[UPDATED: Dec. 18, 2020] Having spent many years covering ag machinery, I recall all the times I found myself having a drink with other machinery writers at the end of a busy day, only to notice how often we’d all be agog at something we’d heard AGCO CEO Martin Richenhagen say.
To be clear, we weren’t scoffing. In fact, it was the exact opposite. We couldn’t help being stopped in our tracks by his frank insight.
Now, however, Richenhagen has announced he is stepping down after the better part of two decades at the helm of one of the world’s largest ag equipment companies.
The remarkable thing about Richenhagen is that he speaks plainly, and he is one of the few major brand CEOs who can be counted on to show up for a press event instead of asking a VP to deal with the questions that we journalists feel are important to our farmer readers.
Plus, any time I wanted to interview him, he made himself available and gave me thoughtful answers. Every ag machinery journalist I know appreciates that about him.
His last official press conference as AGCO CEO was live-streamed from the Fendt headquarters in Germany to journalists all around the globe in October, and Richenhagen stayed true to form and was as unfiltered as ever, going so far as to use the word “bullshit” at one point, giving my writer friends yet one more thing to chuckle about via Twitter.
In his farewell address, speaking in German, Richenhagen acknowledged his colourful reputation.
“I have known many of you for many years and had a great relationship based on friendship and trust,” he said, translated into English.
“For the press, I think it’s good to hear things in the original way, even to listen to the boss and filter what you hear. Maybe you can decide to filter a little bit off things you don’t want to hear so clearly. Sometimes I would have liked not to be too clear, I may have overdone it a little bit.”
Richenhagen’s long-term goals for AGCO, known as his 2020 plan, are coming to an end, along with his reign as CEO. As he steps away, Eric Hansotia will take the AGCO helm. He had been serving as AGCO’s chief operating officer.
The press event where Richenhagen spoke was focused on AGCO’s Fendt brand and its European launch of new products.
When AGCO took over Fendt in 1997, there was a lot of concern whether the brand, which was the pride of German agricultural machinery manufacturing, would find itself absorbed into AGCO’s other marquees and eventually fade away. That didn’t happen, but the apprehension has lingered among workers. Richenhagen also addressed that in his final speech.
“I would like to begin with a very clear statement about my successor, Eric Hansotia,” he said. “You (journalists) are all very well networked with Fendt and you can sense the concern among employees, because many have said, oh, if an American takes over nobody will be interested in us and everything goes down the drain. But let me say this is absolutely nonsense — or bullshit, as the Americans put it.”
Yeah, that’s where he used that word.
“Decisions made at Fendt were not made because I am German but because they make sense,” he continued.
The reality, of course, is Fendt has become AGCO’s flagship global brand. And that is down to Richenhagen’s vision.
In 2012 when AGCO completed the modernization of the Marktoberdorf, Germany assembly plant that has long been home to Fendt tractor production, three North American journalists were invited to the grand opening. I was the Canadian in the group with two others from the U.S., whom I knew well.
As we three stood among the crowd of attendees talking with the North American brand marketing manager who invited us, a senior European brand executive approached and joined the conversation. We were introduced to her and she was informed we had come from North America to attend the gala. She looked a bit stunned, turned to our North American host and said, “All this for 150 tractors?” In the middle of taking a drink from his glass of beer as she said that, the marketing manager almost choked. Sales figures are a tightly kept secret on this side of the Atlantic, unlike in Europe. AGCO was then working hard to impress North American farmers with the new-to-us Fendt tractors.
We three writers had a good laugh about that later that day.
Since those early days, AGCO — or more correctly, Richenhagen — has set some serious and very ambitious goals for Fendt that extend far beyond the brand’s traditional European marketplace.
“Outside of Europe we are increasing our sales of tractors this year by 20 per cent,” Christoph Gröblinghoff, VP and managing director at Fendt, told press conference attendees. “And we’ll reach 1,800 (exported tractor) units.”
In Germany, Fendt’s home market, it’s always been a market leader, but today in the very high horsepower segment, nearly half of all tractors going to farms there are Fendts. And it owns significant shares in all the other horsepower groups. That 2012 factory update was meant to accommodate future growth in tractor production as the brand’s global presence grows. Even with the pandemic slowdown, sales in 2020 so far have been strong.
“We almost touch the 20,000 units, not quite, but the year’s not over yet,” Richenhagen said. “Next year, we’re sure we’ll be well above that. When I started, it was only 10,000 tractors here in Marktoberdorf. The capacity of the assembly line (now) is 30,000 units. So there is some space (for growth) without having to invest too heavily.”
