My thoughts on AGCO
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Category: Allis Chalmers
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Topic: My thoughts on AGCO
Posted By: Russ-neia
Subject: My thoughts on AGCO
Date Posted: 17 Nov 2009 at 3:29pm
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I've been reading the messages about AGCO dropping the orange tractors. I guess I have too much time to think while doing fieldwork and the CEO's don't have time to think, just react. I feel they have been making a lot of blunders, and this is just one of the more recent and visible ones. Their first error was trying to establish the Fendt and Challenger brands in North America. The Challenger line was a thinly veiled attempt to ride along on the Caterpillar brand, but without the Caterpillar durability or features. Fendt, while very respected and high technology simply was not a good idea for North America. Americans care about appearance and Fendts are homely. They weren't adaptable to 30" row spacings. The cab was (and still is) too small and cluttered/confusing. Years ago I talked to a Deutz dealer who told me the same thing about European cabs being too small. He had a customer (of German heritage!) who could not fit behind the steering wheel and had to used a Deere with the steering wheel all the way ahead. Fendt and Challenger both required new dealer networks, or substantial re-training of existing CONSTRUCTION oriented dealers to handle the product. In most cases of Challenger, I think it was an ill-conceived plan hatched by management, who forgot to ask the dealers if they were even interested in selling Ag products. Around here it seems Ziegler is very, very reluctant to do anything with ag, and if they do, only the big rubber-track (Caterpillar) machines or Lexion combines. The AGCO dealers who were left by the mid 1990's were lean and mean out of necessity. They obviously were committed to the business or they would have exited in the 1980's. AGCO wouldn't have needed to do much marketing if they had fed their dealers. Hard to win a weight-lifting championship with an emaciated athlete. Hard to sell tractors that don't exist or out-dated combines. AGCO could have kept their multi-brand strategy to add individual lines to competing brand dealers, but they should have supplied their AGCO dealers with a full line of orange equipment to complement the tractors - orange disks, planters, mowers and balers - maybe some marketing agreements with some shortliners to supply orange snowblowers or ATVs like JD does with the Frontier line. Since they were already in bed with Caterpillar, maybe they could have worked an agreement to let AGCO farm dealers sell an orange version of the Cat skidloader, telehandler or endloader. Maybe even a small, steel-track ag crawler. This is ultimately what they are (finally!!) doing by putting everything under the Massey colors and name. They have been mistreating their dealers from day one. Pulling the Gleaner contract on a dealer because they didn't sell heads with a combine, therefore it didn't qualify as a "unit", even though they sold in excess of $100K in AGCO parts. Signing up a local dealer to sell White planters, then a few months later allowing the Ziegler dealer to sell White planters too. Removing inventory off the dealers lot so he had nothing to show potential customers. Telling the dealer network at meetings that they could "live off the spillage from Red and Green". AGCO did a very poor job of integrating all the technology and patents they acquired. The Fendt transmission should have been put in a broader hp range of tractors and done so much sooner. Now JD is selling a CVT (under license from AGCO) and so is Case-New Holland. JD even has it in their track tractors. Why AGCO didn't have it in their track tractors first, and most definitely NOW is inexcusable! Having a crappy cab on the tractors all those years when they could have just modernized the 8000 series cabs. They did three revisions of the Gleaner cab in this same time. Maybe they could have jobbed the cab out to an automotive supplier, as they seem to understand ergonomics and comfort. Valtra has a lot of great machines and I think many of their features would sell well in North America if they were incorporated into an American machine (Americanized, if you will) They have a nice articulated tractor that would do well against the New Holland bi-directional, and could be offered in several power ratings with a host of matched attachments, which is a flaw of the NH tractor. It would seem natural having access to all of the Gleaner and Hesston products to produce a self-propelled Hesston large square baler with a Gleaner chassis and cab and Sisu engine. An american-made self-propelled forage harvester would probably sell amazingly well, too, allowing AGCO to increase the manufacturing volume of costly components such as cabs and final drives. We've been an Allis family since my grandfather bought his first tractor, a WC, in the 1930's. We suffered through the Deutz debacle and thought things had turned around. I don't place all the blame for Allis-Chalmers' demise on management. A good share of it is shouldered by our government for changing horses in the middle of the race. It is hard for any management to foresee legislative changes and interest rate manipulation. At the time the Ag Equipment division was sold, they had very good market share in combines, tillage equipment, cotton harvesters, planters and combines and were gaining market share in a shrinking tractor market. That doesn't sound like poor management to me. Today we have AGCO unable to gain market share or sell orange tractors in a ROBUST ag economy?? I was impressed with the marketing blitz they started on the new DT tractors last spring http://agcodtb.blogspot.com/ - http://agcodtb.blogspot.com/ , but wondered why it seemed to end abruptly. I've been an AGCO stockholder of varying degrees since 1995. Right now my holdings are minimal and I'll be watching to see if I should liquidate or accumulate. We have several great New Holland dealers within 25 miles and have many of their forage products already. At least they understand the importance of projecting a stable corporate image and having a uniform look to their product line. The yellow (NH) combines and blue tractors are selling well, here. People are hungry for an alternative to John Deere, but they aren't willing to settle for the Keystone Cops. ------------- The innovators offer what others will imitate. |
Replies:
Posted By: ILGLEANER
Date Posted: 17 Nov 2009 at 6:47pm
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Russ very well said!!!!!!!!
