CNH Global N.V.

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CNH Global N.V.

World Trade Center
Tower B, 10th Floor
Amsterdam Airport
The Netherlands
Telephone: (20) 446-04-29
Fax: (20) 446-04-36
Web site: http://www.cnh.com

700 State Street
Racine, Wisconsin 53404
U.S.A.
Telephone: (262) 636-6011
Fax: (262) 636-6432

Public Company, 71 Percent Owned by Fiat S.p.A.
Incorporated: 1991 as N.H. Geotech
Employees: 35,000
Sales: $10.67 billion (1999)
Stock Exchanges: New York
Ticker Symbol: CNH
NA1C: 333111 Farm Machinery and Equipment Manufacturing; 333112 Lawn and Garden Tractor and Home Lawn and Garden Equipment Manufacturing; 333120 Construction Machinery Manufacturing; 333924 Industrial Truck, Tractor, Trailer, and Stacker Machinery Manufacturing

CNH Global N.V. was the name adopted by the Dutch firm New Holland N.V. following its 1999 acquisition of Case Corporation. CNH is the world’s second largest maker of agricultural equipment, trailing Deere & Company, and third in construction equipment, following Caterpillar Inc. and Komatsu Ltd. The company’s products are sold in 160 countries under a number of brands, including Case, Case IH, and New Holland, through a network of more than 10,000 dealers and distributors. By region, 46 percent of sales are generated in North America, 39 percent in western Europe, five percent in Latin America, and ten percent elsewhere. Fiat S.p.A., the Italian automaker, holds a stake in CNH of approximately 71 percent.

19th-century Origins of Case

The history of Case is merged with the Industrial Revolution’s impact on farming. Jerome Increase Case grew up threshing wheat by hand on his father’s farmstead in the early 1800s. Wheat was cut with scythes, then beaten by hand to remove the grain. The blistering work meant that one person produced about half a dozen bushels a day, so farmers necessarily limited their acreage to prevent bottlenecks in production of their wheat. When Case was 16, he took his father to a demonstration of a crude, mechanized thresher patented around 1788 by Scotsman Andrew Meikle. His father was sufficiently impressed by the machine and applied for a franchise to sell them.

For five seasons, Jerome Case operated the machine for his father and his father’s clients. During that time, Case became aware of the machine’s flaws, as well as its indispensability to farming. In 1842, Jerome Case moved to Rochester, Wisconsin, then the growing heart of the wheat culture in the United States. He sold five thresher machines along the way, reserving one for himself.

Rochester was a village when Case arrived. That autumn, he did custom threshing and worked on his modifications of the machine. Case envisioned a machine that was both separator and thresher, constructed so that the straw would move to one end while grain fell underneath the machine. Such a machine had already been patented by inventors in Maine in 1837, but Case had not seen their invention. His machine differed in its operation. Case was helped by Stephen Thresher, a carpenter he met where he boarded in Rochester. The two were advised by Richard Ela, who made fanning mills and hailed from New Hampshire.

After a successful first demonstration of his new thresher-separator, Case decided to concentrate on manufacturing rather than custom threshering. When Rochester balked at his petition for water-power rights, Case moved to Racine, Wisconsin, in 1844, playing a part in that town’s explosive growth. Within three years, he had gone from renting a building to constructing his own factory. First named Jerome Increase Case Machinery Company, the name was changed to Racine Threshing Machine Works. By 1848, Case was producing 100 threshers a year and claimed he was meeting only half of the orders received. By 1854, water power was supplanted by a steam boiler and engine within the factory.

It was difficult to deliver such cumbersome equipment in the 1800s. There were no railroads in Wisconsin until the 1850s. Most roads were widened Indian trails, and rain could make them treacherous to wheels. Timely delivery of the heavy machines was not always possible, and timing is as essential as rain to farmers. In addition, Case spent much time traveling to distant farms to collect back payments, credit being another necessity of his clients’ business.

Many complementary farming products were appearing during the same period that the wheat belt of the Midwest and the Great Plains was burgeoning. While Case’s business was growing, John Deere and Major Andrus were developing a steel plow in Illinois, and a reaper had been developed by Cyrus McCormick. Case purchased rights to the thresher and fanning mill invented before his, then added improvements. Acknowledging that his own strength was business and seeing the applications of machines, Case often acquired and improved upon the inventions of others. Case was established as a leading thresher manufacturer by the early 1850s.

