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AGCO celebrates silver anniversary.

In the late 1980s, the agricultural industry was just coming off some of its worst years. Allis-Chalmers, one of the most successful farm machinery companies in the 1960s and 1970s, was hit especially hard, having to sell off its divisions piecemeal. The construction division went to Fiat, while the farm equipment business was sold to Klockner-Humboldt-Deutz (KHD), becoming the Deutz-Allis Ag Equipment Division.

In 1988, Robert Ratliff, armed with 26 years of experience at the International Harvester Company, stepped in as President of Deutz-Allis. And so begins the story of AGCO.

THREE GROWTH PHASES

Alistair McLelland, AGCO's Vice President of Marketing, North America, has had a ringside seat to AGCO's growth. He has been with AGCO since the company acquired Massey Ferguson in 1993. "Before the acquisition, I was with Massey's export office in Florida, managing sales for Latin America," recalls McLelland. "I was very fortunate to have been among the first group of Massey employees to move to AGCO's Atlanta headquarters where I was able to work directly with the founders of AGCO and help support their vision."

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"I see the development and growth of AGCO to be much the same as a person grows and changes," says McLelland. "The early years, or infancy, was about Robert Ratliff's vision of building a business through acquisitions and reaching critical mass. Then we transitioned to our early adult years, moving from acquisitions-only to more organic growth, while capitalizing on a strong dealer organization. Now we're heading into our mature phase. We have a solid platform of products, offering leadership in tractor, hay tool and spray application technologies. And we're leveraging that technology across all our platforms."

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THE EARLY YEARS

Ratliff's vision, in fact, was all about not doing business as usual. For one, he believed that companies could be built and could thrive on acquisitions.

In late 1989 when the Berlin Wall came down, KHD had a change in its global strategy. The company's focus became Eastern Europe and a reunified Germany. Consequently, there was really no desire to continue a relationship in the U.S. This opened the door for Ratliff and other Duetz-Allis executives, John Shumejda, Edward Swingle, and James Seaver, to execute a leveraged buyout of the Deutz-Allis Ag Equipment Division.

After adequate funds to complete the purchase were raised, AGCO was born in June 1990.

Initially, the new company was to be named Allis-Gleaner, blending the trusted tractor name with the tried-and-true combine franchise. But too many legal issues popped up. Instead, AGCO Corporation, (A for Allis; G for Gleaner) was settled on, and the company began selling AGCO Allis tractors and Gleaner combines.

Once AGCO was up and running, its leaders started looking for ways to expand the company's footprint and provide a full-line of products. In the first 15 years, more than 30 acquisitions allowed AGCO to attain this goal, an effort that also was the driving force behind consolidation of the farm equipment industry.

As the acquisitions and integration continued, a particularly notable strategic move was made to lift the spirits of the entire AGCO dealer sales force. When KHD acquired A-C, Duetz-Allis tractors were painted spring-green, a color not very popular with some farmers and dealers at the time. The traditional Allis-Chalmers orange was brought back--an indication that AGCO understood the needs of dealers and desires of customers.

ACQUISITIONS CONTINUE

Acquisitions also laid the groundwork for AGCO's crossover distribution concept where an AGCO Allis dealer could also become a dealer for any of the other brands AGCO owned and manufactured, and vice-versa.

When AGCO acquired the rights to distribute Massey Ferguson products in North America, 1,100 new dealers gained access to AGCO's crossover dealerships, providing an incredible opportunity for sales growth. According to the book, "The Proud History of AGCO" by Hannu Niskanen, the acquisition also increased the geographic scope of the AGCO distribution in North America. While AGCO Allis, Gleaner and White were well represented in the Midwest, Massey Ferguson had wide coverage in other parts of the continent, especially with the hobby/lifestyle farming segment.

With AGCO's purchase of Massey Ferguson's international operations in June 1994, AGCO's revenue was doubled, and 4,000 new dealers around the world gave AGCO a solid foundation for global operations.

Coming acquisitions further enhanced the product offering. The Fendt acquisition, in particular, brought a higher level of technology with the first successful Continuously Variable Transmission (CVT) on tractors. And in 2001, Caterpillar sold the product rights to its rubber-tracked Challenger to AGCO, rounding out the company's technology and its tractor offering to include everything from sub-compact to 4-wheel-drive articulated machines.

"We've just touched on the highlights," points out McLelland. "When you consider the collective history and accomplishments of the 30 plus brands which were brought together, you realize why this anniversary is so important, and why there is such pride in the company's heritage."

