Equipment Specs
(Redirected from AGCO)

AGCO Corp.

From RitchieWiki

(Redirected from AGCO)
Companies > Manufacturers
Equipment Specifications - RitchieSpecs
Free specifications for all classes of equipment
AGCO Corp. is a multinational manufacturer, marketer, and distributor of agricultural equipment and implements. It has grown through a series of acquisitions and mergers, forming a network of 3,200 independent dealers and distributors in more than 140 countries.[1]

AGCO is currently being traded on the New York Stock Exchange under the symbol AG. It is on the Fortune 500 list, ranked No. 11 amongst industrial and farm equipment companies.[2] Its 2007 revenues were US$6.8 billion.[3]


[edit] History

[edit] Company Constantly Changing Owners

AGCO formed out of the ashes of Allis-Chalmers.

In the late 1980s Allis-Chalmers was purchased by a German company called Kloeckner-Humbolt-Deutz AG (KHD). The company was renamed Deutz-Allis and continued selling agricultural equipment in the U.S. However, KHD had underestimated the loyalty of American farmers to U.S.-built equipment. Ultimately KHD was disappointed with sales and was soon looking to unload the unprofitable company.

The head of Deutz-Allis in the U.S., Robert Ratcliff, still saw potential for the company and offered to take the company off KHD’s hands. In 1990, Ratcliff and four other executives purchased the company, renaming it the Allis-Gleaner Corp., or AGCO.

At this point in his career, Ratcliff had extensive experience in operations and the equipment industry. He had previously worked at Uniroyal and International Harvester. He had been hired by KHD in 1988 to help turn the fate of Deutz-Allis around.

AGCO’s headquarters were established near Atlanta, Georgia. It was viewed as a clean start and allowed the company to take advantage of strong local transportation and labor markets.

The first big change Ratcliff made to distinguish his new company from Deutz-Allis was to change the equipment’s color from KHD’s dark green to a more “distinguished orange.”[4]

Early on, Ratcliff introduced a plan to cut cost and “increase efficiency.”[5] He also devised “an ambitious strategy for growth.”[6]

[edit] Growth Through Acquisition

In 1991 AGCO made its first acquisition when it purchased a small hay handling company called Hesston Corp. It had an “excellent reputation for quality,” but suffered a long history of financial problems.[7] A few months later, AGCO added the White Tractor division of Allied Products. Together White Tractor and Hesston cost AGCO US$36 million, adding 1,100 dealerships.[8]

These first two acquisitions were paramount to establishing Ratcliff’s vision for his company. He “realized that AGCO would be fighting an uphill battle if it was going to try to compete with manufacturing giants such as John Deere and J.I. Case.”[9] Deere and Case were two of the biggest agricultural equipment companies.

"You've got 70 percent of the industry in North America controlled by two companies ... neither of which has made money for a number of years," explained Allen Ritchie, head of AGCO's acquisition team, in the May 1994 issue of Georgia Trend. "[Those] businesses were really being driven by the manufacturing side of the business—low cost production ... and nobody won."[10]

So, understanding he could not compete with Deere and Case when it came to manufacturing, Ratcliff planned to beat them with marketing and distributing. Ultimately, AGCO intended on building a comprehensive, efficient network of dealers that could supply an expansive, reputable line of products.[11]

Now that the company had established a financial position, it hired a chief operating officer, John Shumejda, to add stabilization. Shumejda was an engineer and an expert in agricultural machinery. His job was to streamline AGCO’s manufacturing and distribution.

In January 1993 AGCO paid US$94.8 million to Varity Corp. for the assets of Massey-Ferguson’s North American operations.[12] This included an additional 1,100 new dealers and approximately US$200 million in sales.[13]

Later in 1993 AGCO acquired White-New Idea for US$53 million.[14] It manufactured baling equipment. It added 300 new dealers and US$83 million in revenue.[15]

AGCO’s acquisition spree was eventually helped by an initial public offering of one-half of the company’s stock. Initially it was traded on NASDAQ, and then it gained a listing on the New York Stock Exchange in 1994. At this point the company had established 2,600 dealers, while Deere only had 1,400.[16]

AGCO had also established an extensive product line that included 20 different tractor models under the AGCO Allis name, four different Gleaner combines, 11 White tractors, as well as a range of equipment under the Massey-Ferguson name.

The company’s debt burden had increased, but so had sales. In 1990, sales were US$220 million, in 1992 sales were US$314 million, and by 1993 sales had reached $596 million.[17]

[edit] Moving Outside the United States

In 1994 AGCO bought the international operations of Massey-Ferguson for US$330 million.[18] This pushed AGCO’s influence worldwide. Previously sales outside of North America only accounted for two percent of AGCO’s revenue.[19] After this acquisition it shot up higher than 50 percent.[20] Massey-Ferguson products were sold in more than 140 countries.

In 1995 AGCO purchased the AgEquipment Group. It was a manufacturer and marketer of agricultural implements and tillage equipment. This group included the brand names Glencoe, Tye, and Farmhand.

In June 1996 AGCO spread further outside its U.S. borders when it acquired Iochpe-Mexion, which was a Massey-Ferguson licensee in Brazil. It held a 45 percent share of the tractor market, as well as significant portions of the combine harvester and loader backhoe market within Brazil.[21]

At this point, AGCO hired a new president and CEO, Jean-Paul Richard, while Ratcliff remained a chairman.

In December 1996 AGCO purchased Deutz Argentina SA for US$61 million.[22] It was the leading producer of farm tractors in South America’s second largest market.

