AGCO--challenging times, rewarding performance.

In an exclusive interview, Implement & Tractor spoke with AGCO chairman Robert Ratliff and vice president of corporate relations Molly Dye about opportunities for growth, pleasant surprises, recovery from tragedy and more. We invite you to listen in...

Implement & Tractor: YOU have frequently stated, "We're establishing a General Motors model in an industry where it hasn't existed before." Assuming that the Challenger line-up is well received and that the AGCO-labeled equipment is similarly well respected, can you envision ever moving toward a full-line philosophy and eliminating or consolidating any of the nameplates that don't offer a full range of products, i.e. Massey Ferguson, Allis, Hesston, Gleaner, etc.?

Robert Ratliff: I don't believe that would be something we would consider. Each of cur product lines already has an identity that we don't want to throw away. We have combined the Allis and White tractor labels under the AGCO brand and I don't think we would consider dropping any more brands.

I&T: Most people would acknowledge that the purchase of the Challenger tractors and their subsequent introduction as AGCO products has been very successful, at a minimum from a public relations perspective. You have further announced that AGCO will roll out a full line of wheeled tractors, combines, hay tools and other implements. What is the schedule for these new releases?

Molly Dye: Let's not forget that the introduction of the Challenger line has been good for Caterpillar dealers, too! They now have a full line of agricultural equipment to sell that they didn't have before. And some of those now handling the Challenger line didn't take it on before, because they had no market for big, high-horsepower tracked tractors. In some areas of the country, they can sell wheeled tractors and haying equipment, but not the big units.

As to the availability of the rest of the line, the wheeled tractors are headed to dealers as we speak. The baler is already out and the other hay tools will follow between now and October 1. The combine will be the last to appear, and that should be available in January 2003. Everything but the combine will be on the sales floor by December.

I&T When will the full Challenger line-up be announced? And will the products be unique to the Challenger line or will they be other AGCO products carried under the Challenger banner and nameplate?

MD: The full list of products will be announced by the middle of August or before. They will be based on other AGCO products... with the proviso that if it has the Caterpillar engine, it will be labeled "powered by Cat." But they will not be different from the AGCO models in any significant way - other than the engine and perhaps some design nuances.

I&T: Expanding further on the General Motors theme, Henry Ford is often quoted as saying that people could have any color Ford they wanted as long as it was black." I believe General Motors scored points with the public by offering them a choice of colors. Do you foresee the possibility of a similar development in the tractor industry?

RR: That was tried in about 1992 by the then White Tractor business. They allowed the customer to order the tractor in a variety of colors. That didn't work... because they ended up with so much inventory of parts in different colors they really quadrupled the amount of inventory they had to have, and it tied up an excessive amount of capital. Our industry is formulated by brand and color, and we would expect to continue to support that. I don't think we would ever offer a variety of colors.

I&T: Given the spate of recent acquisitions by AGCO, are the pieces pretty well in place for the complete line up of AGCO nameplates? If not, what holes are you looking to fill?

MD: We are always going to be interested in new opportunities and will always listen, so we haven't ruled anything out. We don't have a cotton picker, for instance. Would we like one? Yeah. But adding brands is not a matter of great priority at this time.

I&T: In that vein, last year you were quoted as saying that you had a need for more forage products, in the European market particularly? How have those plans developed?

RR: We have entertained some possibilities to acquire from another supplier or develop a forage harvester from within. At this point we have not been able to announce yet. We are still in negotiations and our own development.

I&T: The Challenger line was introduced in Europe in June. What has been the reaction, and what progress has been made relative to establishing dealers and/or distributors?

RR: Just as in North America, there is considerable interest in the Challenger brand in Europe. At this time, all I can say is that we are having private showings of the products to dealers and discussing what the market potential would be in each of their territories. We feel there has been considerable interest throughout Europe... as well as South America, Australia and even the Asian countries. We are pretty encouraged by the verbal responses we've been getting.

I&T: Given the situation with the introduction of Challenger, and other issues within the company, this has been, shall we say, "a challenging year," both personally and professionally. How would you assess the company's performance so far this year?

RR: As we have related, the personal losses we had in the company were unexpected and difficult for everyone to grasp. But I think that one must understand that in a public company, you must have succession plans. We were fortunate that we did have such plans and were able to take the necessary steps to replace both individuals quickly. And then go through a transition period as to our future management team.

The Board acted very deliberately, without being hasty, and has identified that the future management of the company will come from within and we feel very confident in the talent we have.

In the period of six months since the crash we have experienced our employees rising to the occasion. The output and effort has been more than one could expect. That has helped maintain the momentum of the company and to handle these new challenges and opportunities like the Challenger acquisition. We feel very good about the progress that has been made in spite of that loss.

I&T: Do you have any parting comments?

RR: We are still very confident about the industry for the balance of this year and ensuing years. We think that the Farm Bill has been a great support for the farm community and the export of commodities should, in the long term, help commodity prices... which should be the basis for improvement in the sale of farm equipment.