company’s hospitality.
Dressed in a charcoal grey suit, blue tie and polished brown loafers, Mr Richenhagen looks like the stereotypical multinational businessman. But ask him whether he recognises the “big boss” description, the answer is a firm – if a little dour – “no”.
“No, of course not, I’m just having a lot of fun managing a company that has grown its sales from $200m in 1992 to become a Fortune 500 corporation with $5.5bn of sales in 2005,” he says.
He may not be from a farming background, but Mr Richenhagen says his first job at a stables in Germany brought his first, and most memorable tractor experience.
“I had a brand new demonstrator from a local dealer to take a trailer-load of students around the countryside,” he says in excellent English, albeit with a heavy German accent. “We were singing and I didn’t see the ditch and nearly rolled the tractor.
“It taught me a big lesson – farm equipment is more dangerous than people think. All the sophisticated computerised controls can isolate operators from that, but machines are getting bigger and more powerful. It is something we must not forget.”
Let the Germanic safety warning go and it is clear to see that those early years set a passion alight, one that took Mr Richenhagen to Claas in Germany and then to Agco via senior positions in the steel industry, a Swiss flooring maker and Schindler lifts.
“I love farming,” he enthuses. “It has more honest, down-to-earth people with better ethics than any other industry. Farming is a great story, and I want to be involved with keeping it that way.”
FWi decided to delve further:
You suggest farming is a great story, but where where’s the evidence for it having a brighter future?
Look at how the financial markets are investing in corporations involved with farming. I sit on the board of a copper mining company and it is just the same. Any commodity with a finite supply faces a good future.
The doom-mongers will be proven wrong. The world had 1bn people in 1800, 2bn in 1900, 6bn in 2000, 6.5bn today and will hit 8bn by 2030. There is a real need to feed that population. There just isn’t the political will to accept that some will simply die from starvation.
What’s more biofuels are the only real sustainable alternative to fossil fuels, which provides a great market in itself and the prospect of farmers growing their own fuel, too.
You talk about the potential for renewables. Is it right that you are looking to invest in the forage harvester market because you see growth in that area?
There may be some potential for Agco Corporation getting involved in the forage harvester business in the future and we are investigating growing markets such as eastern Europe and China. This new market opportunity supports the changing environment of our business with regards to renewable energies and the future of agriculture.
If Agco does invest in this market, we would see it as a further fulfilment of a full product line offering for our customers. The forager market isn’t very large, but from what we understand, we anticipate it to increase more than 30% during the next 5-10 years.
Why should farmers buy new machines rather than stretch more years from existing ones?
It’s simple, it’s what we are all about, it’s productivity. We can improve productivity through better fuel consumption, which is becoming more and more important, lower running costs through better parts and servicing, and higher outputs from larger machines handling larger equipment.
Technology really can make a difference. Look at our latest 60kph Fendt tractors – they bring real benefits for businesses doing a lot of road work. New electronic interfaces will improve implement handling, and within 3-5 years we will have on-board diagnostics so more preventative servicing can be done, to avoid costly downtime. Farmers want 24/7 productivity and with mobile servicing, as well as improved factory servicing, that is what we can increasingly deliver.
But why should farmers buy one of your brands? All modern tractors are pretty much the same aren’t they?
Servicing will become a greater differentiator between suppliers, with buyers increasingly opting for full service packages, with replacement equipment options, or lease programmes, to ensure productivity is not compromised. UK farmers, with their focus on productivity are leading this trend.
Satellite positioning will become commonplace, too, economics rendering them a no-cost extra within a few years. I’m not sure they’ll ever deliver the agronomic benefits some of the academics seem to talk about, because you will always have Mother Nature intervening. But they will certainly assist steering, bout work and recording where inputs have been used, which is important to prove environmental credibility.
But why are there still so many brands? It simply confuses farmers.
Some makers offer different ranges, but beneath the paint the machines are the same. Other companies have put everything on the same platform and then tried to resurrect old brands afterwards, like Case have with McCormick. We haven’t done that.
With us the brands really are different – Fendt is high tech, with a different engine and drive train from Valtra, which is suited to forestry work, with a stronger cab and reverse operating facility, while Massey Ferguson is different again, offering a more user-friendly package to a global audience.
That doesn’t mean innovation in one brand will not migrate to others. It will, but it will still be within the context of the overall brand values, so it sits within the environment of the overall brand.
So are you going to continue with all the brands?
We are down to 12 brands now and we will settle at four. That is Challenger, Fendt, Massey Ferguson and Valtra. The Challenger brand is good for professional farmers because it consistently delivers high specification, top quality, tough reliable products with the latest in advances technology.
Fendt is the best choice for speciality crops and livestock farmers while Masseys are true workhorses at a competitive price. Valtra, meanwhile, are renowned for their reliability and versatility.
But some Agco brands don’t have the best reputation? What are you doing to address that?
Our decision to invest 30% more in engineering development year on year is paying dividends. It means we have got the Massey Ferguson range into pretty good shape, which is important, because people could remember the quality problems we had, when the product was not so good. Now we are turning attention to the combine range.
So where does Agco go now?
My goal is to make a real business of Agco. We need some real synergies from all the acquisitions we’ve made, so we can double earnings in five years and take second place in the world farm machinery market. Our philosophy is one of “always growing”. It’s an Agco trademark.
AGCO FACTS |
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