Business was steady enough to allow Case to pursue civic interests; he was elected three times to the State Senate and served twice as Racine’s mayor. The poor harvest and financial panic of 1857 did not prevent the company, then still specializing in threshers, from introducing new products. In 1862, Case began selling the “Sweepstakes,” a thresher capable of producing 300 bushels of wheat a day. Pressures, including the Civil War, drove Case to create a co-partnership by 1863, established as J.I. Case & Co. The partnership included Case, Massena Erskine, and Stephen Bull until 1880.

The same year that Alexander Graham Bell won a bronze medal at the Philadelphia Centennial Exhibition, Case’s new thresher, the 1869 Eclipse, also won a bronze and a commendation. The thresher took the gold medal at the World’s Fair in Paris two years later. With the Homestead Act of 1862, farming burst into a new era, requiring equipment that could keep up. In 1878, Case produced its first steam traction engine, and by the following year had sold 109 of them. Sales doubled in 1878, reaching the million dollar mark by 1880. The partnership was incorporated as J.I. Case Threshing Machine Company in 1880. By 1890, Case was offering nine different horsepowers of steam traction engines, and continued improvements. Production peaked the same year the first gasoline tractor was introduced, 1911. Most steam engine products were eclipsed by the gasoline tractor by 1924. At that point, Case had built about one-third of this country’s farm steam engines. But it took time for tractors to become standard farm equipment; as a power source on U.S. farms, draft animals outnumbered tractors until 1952.

Case died in 1891 at the age of 73. Leadership of the company was passed to one of his former partners, Stephen Bull, who was assisted by his son Frank. Between 1893 and 1924, the company expanded to Europe, South America, and Australia. Competition between thresher manufacturers led to the dissolution of the Thresher Manufacturers Association in 1898 and increased rivalries. A depression between 1893 and 1897, a warehouse fire, and a Great Plains drought contributed to a decline in Case profits of nearly three-quarters between 1892 and 1896. Stockholder dissatisfaction led to new ownership, which resulted in Frank Bull as president. Bull became chairman of the board in 1916 and was succeeded in presidency by Warren J. Davis. The company name was changed to J.I. Case Company after further reorganization around 1928.

Company Perspectives:

To continue to give customers access to their preferred brands, CNH is committed to a multiple brand, multiple distribution business model. While the company will combine functional operations on a global basis, commercial and sales organizations and distribution networks will remain dedicated to specific brands.

For CNH, this strategy makes solid business sense for two reasons. Brand loyalty is strong in the equipment industry, in part due to the generations of equipment use within family businesses that are prevalent in the agricultural and construction equipment industries. Second, the Case and New Holland businesses are highly complementary, and the various brands of each business have strengths in different customer segments and geographic markets around the world. CNH will build on the existing points of differentiation between its brands. For example, in the North American agricultural equipment markets, the Case IH line has a substantial presence in the large cash grain customer segment, while the New Holland line has a strong position in multi-use farms that include livestock and dairy segments. These product lines have been developed over time to deliver the features and performance required by these distinct customer groups.

In addition, the two brands have products that address specific, sometimes specialized, market needs. New Holland, for example, is a dominant supplier of grape harvesting equipment, while Case has leading products for cotton and sugar cane harvesting.

Early 20th Century: Becoming a Full-Line Manufacturer

Case was advertising a full line of road machinery by 1912. The gasoline tractor became one of the company’s most important products. Since 1902, many firms were fighting to produce the gasoline-powered successors to steam-powered engines. International Harvester began making them in 1905, and Ford in 1907. The design and manufacture of lighter, smaller versions of the engines made Case a major player in the gasoline tractor market by the 1920s. By the late 1920s, Case had become a full-line manufacturer, aided by its 1919 acquisition of Grand Detour, a tillage equipment company. Case also made expensive automobiles from 1912 to 1927: roadsters, coupes, and sedans in 14 different models over the years. Because of low profitability, the auto lines were phased out.

The depression in the American economy in the wake of World War I greatly impacted the farm equipment industry. By 1929, only 18 of the 157 manufacturers of farm equipment operating 12 years earlier remained. Case’s profits fell steadily, despite the addition of a combine to its line in 1923. The company was especially challenged by the dealer network of International Harvester. Case did not keep up with competitors’ improvements while it was enjoying the sales of its steam traction engines and threshers. Between 1920 and 1922, annual gross sales plunged from $34 million to less than $16 million. In 1924, Case’s new president, Leon R. Clausen, assumed the reigns after leaving John Deere Company. He would remain president until 1948, and chairman of the board until 1958.