By early 1997 AGCO returned to its German roots when it acquired the firm Xaver Fendt GmbH & Co. KG for US$320 million.[23] It produced some of the world’s most technologically advanced tractors and heavy farm equipment. Fendt had achieved annual revenues of US$580 million and held a 25 percent share of the German market.[24] However, it also held significant shares in several other western European nations: 25 percent in the Netherlands, 20 percent in the U.K., 18 percent in Scandinavia, and 17 percent in France.

In August 1997 new president Richard resigned after clashing with Ratcliff because of his “reluctance to give up too much day-to-day control.”[25] Ratcliff reassumed the position of CEO.

[edit] Financial Downturn

AGCO revenues reached an all-time high in 1997 with US$3.22 billion.[26] However, this financial success was met with a few years of economic difficulties.

Both Asia and Russia were suffering financially and reduced their imports of U.S. grain accordingly. Meanwhile, three straight years of record crops with no market to sell to drastically reduced crop prices lower than they had been in 20 years. This in turn decreased demand for farm equipment, which resulted in factories laying off workers, cutting production, and even closing plants.

In October 1998 AGCO announced it would cut 1,400 jobs, or roughly 12 percent of its workforce as revenues dropped to $2.94 billion.[27] This also resulted in a number of years of consolidation. It closed plants in Argentina, Ohio, and Texas.

In February 1999 AGCO named Shumejda as the new company president and CEO; Ratcliff remained a chairman. However, the downturn continued as the workforce was cut a further five percent in 2000.

Despite its hardships, AGCO decided to return to the business style that brought it so much success initially: growth through acquisitions.

[edit] Coda: Rebuilding Through Acquisitions

In mid-2000 AGCO it bought out CNH Global N.V.’s stake in a hay-farming equipment joint venture called Hay and Forage Industries. Later in 2000, AGCO entered another joint venture, this time with an Italian agricultural equipment maker called Same DeutzFahr SpA, to distribute the brands Same, Deutz-Fahr, Lamborghini, and Huerlimann in North America.

In early 2001 AGCO purchased the Minnesota firm Ag-Chem Equipment Co. Inc. for US$247.2 million.[28] It specialized in self-propelled sprayers.

In January 2002 AGCO bought Caterpillar’s agricultural tractor business, which featured the Challenger line of tractors. These tractors were launched in the 1980s and featured rubber crawler tracks.

Meanwhile, a week before the deal with Caterpillar was completed, AGCO president Shumejda, and Edward Swingle, senior VP of sales, were killed in an airplane crash. Once again Ratcliff reassumed the position of president and CEO.

Ratcliff managed one more deal before the end of 2002. In November he acquired Sunflower Manufacturing Co. Inc. for US$48 million.[29] Sunflower produced a line of tillage, seeding, and specialty harvesting equipment.

The year 2003 was the best for the company since 1997. In fact, the company showed profits of US$74.4 million on revenues of US$3.5 billion.[30]

In early January 2004 AGCO completed its largest acquisition yet. It purchased Valtra’s tractor and diesel operations from the Finnish firm Kone Corp. for US$756 million.[31] Valtra held a leading market position throughout the Nordic region of Europe. It also had a significant presence in Latin America.

After a lengthy search to replace Shumejda, AGCO hired European Martin Richenhagen in 2004 as president and CEO. His employment showcased the importance of the European market. In fact, even prior to the purchase of Valtra, nearly 50 percent of sales were registered in Europe.

Immediately, Richenhagen did not seem as interested in growing through further acquisitions.

"AGCO has put together a fine selection of businesses. My challenge is to create a corporate identity and to grow the business, to harvest what is already in place," he said to the Atlanta Business Chronicle in May 2004.[32]

[edit] The Company Today

AGCO has 13,700 employees[33] worldwide with head offices in Duluth, Georgia.[34] It markets and distributes more than 26 different brands around the world.

[edit] Equipment List

[edit] References

  1. AGCO Corp. profile., 2008-08-25.
  2. AGCO Corp. on 2008 Fortune 500 list., 2008-08-25.
  3. AGCO Corp. on 2008 Fortune 500 list., 2008-08-25.
  4. AGCO Corp. History., 2008-08-25.
  5. AGCO Corp. History., 2008-08-25.
  6. AGCO Corp. History., 2008-08-25.
  7. AGCO Corp. History., 2008-08-25.
  8. AGCO Corp. History., 2008-08-25.
  9. AGCO Corp. History., 2008-08-25.
  10. AGCO Corp. History., 2008-08-25.
  11. AGCO Corp. History., 2008-08-25.
  12. AGCO Corp. History., 2008-08-25.
  13. AGCO Corp. History., 2008-08-25.
  14. AGCO Corp. History., 2008-08-25.
  15. AGCO Corp. History., 2008-08-25.
  16. AGCO Corp. History., 2008-08-25.
  17. AGCO Corp. History., 2008-08-25.
  18. AGCO Corp. History., 2008-08-25.
  19. AGCO Corp. History., 2008-08-25.
  20. AGCO Corp. History., 2008-08-25.
  21. AGCO Corp. History., 2008-08-25.
  22. AGCO Corp. History., 2008-08-25.
  23. AGCO Corp. History., 2008-08-25.
  24. AGCO Corp. History., 2008-08-25.
  25. AGCO Corp. History., 2008-08-25.
  26. AGCO Corp. History., 2008-08-25.
  27. AGCO Corp. History., 2008-08-25.
  28. AGCO Corp. History., 2008-08-25.
  29. AGCO Corp. History., 2008-08-25.
  30. AGCO Corp. History., 2008-08-25.
  31. AGCO Corp. History., 2008-08-25.
  32. AGCO Corp. History., 2008-08-25.
  33. AGCO Corp. profile. 2008-08-25.
  34. AGCO Corp. profile. New York Times online, 2008-08-25.

[edit] External Links