While AGCO is still open to certain acquisitions that would expand the company's product lineup, its last major purchase was GSI Holdings, Inc. GSI's primary business lines are grain-storage equipment and livestock equipment such as watering systems and barn ventilation fans, products greatly needed in regions with developing agricultural production, such as Brazil, Russia, India and China.

A MATURING COMPANY

Today, AGCO is a maturing company with a solid base of products and dealers. At 296 among Fortune 500 companies and with 2015 global sales of $7.5 billion, AGCO is focused solely on the agricultural industry, but is now taking a different approach to bringing new products and services to the agricultural market.

"When Robert Ratliff retired in 2006, and Martin Richenhagen became CEO, we began to transition away from building the business through acquisitions to a more organic system of product development," says McLelland. "For the last seven or eight years, we've relied on our own internal research and development teams to identify and create new product offerings."

The first major introduction of products with technologies developed from within AGCO occurred in 2011. The investment in internal research and development, along with additional investments in technology from strategic partners, is reflected in the latest class of introductions which includes:

* Massey Ferguson 4700 Series heavy-duty utility tractors, part of a larger global vision and the first in a new generation of modern, common-platform tractors that will include 4700, 5700 and 6700 Series utility tractors built in the newly opened, state-of-the art facility in Changzhou, China;

* White Planters 9800VE Series planter, the result of AGCO's latest investment in planting technology available from Precision Planting;

* Gleaner S9 Series transverse rotary combines with Gleaner's Vision cab and new Tyton terminal that provides full integration of products in AGCO's suite of FUSE precision farming technologies.

* Fendt 1000 Vario tractors deliver 380-500 HP and are designed for heavy draft work. These agile, powerful wheeled tractors bring forth an entirely new power segment in row crop tractors with Fendt's extensive technology, comfort and performance.

DEALER SUPPORT

While new products continue to roll off the lines at AGCO, the company also has invested in preparing its dealers to sell and service that equipment. 'We have a great dealer base with a strong financial structure," notes McLelland. "Over the years there has been a great deal of dealer consolidation. Ten years ago, we had many single-location stores. Now the dealer organization is made up of high-volume, multi-location stores offering much better financial stability."

To support those dealerships, AGCO developed the AGCO Academy, offering dealer training on sales skills, financial management and, of course, product features, benefits, operations and servicing.

In 2011, AGCO opened its Global Learning Center, a 19,500-sq.-ft. facility next to the AGCO headquarters. The Center serves as home for AGCO Academy, as well as AGCO University which offers learning and development programs for employees.

MARKETING STRATEGIES

With so many well-known individual brands and rich brand histories, it would seem that marketing communications efforts at AGCO would be a bit of a nightmare. Yet, over the years, the internal tactical marketing and advertising teams have worked alongside external agencies to develop solid communications.

"Our tactical marketing teams are segment-oriented, developing strategies to grow the business now and up to 12 months from now," explains McLelland. "The marketing communications team works with tactical to determine and develop the best communications approaches."

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AGCO currently partners with four outside advertising firms, with work split along brand and market-segment lines.

San Diego-based VITRO provides brand and media strategy as well as creative strategy and development for AGCO's Fendt, Massey Ferguson, Challenger, Hesston, RoGator and TerraGator brands, while content development and execution for these lines is primarily the responsibility of Crabb+Radermacher of Atlanta.

Retained to provide dealer marketing and media strategy and execution is the Flint Group, Fargo, ND. AGCO's longest running agency relationship is with the small Athens, GA, based shop Snowden-Tatarski which supports Gleaner combines, as well as the Sunflower and White Planter brands.

According to McLelland, we'll be seeing a more concentrated market-specific approach to their communications efforts. And there will be a greater effort to talk more about AGCO, its history and the range of its equipment offerings.

"We want to show the entire breadth and strength of our portfolio," he notes.

"We want to show producers in all market segments that they can become more profitable by engaging with our entire suite of products and services."

COMING UP

Looking forward, McLelland believes the bundling of AGCO's different brands will be key. "We're confident that, as a full-line supplier, we can improve farmer productivity and profitability," he says. "By bundling our brands and products together, we can satisfy the needs of nearly any customer segment.

"We're incorporating two parallel strategies. One for what we call our B-to-B, or Big Ag, market segment with our Challenger and Fendt brands. And another for B-to-C, or small farm and rural lifestyle, with small hay and Massey Ferguson tractors."