Clausen brought many ideas with him from Deere, including faith in aggressive marketing and the value of being a full-line manufacturer. He established three primary goals: improve tractor designs, establish a full line, and modernize the factories. The Model C tractor was introduced in 1929, and a tricycle tractor appeared in 1930. A line of “Motor Lift” implements arrived in 1935. Lines were expanded by acquisition as well as invention: Case purchased through the Emerson-Brantingham Company a line of farm equipment that included binders, mowers, reapers, and corn planters. The Rock Island Plow Company was acquired in 1937, adding drills, spreaders, and plows to the company’s offerings.

Case also purchased that year a factory in Iowa to make small combines, sales of which had been growing steadily since they were introduced to the market. Case, Harvester, and Deere were responsible for three-quarters of the farm machinery sold in the United States by 1937. Although Case had, since 1912, offered an array of road building machinery, these products were not promoted under Clausen and it was not until the mid-1950s that Case became serious about marketing its construction equipment.

Clausen set to work on revamping the sales department and restructuring manufacturing. He is credited with building Case’s dealer network. Although severe cutbacks were necessary to weather the Great Depression, Case managed to increase sales by 1936 on the strength of the company’s tractor sales. In 1939, a new tractor line was introduced, as well as a small combine, hammer feed mills, and farm wagon gears.

With the start of World War II, Case’s tractors were in even greater demand. More than 15,000 of its tractors went to the military between 1941 and 1945. New tractors were designed and manufactured with war needs in mind. Case was also producing items such as shells, aircraft wings, and gun mounts for the war effort. Case devoted much more wartime engineering to federal production than did Deere or Caterpillar, which left it at a disadvantage at the war’s end. Nonetheless, the postwar demand for farm machinery outpaced supply and Case’s lost wartime share soon seemed recoverable.

Key Dates:

1842:: Jerome Increase Case builds his first thresher machine, and soon founds the Jerome Increase Case Machinery Company.
1863:: Company is reformed as a co-partnership, called J.I. Case & Co.
1878:: Case produces its first steam traction engine.
1880:: Partnership is incorporated as J.I. Case Threshing Machine Company.
1895:: New Holland Machine Company is founded.
1917:: Ford Motor Company begins making the first mass-produced agricultural tractor.
1919:: Fiat introduces its first mass-produced tractor to the market.
c. 1928:: Case changes its name to J.I. Case Company.
1945:: Case workers in Racine begin a 440-day strike—at the time, the nation’s longest ever.
1947:: Sperry Corporation acquires New Holland, creating the subsidiary Sperry New Holland.
1957:: Case relaunches its industrial equipment line and acquires American Tractor Corp.
1964:: Kern County Land Company (KCL) gains majority control of Case.
1967:: Tenneco Company acquires KCL and its stake in Case.
1970:: Case becomes a wholly owned subsidiary of Tenneco; Fiat creates an earthmoving equipment subsidiary, Fiat Macchine Movimento Terra.
1974:: Fiat Macchine creates joint venture with Allis Chalmers Corporation, Fiat-Allis.
1984:: Fiat consolidates all of its agricultural machinery manufacturing under Fiatagri unit.
1985:: Case acquires International Harvester’s agricultural product line.
1986:: Ford acquires Sperry New Holland and merges it with Ford Tractor Operations to form Ford New Holland, Inc.
1988:: Fiat-Allis and Fiatagri are merged to form FiatGeotech S.p.A., which includes all of Fiat’s agricultural and earthmoving equipment.
1991:: Case posts a net loss of $1.1 billion; Fiat acquires an 80 percent interest in Ford New Holland, which is merged with FiatGeotech to form N.H. Geotech.
1993:: N.H. Geotech changes its name to New Holland N.V.
1994:: Tenneco takes Case Corporation public.
1996:: Tenneco sells its remaining stake in Case, which gains its full independence.
1999:: New Holland acquires Case and changes its name to CNH Global N.V.

