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company trims brands, realigns dealers Agco will phase out its orange Agco tractors

  • The Wichita Eagle
  • Published Sunday, Jan. 31, 2010, at 12:07 a.m.
  • Updated Sunday, Jan. 31, 2010, at 7:36 a.m.

Moving from orange to red is making Agco Corp. plenty blue, as the company tries to trim brands, cut costs and realign dealers — all without losing too many customers. Agco, the world's No. 3 maker of agricultural machinery, announced plans over the past few months to phase out its namesake orange Agco brand of tractors by 2012. It will keep as its main tractor brands the red Massey-Ferguson and yellow Challenger brands.

The company also will de-emphasize its brands for other farm machinery, notably Hesston brand hay and forage equipment and Gleaner combines, both made in Hesston.

In the future, the sprawling Agco plant in Hesston, makers of hay and forage products for 63 years, will turn out machinery that reads: "Hesston by Massey Ferguson," with the Hesston in smaller letters.

Agco also owns Sunflower tillage equipment, which is made in Beloit and Cawker City.

Agco is making the move to save money on marketing and to establish a clearer identity for the company, which has a glut of brands worldwide, said Reid Hamre, a brand marketing manager for Agco.

The Agco brand, which reaches back to Allis-Chalmers in the 1980s, has the narrowest range of equipment of the three main tractor brands and the least heritage.

It will allow the company to spend more on keeping its technology current as it fights tooth and nail with No. 1 John Deere and No. 2 CNH.

The pressure is on Agco to keep spending on technology to remain competitive. It is a relatively small player in North America, deriving three-quarters of its sales from Europe, South America and Asia.

The company had a difficult 2009. Through the first three quarters, sales fell 23.7 percent and profit by 64.8 percent from the same three quarters of 2008.

Dealers understand Agco's motives but also feel a lot of anger from their customers.

"Farmers are very loyal to brands," said Bruce Baldwin, co-owner of Kalvesta Implement, an Agco dealer near Garden City.

"They stick with a brand because their grandfather used that brand or their brother used it, and they like the brand and the technology."

Agco dealers have been very careful about criticizing the company. They are now negotiating with Agco over who will get which dealerships.

Baldwin and David Borho, co-owner of Kincheloe's, an Agco dealer in Pratt, agreed that telling regular Agco brand customers that they might have to switch to Massey-Ferguson or Challenger will be difficult.

"If there is an area where orange is dominant, and there are some in Kansas, for those guys there will be some trauma," Borho said.

The dealers say they have seen plenty of this from Agco before. The company has absorbed more than a dozen companies in its 20 years of existence.

Hamre said the company is keenly aware of dealer and customer dissatisfaction.

"Our approach is to do everything we can working with our dealers to retain as many customers as possible," he said.

He said the customers are really more loyal to the dealers than the company. The dealers, he said, have the power to regain their customers' loyalty.

The key fact, Hamre said, is that Massey-Ferguson tractors and the Agco tractors are identical except for the paint.

If the customers can just see their way past the color change, they'll be getting the same products and service they had before, he said.

"In buying a tractor or combine or planter, it's usually very, very important that (the farmers) feel in that purchase that they're continuing with a dealer who will support that product and work through any adjustments to make that product work correctly for their applications and keep it running in critical times," Hamre said.

Reach Dan Voorhis at 316-268-6577 or dvoorhis@wichitaeagle.com.

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