The rumours had been building for months. There were even spy pictures posted on the Internet as possible proof. Then in September, Kubota’s global headquarters made it official. The company is taking direct aim at the farm market.
More specifically, Kubota launched a new, powerful line of M-7 Series tractors, and these new tractors are pushing their upper horsepower limits well beyond anything the brand has ever offered in its previous smaller, utility-class models.
The launch means Kubota intends to play in an entirely new arena, and it represents the biggest step yet toward making the orange brand more appealing to farmers, allowing it to make serious inroads into the ag equipment market.
The company has apparently envisioned itself as a much larger player in that segment for some time. A few years ago, at least one corporate executive stated Kubota would eventually become a full-line ag equipment manufacturer. But is that still the target?
“I think it is,” says Todd Stucke, Kubota’s vp of ag and turf in the U.S. “I mean, we are constantly looking for areas to grow. We have, basically, three different product segments. And in each of those areas we’re looking at how we expand the product line.”
When Country Guide sat down for interviews with Stucke and his counterpart David Webster, general manager for sales and marketing in Canada, the two execs agreed the M7s are just one step in that effort. There is much more on the horizon to interest farmers.
“… As we look at getting into larger farming operations, we’ll definitely continue to see product-line expansion, evidenced by the M7 tractor that was introduced,” says Webster. “And we’ll definitely see that product line continue to grow. The company isn’t done there.”
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So for farmers who envision themselves spending a day in the field in a high-horsepower Kubota, i.e. something far beyond the 170-hp model that currently tops the M7 line, that day is likely to come.
But the brand isn’t about to rush to market with a host of new equipment.
“We’re going to do it right,” says Stucke. “One step at a time. We have to get this tractor launched correctly.”
Kubota’s plans for the M7 Series in the short term are ambitious. As production begins in its new French factory, the company has set its sights on retailing 3,000 units per year globally by 2017. If initial orders from North American dealers are any indication, that shouldn’t be a problem.
Over the long term, building tractors in France for North American dealers may not be the best strategy, as AGCO discovered. A couple of years ago it moved production of North America-bound Massey Ferguson and Challenger mid-range tractors from its Beauvais, France factory to Jackson, Minn., in order to be more responsive to market orders from this side of the Atlantic.
“Loaders for the M7 will come out of a facility in Georgia,” says Webster. “We’ll look for opportunities to localize production where it makes sense.”
“I see that (North American M7 production) based on our performance over here,” adds Stucke. “Once we get to a critical mass here, we’ll look at a factory.”
While the new tractors have a relatively broad appeal to farmers in Europe — where the average horsepower demand for field tractors is typically a little lower than in North America — they don’t here. But they do fit nicely into Canadian and U.S. livestock operations.
“That’s the difference between Europe and North America,” says Webster. “Where that would be a tillage, field tractor in Europe, in North America, especially out west, we view that as a cattle tractor, fitting into livestock and haying operations. As we look to expand, that’s where that tractor fits for us.”
To complement that appeal to livestock growers in Canada and the U.S., dealers can now offer M7 tractors partnered with an expanding line of equipment made available by Kubota’s latest corporate acquisition, Norwegian equipment manufacturer Kverneland, which has an established line of haying and tillage products. Selected haying implements are already being offered in Kubota orange. And there are plans to make new versions of them more attractive to North American farmers.
“One of the biggest things we’ll be introducing is the silage baler,” says Webster. “We have a 4×5, 5×5 (round) baler that we offer now in a couple of different models. And we offer those in silage configurations as well. We don’t have a 5×6 baler yet, which is probably more applicable to customers in Western Canada, in the Prairie provinces. But that’s something I expect to see in our product line in the coming years. With the acquisition of Kverneland, we’ll see more of those products being offered under the Kubota brand.”
Although the Kverneland acquisition is the only one Kubota has made in the ag sector recently, there has been persistent speculation in the industry of others pending — none of which seem to have yet come to fruition. Perhaps giving some credence to that chatter, the company isn’t ruling out the possibility there actually could be more.
“The acquisition of Kverneland, I think, has demonstrated Kubota’s appetite for acquisitions, not that there is an abundance of ag acquisition opportunities,” says Webster. “But there are some, and I think there are other opportunities that will continue to be reviewed.”
“We look at the opportunities out there,” adds Stucke. “If any provide a synergy and stockholder value, then we’ll look at that opportunity.”
As the brand adds more products to its line and moves closer to full-line status in North America, at least one European trade publication is already referring to Kubota as a full-liner, because of the additional Kverneland products tailored for that market that are being sold there.
How becoming a full-line (or nearly full-line) brand would affect its Canadian dealer networks remains to be seen. On the surface, the fact that many Kubota dealers are also primary representatives for one of the Big Four major brands might seem to complicate retail agreements. Would some dealers be forced to drop a “full-line” Kubota?
“I think we’ll see some of that,” says Webster. “But over half of our (Canadian) dealer network is (already) Kubota only, so they’re focused on providing Kubota solutions. I think we’ll actually see more of that going forward. But our model looks a little bit different than the typical ag dealer in the West. We have compact construction equipment, skid steer loaders and small wheel loaders as well as turf equipment. When you look at that full product portfolio, those are areas your typical ag dealer isn’t involved in.”
“If dealers can make money selling our product, the transition will work itself out, whatever way that is,” Stucke says confidently.
As the brand makes inroads in the ag market, Stucke believes Kubota will need a product support system that can offer farmers parts and service in a way that meets their often urgent needs, which is a different consideration than the company faces with its residential products.
“As we enter into a new segment, there are new customer demands,” Stucke says. “We realized it’s as much about product support as it is about the products themselves. It’s a different demand than the residential customer. As Kubota enters that segment, we have to be ready.”
Although both Webster and Stucke are keeping their cards close to their vests on the schedule for future product rollouts, they reveal there will be more of them, and their launches will be strategic.
“I’ll speak for the U.S.,” says Stucke, regarding Kubota’s hay tools. “We’re going to roll out the products as they match the horsepower of the tractor lines. We want our products to be pulled by a Kubota tractor. As we get higher-horsepower tractors we’ll get more products. That’s been our strategy here.”
Adds Webster: “Our product line is definitely going to continue to expand.”