According to McLelland, important part of the company's success in years to come. Fuse is AGCO's precision agriculture strategy and technology platform. It is built upon an open architecture that allows producers to connect both AGCO and competitors' equipment with AGCO dealers and other trusted advisors.

"Fuse Technologies will help our customers efficiently plan, produce and protect crops through the entire cycle from planting through storage by providing them the flexibility to mix equipment and software platforms, plus the freedom to control outside access to their data," explains McLelland.

"Overall, we're in a great position to gain additional market share in North America," says McLelland.

To drive the next 25 years of growth on the global front, AGCO will focus on five key brands: Challenger, Fendt, GSI, Massey Ferguson and Valtra, supporting sustainable agriculture around the globe and striving to be a strong player in the faster-growing agricultural equipment markets of Brazil, Russia, India and China.

AFRICA

A major area of investment is in Africa. In January of this year, AGCO held its fifth annual AGCO Africa Summit in Berlin, Germany. A joint initiative of AGCO, Bayer CropScience, Rabobank and De Lage Landen, the 2016 Summit focused on transforming agriculture in Africa through inclusive and sustainable growth.

To that end, AGCO has developed an Emerging Farmers' Mechanization Package through its Massey Ferguson brand that gives emerging farmers in Africa access to modern farm equipment at an affordable price. The package features a range of Massey Ferguson tractors between 55 and 85 horsepower and a full line of accompanying implements including a harrow, plow, sub-soiler, planter, trailer or transport box.

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A core element of AGCO's mechanization strategy for Africa is the AGCO Future farm initiative which provides farmers with education in core agricultural practices and trains operators, mechanics as well as local dealers on how to operate, service and maintain agricultural equipment. AGCO will break ground on a second Future Farm in the Francophone region of Africa later this year.

Another effort central to the company's global efforts is the opening of a new facility in Changzhou, China. Established as a base for manufacturing plus research and development, the facility is expected to gradually reach an annual capacity of 20,000 tractors, 30,000 engines and 40,000 rear axles and transmissions.

"As we reflect on the past 25 years and look forward, AGCO really exemplifies some of the same goals pioneering innovators of the 1800's had when they began developing new and more efficient ways to produce food," McLelland reflects.

"Today, we remain focused on creating solutions that help farmers to feed the world. That heritage has helped AGCO achieve its first 25 years of success, and it will serve us well into the future."

KEY DATES IN AGCO HISTORY

1901: Edward P. Allis Company merges with Fraser & Chalmers to form Allis-Chalmers Company, based in Milwaukee.

1920: Company enters the farm tractors market.

1984: Industry downturn leads to three-month shutdown of tractor and combine production plants.

1985: Farm equipment division is sold to Klockner-Humboldt-Deutz AG (KHD); the German firm combines the division with its Deutz Farm Equipment subsidiary to form Deutz-Allis Corp.

1990: Robert Ratliff leads a management buyout of Deutz-Allis, which is soon operating as AGCO Corporation; headquarters are shifted to near Atlanta, Georgia.

1991: Acquisition spree begins with purchases of Hesston Corporation and White Tractor.

1993: AGCO purchases Massey Ferguson's North American operations.

1994: Company's stock listing shifts from the NASDAQ to the New York Stock Exchange; company buys the international operations of Massey Ferguson.

1997: Xaver Fendt GmbH & Co. KG, the leading German tractor maker, is acquired.

2001: Caterpillar sells product rights to its rubber-tracked Challenger to AGCO.

2001: AGCO Corporation purchases Ag-Chem Equipment Company

2004: The Valtra tractor and diesel engine operations of the Finnish firm Kone Corporation are acquired for $756 million.

2004: Martin Richenhagen named AGCO President and CEO

2010: AGCO Africa Summit is launched as key initiative to improve global food security and sustainability

2011: GSI Holding Corp. (GSI), a leading global manufacturer of grain storage and protein production systems is acquired

2011: Largest new product introduction in AGCO history held in Kansas City, MO, marks the transition to organic growth for AGCO

2012: AGCO expands its Jackson, MN, facility to include high horsepower wheeled tractor production for North America

2013: Fuse Technologies, AGCO's global precision farming strategy, launches

2015: AGCO opens new tractor manufacturing facility in Changzhou, China

by Mike Gustafson, Deer's Landing
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Author:Gustafson, Mike
Publication:Agri Marketing
Article Type:Cover story
Geographic Code:60AFR
Date:Mar 1, 2016
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