When asked if the brand can reach 20,000 tractors in 2021 or 30,000 by 2030, Richenhagen was bullish on the idea. “Of course, it’s a goal that is not ambitious enough. We will probably produce more than 20,000 tractors, 21,000 plus, I’d say. And then 30,000 is maybe not enough 10 years later. I’d be disappointed if it took us 10 years. I think we can get there much faster.”
He also hinted at the idea that production may eventually need to be split, with some tractors built in North America or Brazil.
“Like no one else, Martin Richenhagen has strongly promoted the Fendt brand,” added Gröblinghoff. “But (he) also demanded excellence. The success and rise of the Fendt brand in the Richenhagen era speaks for itself. The number of employees has more than doubled.”
AGCO continues to invest heavily in the brand, with an impressive $1 billion R&D budget for 2020. “I believe that will increase further,” said Gröblinghoff.
And there have been other investments beyond that.
“We’ve invested almost US$2 billion in Fendt, not only in bricks and mortar but also in new products,” added Richenhagen. “And Fendt is on its way toward being a full liner. We know we still have some work to do.”
“In short, the Fendt product line is getting larger, the product is getting smarter, and the Fendt distribution network is growing by leaps and bounds,” noted Eric Hansotia, AGCO’s incoming CEO. “In North America, our sales are growing rapidly. We’re going to nearly double our sales this year compared to last year.”
As Richenhagen presided over this final official press conference, though, he demonstrated he remains the same colourful character he was always known as. In a farewell video prepared by Fendt staff to honour him, one of Richenhagen’s famous public unfiltered comments was featured. When the brand introduced the 1000 Series tractors at the famous, historic Neuschwanstein castle in Bavaria, which was used as inspiration for the castle in Disneyland, Richenhagen recalled being with a group of Americans who thought the Disney castle came first, not the original they were standing in front of that was built in 1869.
On video he was shown saying, “I was here with a group of farmers from America and I wanted to make a joke. I said, ‘Of course you know the original for this castle is in Orlando at Disney World.’ And they said, ‘Yes. We know.’ So it was not perceived as a joke at all.”
During the Q&A portion of the October press conference, Richenhagen was asked by a British journalist if there were plans to make the new Fendt planter available in the U.K. He responded by saying the narrow U.K. roads were an obstacle and current economic conditions for farmers there would hinder sales.
“With Brexit, not much will be happening there anyway,” he quipped, as the audience erupted in laughter. “No. That was a mean comment,” he conceded a few moments later.
As he praised the qualities of his replacement, Hansotia, he suggested the company would be in such good hands that… “In a few months you probably won’t think of me anymore.”
That’s not likely. Richenhagen will long be remembered for the skilful way he grew AGCO. He also made no secret of his stance on humanitarian concerns, too. During the European migrant crisis he praised his native Germany for accepting record numbers of refugees and aided the effort with AGCO’s resources. Under his leadership AGCO also made significant efforts to help develop farming in Africa.
“I’ve been with this company 16 years and had a great job,” he said ending his speech at the press event. “Everyday I took great pleasure in my work. It was fun for me, therefore I was able to be committed. So I’m not leaving the company with sadness or with tears in my eyes. But of course, I will be 68.5 years old, And after having served the company for 16 years, I think it is about time.”
Richenhagen set a high bar for his replacement. And he also created a model that more CEOs look to emulate.
What’s in store for the Challenger brand?
At an October press conference for the Fendt brand, AGCO CEO Martin Richenhagen was asked a key question: With the elimination of the Challenger brand in Europe and the introduction of two-track Fendt-brand tractors in North America, once the exclusive domain of the Challenger brand, is the Challenger soon to go extinct?
Publicly discussing the possibility of phasing out an equipment brand can put executives in a tough spot. When AGCO discontinued the orange AGCO brand tractor line — which was seen as a direct continuation of the Allis-Chalmers tractor brand — there was a strong reaction from farmers and brand enthusiasts.
Here’s how Richenhagen handled the question:
“Of course when you talk about a brand disappearing in public, then dealers are upset and all the owners of a product would also be upset. So let me answer that as follows: Challenger is the exclusive brand for Caterpillar dealers in North America. It is not used elsewhere. In Europe we already excluded the brand from our range. And the Challenger dealers in the U.S. are also sales partners with Fendt. So this means my answer to the question is it is a very good question. Can we move on to the next one.”
*Update: The article previously indicated Eric Hansotia as born in the U.S. which was incorrect.