The family farm is nearly extinct. There are 2.1 million farmers in
Bigger farms that are farther apart have led to larger dealerships covering more territory and an erosion of brand loyalty among farm managers in favor of distributor relationships.
“Corporate-owned or operated farms continue to get bigger and bigger,” says Ratliff, 62, an affable Uniroyal Tire veteran who has been chief executive of AGCO since October 1988 and chairman since last August. “Farms are 50 percent larger than 15 years ago. As they grow, they must maintain yield and quality. Because they want to grow their crops faster, they want tractors and combines with greater speed and quality.”
To meet this demand, Ratliff hit the acquisition trail in recent years. You may not have heard of AGCO-the descendent of agricultural equipment manufacturer Allis-Chalmers-but you’ve likely heard of some of the prestigious brands now under the far-reaching corporate umbrella.
Last year, the company paid Chicago-based Allied Products an estimated $60 million for its tractor-manufacturing and replacement parts White-New Idea Farm Equipment Division. It also bought the North American distribution business of tractor and combine manufacturer Massey Ferguson from Buffalo, NY-based Varity Corp. In 1991, it snapped up Kansas-based Hesston Corp. and the White Tractor Division of Allied Products.
John McGinty, managing director of
“It was a combination of a better market, increased market share, pricing, and the assimilation of the acquisitions,” McGinty says. “Ratliff has done a superb job.”
With the acquisitions, AGCO controls a network of more than 3,500 dealers. Most handle multiple AGCO brands, unlike dealers affiliated with major competitors Moline, IL-based Deere & Co. and Tenneco subsidiary J.I. Case Co. in
To be sure, the game is changing quickly. So far, AGCO is keeping pace. Says analyst McGinty: “Their whole trick is to use the leverage of all those [3,500-plus] distributors.”
“The dealer has become the supermarket for his market area,” Ratliff says. “The crossover contracts we offer add opportunities for him to sell products he didn’t have previously, generating volume discounts and more opportunities and profits for him.