Since the departure of Bob Crain in January 2006, New Holland has sorted through several executives to head up its North American ag operations. Finally, it looks like it may finally have found the high-powered brain trust it needs to move forward.

In August 2008, CNH Global, parent company of New Holland and Case IH brands, announced that Barry Engle would be joining the company as the new president and CEO of New Holland Agricultural Equipment S.p.A. Two weeks earlier, the company named John Stevenson as its new vice president of sales and marketing in North America.

Prior to joining the farm equipment maker, Engle held several high-levels positions with Ford Motor Co., including president, Ford of Brazil, and president and CEO of Ford Motor in Canada.

Stevenson made his way to New Holland by way of the trucking industry. In addition to senior level positions with Freightliner, Volvo Trucks North America and Mack Trucks, Stevenson most recently filled the post of president and CEO of American LaFrance LLC, a U.S.-based manufacturer of fire, rescue and other emergency response vehicles.

While Engle brings a wealth of strategic international marketing and branding business experience to the head of New Holland's management table, it will be Stevenson's influence that its dealers will feel most acutely. And he'll lean heavily on his experience making and selling trucks to guide him in setting a new course for New Holland's manufacturing and distribution operations.

Reaching Out to Dealers
Officially, Stevenson had only been in his new job for 3 months when Farm Equipment sat down with him for a face-to-face discussion to get his views on where his new company and the farm equipment industry were heading. The fact that he was on the phone calling New Holland dealers even before he accepted the position speaks to his priorities. He said he wanted a "bottom-up, 360 degree" view of the company.

"I've always believed that dealers are your first-line customers because they have the day-to-day contact with the buyers, who are your second-line customers. So I called them and told them we were doing a marketing survey. I also called some competing dealers. I wanted to hear first hand what they had to say," Stevenson says.

He heard about several issues that concerned New Holland dealers, as well as what new products the dealers wanted. But the one message that came through the loudest and clearest was that New Holland dealers were tired of the turnover at the top of the organization. Most, he says, had no idea of the direction the company was heading. They wanted a "plan," says Stevenson.

For the past 3 years, dealers were left to speculate about the fate of their major supplier. Rumors swirled around the equipment maker each time a new face was brought in, leading some to believe that the brand would be spun off. Others openly expressed fears of the longer-term consequences of the "brain drain" that they saw taking place. As one dealer put it, "They've got some great initiatives going, like the 24/7 Top Service program. There's some really good product coming down the pike, but there's tremendous concern with a lot of dealers as far as what their long-term direction is."

Stevenson says he understood what dealers wanted most, which was stability in the organization. "The number one thing they want is for us to build a new organization. The dealers told me they want to build relationships with someone they can trust and they want to have a pipeline to that person." Stevenson says he intends to be that ears and voice of his dealers.

A Turn-Around Specialist
It was his last assignment before joining New Holland - turning around American LaFrance - that Stevenson says presented his biggest management challenge and the one he enjoyed the most. "I'm the kind of guy who likes a challenge, to turn it around, get it as good as it can be and hand it off to somebody else," he says. "I'm not a maintenance-type individual."

At the time, the American LaFrance division of the Daimler Group was losing a lot of money and, in some cases, was 2 years late on product delivery. "My job as president was to turn it around," says Stevenson.

The company built complex, customized specialty vehicles like fire trucks and ambulances that cost $135,000 to $1.3 million. Getting it back on solid footing required going in, changing the structure and totally rebuilding the company.

Between October 2004 and April 2005, the company was able to stem its losses and improve deliveries dramatically. By September of that year, American LaFrance was sold and Stevenson stayed on with the company for another 2 years before "kind of retiring and doing some consulting."

Trucks & Tractors
When he was approached by New Holland to head up its U.S. and Canadian sales and marketing operations, Stevenson says he immediately saw "a lot of commonality" between customized trucks and farm machinery because when everything shakes out, he says, it all comes down to service and performance.

"If a farmer's harvesting a crop and his equipment breaks down and it rains for the next 2 weeks, he's got a major problem. If a fire truck doesn't pump water at a fire scene, that's a major problem. It's about performing correctly the first time and every time. There are a lot of similarities between these industries. It's about relationship building and quality."

The structure of the industries is also similar, according to Stevenson, in that both have a few dominant players. "When you get into medium to high-horsepower tractors and trucks, there are a lot similarities in how the two industries are operate," he says. "You can even see it in how the dealers structure their businesses and service their customers."

He's a firm believer that the only way for New Holland to thrive is if its dealers prosper. "I've been visiting dealers since I started this job and I've been telling them that I have three priorities: to make sure the company's profitable, that our dealers are profitable and that the franchise value increases. We need each of these to succeed," says Stevenson.

Competing with Shortlines
Another area where he sees similarities between truck and tractor industries is the amount of "shortline" competition. In no uncertain terms, Stevenson makes it clear that he doesn't like sharing his dealers' lots with other brands. He also acknowledges how it came about.

