Back in the 1960s and ’70s, Massey Ferguson’s higher-horsepower tractor production was centred in the Detroit area. The facility there churned out a lot of machines. But then came the dark days of the late 1980s. A perfect storm of low farm commodity prices, high interest rates, declining farm machinery sales, and a variety of other factors conspired to shake Massey-Ferguson Ltd. to its core.
Facing financial collapse, the firm was completely restructured under ownership of Varity Corp. Its
combine production was splintered off into a new entity under the name Massey Combines Corp., which had a staggering debt load and very soon went bankrupt, although the remaining agricultural equipment production managed to tread water.
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The Detroit plant eventually closed and MF tractor production moved out of North America, seemingly for good. After AGCO took control — and arguably rescued the brand — it closed the long-running British assembly plant that had been building MF tractors and it consolidated production in a state-of-the-art facility in Beauvais, France.
Based on the company’s sales trends for the past couple of decades, there was good reason to have it there. According to public comments made on several occasions by Martin Richenhagen, AGCO’s chairman, president and CEO, a full 50 per cent of AGCO’s overall sales happen in Europe. The remaining half is split between all the other countries the company sells into.
MF tractor and equipment sales in North America haven’t returned to anything remotely close to the levels seen in the heyday of Massey-Ferguson Ltd. “We are small in North America,” Richenhagen said. “That has to be changed.”
It’s easy to understand why he isn’t happy with the current situation. Back in the mid 1970s, MF was firmly within the top three North American brands in terms of sales. That meant it was big. In 1976, for example, Canada and the U.S. accounted for almost 31 per cent of global sales, compared with a combined European total of about 32 per cent. And it was growing. Even at the end of that decade Massey was still gradually taking market share aware from competitors in North America with its combines.
Executives at AGCO have recognized that being a major player in the market here is essential for any company that wants to be a dominant force in the global agricultural machinery business. And they’ve spent a lot of time and effort planning a comeback.
To help make it happen, management is moving high-horsepower tractor production back to the U.S. In January the company announced the Jackson, Minnesota, plant now assembling their tracked and four-wheel drive Challenger tractors will also start building smaller, rigid-frame Masseys and Challengers.
“Manufacturing our high-horsepower tractors in Jackson, Minnesota, is just one more aspect of AGCO’s commitment to bringing high-quality products and the latest technologies to professional producers in North America,” said Bob Crain, senior vice-president and general manager for AGCO North America, in a press release. “By manufacturing our Massey Ferguson and Challenger mid-to high-horsepower tractors in the United States, we’ll be able to offer machines more closely configured to the production practices and needs of our customers here, while also reducing the delivery time to both dealers and farmers.”
In a TV interview on the Fox News Network late last year, Richenhagen said the company has ramped up its game here, and he cited new and better products, improved distribution and a better management team as the way he set that process in motion.
Now the new management team has produced results.
“Last year for the first time we made money in North America,” Richenhagen said. And now that the firm has tasted North American profitability, it’s pushing for more.
“We’ve finally got North America to where it’s really firm,” said Steve Kope, vice-president, sales, North America, in an exclusive interview with COUNTRY GUIDE. “Our strategy going forward is to grow it.” And moving tractor production to Jackson is a major component in that plan. “In my mind that represents a commitment to the North American market,” Kope said.
The former Ag-Chem facility in Jackson, which AGCO acquired in 2001 when it purchased that company, is the first AGCO facility in North America to build tractors. It had been producing sprayers.
AGCO purchased the tracked Challenger tractor line from Caterpillar — also in 2001 — and moved the assembly works there from its former home in Peoria, Illinois. The facility has been building tractors ever since.
There is a good reason for choosing Jackson as the new home of Massey tractor production. When AGCO introduced the articulated, four-wheel drive, MT900 Challenger line in 2007, the Jackson plant was given the job of building them as well. When asked at the time why the company chose to centre tractor production in that relatively small, rural community, Jason Hoult, the Challenger line’s product marketing manager, said most of the employees there had strong ties to farming and took pride in building the equipment, which made them an ideal workforce the company intended to stick with. And it has.
To accommodate adding Masseys to the list of products coming out of Jackson, AGCO estimates the plant will need 100 more employees. And the plant itself will grow by 75,000 square feet. It will also get a 17,000-square-foot visitors centre to welcome the public as well as to show off the facility and its products. Remarkably, the company intends to see the expansion completed and new Masseys rolling off the line by the end of 2011.
It’s an ambitious time frame that is reminiscent of another MF plant expansion from the 1960s.
In 1962 when MF management decided to build an entirely new combine manufacturing facility in Brantford, Ont., and have it up and running in only 18 months, most industry insiders believed that was impossible. But by January of 1964, assembled combines were leaving it bound for dealers all across Canada and the U.S.
If the Jackson plant stays to schedule, it could be a sign that the old MF spirit is back. Kope believes it is. “This is a very different company than it was four or five years ago,” he says.
And to add one more cog to Richenhagen’s improved distribution network, AGCO cut the ribbon on an expanded parts distribution warehouse in Regina last April, just one of the steps toward implementing its “Best-In-The-Field” parts program for North America.
The expanded facility was created to reduce delivery time for parts sent to Western Canada, which previously had to come from Batavia, Illinois. “The border created a natural lag when parts were sent from the parts distribution warehouse in Batavia,” said Lyndon Lashinski, manager of the Regina depot. Parts now leave Regina when ordered by dealers on a two-day delivery basis.
The importance of that move was summed up by one AGCO dealer at the grand reopening who commented, “retail sales of equipment will not and cannot be successful if you can’t support it with quality parts and service.”
With both Crain and Kope putting in personal appearances at the warehouse reopening, management seemed to acknowledge it understood that. “We’ve got some pretty strong growth initiatives for Western Canada,” Crain said after the ceremony. With the announcement of the return of tractor production, it turns out he wasn’t kidding.
By the end of this year an improved and more responsive manufacturing and parts support network will exist, created by a new North American management team overseeing a stable full of new technology. MF equipment is now being marketed by vigorous corporate advertising campaigns and a strong trade-show presence.
The challenge now lies with its dealer network to translate those improvements into sales.CG
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“ We are small in North America. That has to change.”
— Martin Richenhagen