IG ------------- Education doesn't make you smart, it makes you educated. |
Posted By: tnac
Date Posted: 17 Nov 2009 at 7:05pm
| Yes! I think someone should send a copy of that post to AGCO!!!!!!!!!! |
Posted By: Byron WC in SW Wi
Date Posted: 17 Nov 2009 at 8:02pm
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I agree. Very well said Russ. Byron |
Posted By: JohnCO
Date Posted: 17 Nov 2009 at 8:33pm
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I also agree with most of your post. I don't know if the government can be blamed any more then it always is, if other companies made it, AC should have. Of course IHC didn't survive, so I guess that isn't a good argument.
My local Ford/NH dealer just dropped NH and are expanding their Kubota line. I was told NH wanted them to sell more construction equipment but they hadn't sold a skid steer since May. They are on a busy interstate hiway (I 25). There are almost as many Kubota dealers in Colorado as there are JD. Only ONE AGCO dealer in the entire state with less then a dozen MF dealers. It is so discouraging that the corporate thugs don't have a clue as to what the dealers need to be successful.
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Posted By: Jordan(OH)
Date Posted: 17 Nov 2009 at 9:23pm
| Gov't left AC hanging after they pulled out on some BIG contracts. |
Posted By: JohnCO
Date Posted: 17 Nov 2009 at 10:32pm
| Oh Sorry Jordan, I wasn't aware of that. |
Posted By: Oldoug
Date Posted: 17 Nov 2009 at 10:51pm
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Very well said indeed Russ. I noticed the AGCO stock was down today. |
Posted By: Andrew(southernIL)
Date Posted: 17 Nov 2009 at 11:44pm
| A little off topic but I didn't know Fendts were not adaptable to 30"spacings, so what row spacing did they adapt to? |
Posted By: Nathan (SD)
Date Posted: 18 Nov 2009 at 1:46am
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Russ, I have been waiting for your input on this subject from a stockholders point of view.
I wonder if CAT isn't putting a little pressure on AGCO corporate to shrink the competing brands market. For some reason AGCO corporate wants to be connected to these guys so I could believe very easily that if CAT does some whining AGCO is gonna give. For the new guy ( CAT dealers ) to compete against the older established dealers ( old AC dealers that are now AGCO ) to sell the same products has got to be tough. It seems to me that the easist way for CAT corporate to gain market share is to whine to the guys creating most of your competition. A customer first decides which hp model he wants then he decides which color. If you are shopping between the yellow or orange chances are the orange guy is gonna be cheaper because he's been in the game longer. After this happens on a multitude of deals the yellow guy is gonna throw in the towel.
To me it looks like AGCO corporate wants to make sure the yellow guys don't pull out on them.
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Posted By: mark v IA
Date Posted: 18 Nov 2009 at 4:31am
| I'm sorry to hear ACGO is going this way because I was thinking about checking their new tractors but now NO WAY!!!! I own at least 6 Allis Chalmers,I used to own a 8010 & 8030 mwd but had to trade because of the large amount of hours on them. I went JOHN DEERE, main reason was resale, I can drive these tractor for years and still get my money back from them. I had to take it in the shorts when I traded my 8000s off because their company was gone and now the same thing is going to happen again with these ACGO tractors I feel sorry for any of you who invested in these orange tractors. |
Posted By: bigallis1
Date Posted: 18 Nov 2009 at 5:30am
I'm thinking seriously of dumping my AGCO stock. Whether it continues to make me money or not, this lastest announcement has convinced me to cut all ties with them. |
Oldoug wrote:Posted By: 620Doc
Date Posted: 18 Nov 2009 at 6:27am
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"I'm thinking seriously of dumping my AGCO stock. Whether it continues to make me money or not, this lastest announcement has convinced me to cut all ties with them." Maybe you can take that money and put it into Briggs & Stratton Jim. ------------- Every day is a holiday. Every meal is a banquet. |
Posted By: Jim Lindemood
Date Posted: 18 Nov 2009 at 8:11am
| Russ - well said. What we need is a consortium group of North American orange folks to work an agreement with AGCO to take over the management and sales of all AGCO lines in NA. Maybe make money for both them and AGCO. |
Posted By: JohnCO
Date Posted: 18 Nov 2009 at 10:51am
| Nathan, I think you hit the nail on the head with the comments on Cat. Cat has AGCO by the short hairs because of all the Perkins engines AGCO buys, not to mention the big engines in the tracked machines. In my dealings with the local Cat dealer makes dealing with Deere a warm and fuzzy feeling. They are the best, just ask them! |
Posted By: Spud
Date Posted: 18 Nov 2009 at 1:20pm
| A group of old tractor restorers in going to take over Agco and bring back Allis?! What are you smoking? |
Posted By: Calvin Schmidt
Date Posted: 18 Nov 2009 at 1:46pm
| Maybe I'm way ahead of the curve. I bought my first green tractor in 1981. I grew up on orange tractors had have more than 25 of them now, but never owned an orange tractor with a factory cab. I don't how you could work all day in a 7000 series cab. Rented a 8070 years ago and liked the tractor but the transmission was no comparision to my green 15 speed PS. I hope AGCO survives but I'm convinced that a person does not have to be very smart to get a job running a big company. |
Posted By: JimIA
Date Posted: 18 Nov 2009 at 3:22pm
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If you had to "take it in the shorts" for an 8000 series tractor you had a dealer that must not have wanted the tractor. 8000 series have held their value well. A short while ago when that 50 hour brought $50000 I recieved a phone call from a JD guy I know telling me of this. He told me of the great green resale value. I replied with the 8070 that sold in Wisconsin last year, the tractor had 2500 hours on it and it brought $37500. In comparison the Deere didnt do that great.
Just watch in ten years there will be a max of four franchise owners for Deere in each state. Deere are no better than AGCO, they just have better marketing.
Jim
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Posted By: TomYaz
Date Posted: 18 Nov 2009 at 4:46pm
Known as the "Peter Principle"; that is people rise to the level of their incompetence.
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