Postwar Difficulties for Case

Regaining lost market share, however, was interrupted by a strike in 1945 that lasted 440 days. It was, at that time, the nation’s longest strike. Clausen’s animosity for unions—first noted when he was still with Deere—was mutual. Depleted by the strike and its aftermath, Clausen stepped down as president in 1948, staying on as chairman of the board. The strike hurt Case on every level: in its relationship with dealers, customers, and its union, and in its research and development, where it was already lagging behind its competitors.

With the Marshall Plan and the lifted export restrictions, devastated Europe’s hunger for working machinery became a fresh market for Case. In addition, stateside farm machinery was in disrepair. There was a shortage of manpower on farms, due to deaths in the war, which increased the need for machinery. Sales growth on the West Coast led to a plant purchase in California in 1947. This purchase expanded Case’s range into a new tobacco harvester. These factors helped Case post a profit through 1949, despite its costly strike.

Profits declined between 1950 and 1953, in part because of outdated products. Competitors introduced lighter models of tractors in the late 1930s, and these units became popular after the war. Case, on the other hand, had at the end of the war roughly the same heavy series it had at the beginning. Poor engineering hurt Case during the early 1950s as well, as did a propensity to blame the dealer rather than the product. Items such as Case’s hay baler, which had topped the market in 1941, lagged to less than five percent of baler sales in 1953 because Case failed to respond to a competitor’s improvements.

All of these problems added up to a crisis in leadership at Case. According to Case’s own published history, J.I Case: The First 150 Years, Clausen consistently made decisions opposed to change: he opposed diesel engines for domestic sales; he believed farmers preferred “dependability” to changes such as a foot-operated clutch, a cab, and an oil filter—all of which a 1946 survey of farmers specified as desired. When Clausen left the presidency in 1948, Theodore Johnson took over. Johnson was 66 and had never worked outside of Case. The company continued to drift, with a lackluster response to competition, and no notable innovations. Johnson was replaced in 1953 by John T. Brown.

Under Brown’s direction, Case released a multitude of new or improved implements, including the 500 series tractor, which would become a popular line. The 500 had a six-cylinder, fuel-injected, diesel engine; power steering; and a push-button start. Two manure spreaders were unveiled in 1956. That same year, however, Case reported its second loss since 1953. For the first time, bankruptcy seemed a possibility. Diversification appeared to be the only remedy.

Diversifying Case’s Product Line: Late 1950s

Case launched its industrial equipment line in 1957 as though it were new, but it had been making industrial units based on agricultural models for three decades. Street and highway builders, national forests and parks, and others had come to rely on industrial tractors adapted from farm use. Case applied itself to expanding this sector of its line, and turned to Caterpillar Company for marketing assistance. To revitalize its industrial line, Case acquired American Tractor Corporation (ATC) in 1957. ATC’s volume around purchase time was $10 million, but the company was in debt due to recent rapid growth. Its assets included a vigorous president, Marc Bori Rojtman; a strong line of distributors and dealers; and a sturdy line of crawler tractors and loader backhoes—the company’s star product. Under Rojtman, Case’s manufacturing capacity improved, new retailers were attracted, and the company moved confidently into the construction equipment business.

Rojtman’s showman’s personality led to dazzling regional shows to promote new product lines. Deliberate showmanship in marketing resulted, despite criticism, in huge increases in orders. New product invention and marketing and overseas expansion proved financially taxing. But sales rose 50 percent in 1957, reaching $124 million. Clausen, head of the board, strongly opposed Rojtman’s presidency and his debt load, and resigned in 1958. An economic downturn in 1958 left the company in a precarious position. William Grede replaced Rojtman in 1960.

Case’s debt load in 1959 was $236 million. It had become the country’s fourth largest farm and construction equipment producer. Grede’s first order of business was to reduce debt and consolidate manufacturing. A new offering of accessories such as batteries, oil, and hydraulic fluid proved successful. Between the new offering and special discounts, Case sales were still strong in 1960. A six-month strike occurred that same year. Unable to met a $145 million bill due on short-term notes in 1962, a bank agreement was negotiated which called for reorganization and deferment of most of the interest until 1967, so Case could focus on paying down principal. Reorganization included the ousting of Grede. He was succeeded by Merritt D. Hill, who had previously worked in Ford’s Tractor and Implement Division.