"In the fire truck business, there are dozens of competitors. At American LaFrance, we built our own custom chassis, but anyone with a shear, some welding capability and manufacturing experience could buy a GMC or Ford chassis and build a small pumper.

"There's tremendous competition in the farm equipment business all around the country and you have to compete in the different venues. But you can't do it on price because there's always going to be someone who's a little cheaper," Stevenson says.

"We have the franchise but a lot of our dealers carry competitive brands. They put a shortline here and a shortline there and siphon off the business. Maybe it's because we didn't listen and maybe we didn't respond to their needs. That's why we have to build an organization that's bottom-up. What I've heard from our dealers is that this has been an organization that was too top-down. We're going to make the necessary changes so that it's driven from and takes into consideration the nuances of each region.

"North America was treated as if it was one big market, but it's not, it's a regional business. So we're changing how we look at it and treat each region based on its individual characteristics and needs," says Stevenson.

Treating North America as a single, massive market is what set the stage for shortline competition and resulted in the majors' push for "dealer purity."

"If we don't have dealer purity, it's at least partially our fault. We sometimes forget that dealers are entrepreneurs, they have to cover paychecks for their employees, they have the needs of their families and they have to do what's best to keep them afloat. I don't particularly like shortline equipment competing with New Holland equipment because I think it dilutes the focus of the dealership."

Filling Product Holes
When it comes to product strengths, much of New Holland's heritage and success was built on the development of innovative hay tools. In late October 2008, the company celebrated the unveiling of the 700,000th square baler made at its New Holland, Pa., facility.

In 2008, the company was awarded three prestigious AE50 awards for innovative product ideas from the American Society of Agricultural and Biological Engineers. Two of the three awards were given for new designs for its self-propelled forage harvesters and round balers. Their new T9050 4WD tractor was also singled out for recognition.

"Without question, we're second to none when it comes to hay tools and small and midsize tractors," says Stevenson. "They're our heritage and the backbone of this company and we will strengthen and protect that part of our market. At the same time, I see holes in our product line that we need to fill."

The larger strategy, he says, is to be the single-source supplier for New Holland dealers without necessarily manufacturing each specialty product itself. While focusing on what it does best, Stevenson believes it can meet dealer needs for specialty products through partnerships and joint ventures.

"A lot of companies have this strategy," he says, and points to Nike as a prime example. "Nike doesn't produce anything but they offer a wide range of products and they are recognized as an industry leader. There are ways of doing it, but what we must do first is listen to our customer and keep in mind that their needs differ by the region they operate in."

Not Sold on Mega-Stores
When it comes to the dealer network, he doesn't have an "ideal" number of dealers needed to serve New Holland customers, but he is well aware of the push by some manufacturers to consolidate distribution channels with fewer, but larger, dealership owner/operators.

"I'm not buying into the idea that all your dealerships need to operate multiple locations or become mega-store operations. Again, you need to look at your product line, your presence in a particular region and what makes sense. There may be some areas where you want to have a dealer principal that has 6 or 7 stores. There are other areas where it doesn't make sense, where much smaller operations can maintain your presence in the market," he says.

Stevenson believes that with more outlets available, the more opportunity there is for increasing retail sales. But he sees great potential for the "smaller player" on the retail side.

"We have to be very sensitive of the small dealer. In a lot of cases you have more growth potential with some of the small players that are hungry than you do with the big mega-stores," he says.

He likens the trend in farm equipment to what he sees in the automotive industry where many mega-store outlets are struggling for survival because of a dependence on volume sales. "We're seeing a lot of them in trouble while the smaller dealer that has a business based on personal relationships and with less overhead will weather the storm. I'm very cautious about relying on these conglomerates. It's important that we preserve our good, smaller dealers."

One of the arguments he's heard about the need for dealership expansion is to attract the business and technical talent needed to operate their businesses at a "higher level" as well as service the more sophisticated machinery on the market today.

This, he says, is where the manufacturer needs to step in and provide dealer support. "If you work with your dealer network to improve their absorption rates and profit structures, they'll be able to attract the talent that they need."

Improving Absorption
While few OEMs willingly accept responsibility for their dealers' individual performance, Stevenson believes it's critical for New Holland to do so in order to strengthen the entire company. His first target is working with his dealers to improve their absorption rates.

Typically, farm equipment dealers operate in the 60-70% range when it comes to parts and service sales as of total sales. Where dealers need to be, says Stevenson, is at least in the low 90s. "If they can get into that position, you've got a very good, financially stable dealer that can weather a lot of what we're going through now. But if a dealer's absorption rates are 60% or lower, they're too dependent on wholegood sales and as soon as that market weakens they're in trouble with nowhere to turn.

"We as an OEM have to work with dealers and help them be creative about how they can increase their absorption rates," he says. "All dealers have a diesel mentality, so what else can they service besides farm equipment?