Hill brought talent with him from Detroit, including a chief product engineer. He completely restructured Case. Separate divisions were created for marketing, manufacturing, and engineering. Hill also ushered in a new era of labor-management relations, being the first of Case’s presidents sympathetic to issues of labor and race. Money constraints impeded the development of new product lines, but Case managed to stay in the ring with competitors such as Ford and Deere, as the new head of its engineering department insisted. In 1964, Case introduced the 1200 Traction King, a 4-wheel drive, 120-horsepower giant that marked the company’s entry into the large agricultural tractor market.

Case’s operating loss had declined and its production levels were up. The company seemed on solid business ground by 1964, but was still not in a position to meet the terms of the 1962 agreement and have enough left over to fuel growth. Case shopped for a cash-rich partner to whom it could offer the use of its agreement’s tax loss carry-forwards.

Late 1960s: Beginning of Case’s Tenneco Era

In May 1964, the Kern County Land Company (KCL) of California acquired majority stock in Case. KCL was founded in 1874 and began as a cattle-raising venture that branched into petroleum royalties after oil was discovered. It diversified into hard minerals, real estate, and businesses such as its Racine, Wisconsin-based parent company, the Walker Manufacturing Company. KCL was cash-rich and agreed not to dictate Case’s growth or internal decisions. These circumstances allowed Case to expand between 1964 and 1967, in accordance with a booming demand for existing products and the itch to produce new ones. Around 1965, the 450 crawler and the 1150 dozer debuted. A new series of loader backhoes were introduced around this time also, among them Case’s mainstay, the 580. By 1966, Case’s income decline had been reversed. Hill became chairman of the board and Charles A. Anderson became president. Anderson had been with KCL and Walker.

Suddenly KCL, under threat of a hostile takeover by Armand Hammer, wooed a friendly buyer instead, and ended up being acquired by Tenneco Company of Houston. Gardiner Symonds, Tenneco’s president, was familiar with KCL’s natural resources but had no experience with manufacturing. Tenneco was a holding company. The deal closed in 1967. It was thought that Tenneco would quickly sell Case.

When investors began inquiring about Case’s stock, Tenneco decided to run an analysis of the company and found it well-run, but too low on liquid assets to grow. This shifted Tenneco’s plan. Case would prosper from a shift to construction equipment, so Tenneco decided not to sell it. In 1968, Tenneco acquired Drott Manufacturing Company in Wisconsin and leased it to Case. Case had been buying loader buckets from Drott for years. That same year, Tenneco also bought Davis Manufacturing Company of Wichita, Kansas, a producer of crawler and rubber-tire mounted trenchers and cable-laying equipment. Tenneco allowed Case to expand by two product lines: log skidders for timber harvesting, through Beloit Woodlands of Wisconsin, and a “skid steer” loader, manufactured by the Uni-Loader Division of Universal Industries.

James Ketelsen succeeded Anderson as Case’s president in 1967. Tenneco deferred to Case’s manufacturing experience, but both agreed that the company’s future was in construction equipment. The agricultural market had slowed, with replacements and larger machinery to accommodate fewer, larger farms, reflecting the bulk of sales. Case essentially exited the farm implement business by 1970. Yet, while Case dropped its combine business in 1972, an acquisition in 1985 returned harvesting equipment to Case’s line.

After dropping so many of its lines, Case thought it could survive without being a full-line company. The farm economy was dire in the early 1970s, especially for smaller farmers. Case shifted its focus not away from agricultural implements altogether, but toward the large tractor market. Tenneco “loaned” Case $60 million from 1969 to mid-1970, giving the company enough fiscal strength to deal with healthy competitors such as Deere. Even Deere did not have access to such resources. By 1971, Case’s entire construction equipment line had been replaced and that year it unveiled more new machinery than any of its competitors. Tenneco’s faith was repaid, as Case led all of Tenneco’s companies in earnings gains the following year. Meantime, by 1970, Tenneco had purchased the remaining stock in Case, turning Case into a wholly owned subsidiary.

In 1972, Case bought David Brown, Ltd., a British agricultural equipment firm founded in 1860. Brown had a large distribution system in Britain and Case concentrated its small tractor production in Brown. Thomas Guendel took over the company presidency in 1972 and commanded a chapter of unprecedented growth until he left Case seven years later. Sales quadrupled during that time and earnings improved more than 600 percent. The phenomenal growth was due largely to increased success in construction equipment and overseas markets.