"They need to look at buses in the school systems or other equipment used in local municipalities. They need to broaden their market mentality to grow their businesses and I believe that's our obligation. The dealers are our franchise. We need to work with them to expand their parameters."

Buried in Product
Stevenson says they're also guarding against loading New Holland dealers with equipment. "We want our dealers to focus on the individual inventory on the ground. When we release programs, we offer presale incentives to pass along to customers. At the same time, we don't want them to overstock beyond their projected sales. We are making a conscious effort to avoid burying them in equipment. Today, it's a balancing act to achieve short-term gains without sacrificing long-term growth. Like other manufacturers, New Holland would like all of the presales they can get.

"Of course, we would like to have an order bank of presale equipment, but at the same time we want to move the product sitting in the dealerships.

"We're working with our dealers to ensure these transfers happen rather than introducing more inventory into the marketplace," says Stevenson.

"It's cost effective to allow for the transfer of equipment from one dealer who may have too much to another who needs it. That way they don't worry about extended deliveries. It satisfies their customers, it's cost competitive and it works for everybody."

Getting Back on Track
"Today, we're listening to our customers and that includes our dealers. We'll do what needs to be done to enhance our distribution channels," says Stevenson. "Without a solid dealer base, we can't succeed. We can build the best products out there; but who's going to sell them?"

Stevenson says that the changes he's planning will come quickly with everything pointed toward the next dealer meeting in March.

"We'll have everyone together and lay it all out for them. I'll tell them that we're rebuilding the company in North America," says Stevenson.

"We're going to start from the point of understanding our heritage, understanding where we are in the market, understanding our shortcomings and our strengths. They'll hear about how we're going to do it and the fact that they've had input into how it's going to be carried out.

Where the company reduced the number of regional offices and reduced staff in the field a couple of years ago, Stevenson says they'll have more people on the ground.

"We're putting more people into each region and we'll be listening. We'll see what that brings back and adjust accordingly."

He adds that if the feedback indicates that the company needs to strengthen certain areas, it'll either add or reduce dealers to meet customer needs and support its dealers achieve their goals.

While he's not ready to lay out the specifics of his plan, the goal is clear. "We've given up market share and products. And that's nobody's fault but ours. It was rightfully ours and we're going to make it our business to take it back."

The Watchword for 2009: 'Conservative'
Considering the state of the U.S. economy, New Holland is advising its dealers that in the short term they need to be conservative. John Stevenson, the company's new vice president of sales and marketing for North America, says he's suggesting to New Holland ag equipment that in view of the market during the next year, more than ever they need to listen closely to their customers.

"I'm advising our dealers to be conservative in their spending and in the inventories they're putting down going into 2009." He says they shouldn't necessarily look at expanding but to take a look at how they can improve their organizations and be creative in doing it.

"There are multiple ways of doing it and I'm telling them to ask for help if they need it." In the longer term, he says the best advice he can offer New Holland dealers is to understand the strategy of the company, where it's going and how they can grow with it.

"In some cases, it may be consolidation. In others, it may be that stores need to be in higher visibility areas and actually moving those stores," says Stevenson. In some cases, it could be upgrading facilities."

Loyalty Isn't a 'Color Issue'
Within the first 3 months in his new job, John Stevenson, New Holland's vice president of sales and marketing for North America, says he has met with owners and operators of some very large farming operations. What he found was that "loyalty isn't just a color issue" as it may have been in the past.

"It's a relationship and a service issue and these are more important than color when you talk about brand loyalty," he says.

"Sure they're price sensitive. But more important is their insistence that their equipment's operating. They've told me that's their biggest risk. Having supplier and a dealership that's going to meet their needs and keep them operating is what breeds loyalty."

Stevenson says loyalty comes back to listening to the customer, steady progress, building your image, building quality product and staying focused on the customer.

Facility Investments will Ease Equipment Shortages by Mid-Year
The equipment shortages that plagued dealers during the last year were the result of a "boom market," according to John Stevenson, New Holland's vice president of sales and marketing for North America.

To meet customers' demand, last year the company completed a $34 million expansion to its facilities in New Holland, Pa., making it the largest plant producing balers and other hay tool equipment. In addition to the plant expansion and renovation, the investment included two new, state-of-the-art paint systems and five new product lines that added 110 new jobs. In addition to square balers, the New Holland manufacturing facility also produces round balers, pull-type forage harvesters and other haying equipment.

"We have manufacturing capability available to meet growing customer demands," says Stevenson. "From what we can see with the money we're putting into manufacturing, and with the market changes that are occurring, we expect to be profitable by mid-year.

"What we're going through right now in all our regions is taking a look at current market conditions and previous years' sales in three categories. We're also looking at the time inventory is on the ground and we're normalizing it. So, between doing these things and changes in our manufacturing, by mid-year, we expect to start catching up with the market."

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