The company reentered the military market during the 1970s. It was awarded a $55 million contract with the Army and Air Force in 1978. The economy was improving after the recession between 1974 and 1975, and Case was the country’s third largest producer of construction equipment by 1975. By the late 1970s, 45 percent of Case’s sales were overseas, while 80 percent of its production was domestic. France’s Poclain Company, the largest manufacturer of hydraulic excavators in the world, was purchased by Case in 1977. Because Drott’s excavators could not be sold in Europe due to trade restrictions, Poclain was a savvy purchase; it was a recognized worldwide market leader.

1980s and Early 1990s: Bleakest Times Yet

When Jerome K. Green replaced Guendel in 1979, Case passed the $2 billion mark in revenues. Case started the 1980s with 28,000 employees, but it did not anticipate the recession that would shatter the farming community. Shifting to the construction product line was no rescue, as that industry was equally hard hit. New general purpose tractors had been introduced in 1983 and were languishing. Four more 94 series tractors were unveiled in 1984, but by that point, farms were in a real crisis. Case cut production to 55 percent of capacity and it still exceeded demand. Although overseas sales of construction equipment remained strong during the 1980s, Case’s overseas sales did not balance the wounds of the recession in the United States: in 1983, Case lost $68 million, and followed that with a deficit of $105 million in 1984.

Case acquired International Harvester’s agricultural product line, production facilities, and distribution system in 1985. The history of Harvester was as long and as distinguished as Case’s. (Harvester retained its trucking business, renaming it Navistar International Transportation Corp.) Case shut down its own factories for the start of 1985, reducing production to 45 percent of retail sales, and went on to close several Brown plants, and to retire the oldest and least efficient of Case’s home plants. Trimming its agricultural product line to such things as tractors, tillage equipment, crop production, and combines, Case was prepared to compete head-on with John Deere, dominator of the farm equipment market.

Losses in 1986 were down to $1 million, despite the deepening farm recession. In addition, Case was among the top three farm equipment manufacturers in Germany, France, and the United Kingdom. Nevertheless, Tenneco was unhappy with Case’s bad financial showing and unacceptably tardy production in 1987. Green was replaced by James K. Ashford that same year. About 35 new agricultural products were introduced in 1987, while nine factories were closed or closing. Case was assisted by Fortune’s listing of its combines, planters, and loader backhoes as among the best U.S. products in 1988. Ashford oversaw aggressive cutbacks and revamping, including the elimination of 300 jobs in Racine and an intended worldwide cut of 3,000 employees.

By 1989, Case had gone from a $142 million loss to a record profit of $228 million. The recovering farm economy and improved construction equipment sales were cause for celebration. Case’s confidence was sufficient to announce a new headquarters complex, but the recovery was short-lived and sales began to weaken. Although John Deere was cutting back production, Ashford gambled that the recession was over and that Case would gain from a preparatory inventory.

This decision was disastrous. The market did not rebound. In the fourth quarter of 1990, Case’s earnings were off by nearly $100 million and the year ended with a $42 million decline in operating profits. Part of this decline was due to a weakened dollar, which raised imported parts costs. Though Ashford was credited for Case’s turnaround in 1989 and for replacing 80 percent of its divisions’ managers and reviving a sluggish management, he resigned suddenly.

Losses continued in 1991 as Case scrambled to cut personnel by 5,000 and production schedules by as much as 23 percent. Sales were up, but discounts cut deeply into profits. Case ended 1991 with a $618 million operating loss.

Case had become a serious problem for Tenneco when Robert J. Carlson assumed the presidency in 1991. Carlson had spent nearly 30 years at Deere and inspired confidence at Case. The company announced extended factory shutdowns at all of its ten domestic plants and closure of some of its European facilities. Case had restructuring charges of $461 million in 1991. Added to Case’s operating losses for that year, the loss was a staggering $1.1 billion. While Deere and Caterpillar had suffered from the extended recession as well, their trimmed production left them in better shape than Case. Tenneco executives, in fact, were so exasperated by the situation at Case that they offered to sell the subsidiary for $1 to anyone who was willing to assume the hefty $1 billion debt load; there were no takers.

Talk of further reducing the workforce by 4,000 employees started in 1992, when Edward J. Campbell assumed the presidency of Case. Campbell’s approach to downsizing was different: he did not just slash, he reorganized and cut from the top, dismissing 21 of the company’s 43 officers. Various European factories were closed or sold, including the Poclain plant at Carvin. An agreement was made with Sumitomo Heavy Industries of Japan to make midsized excavators for the North American market. Japan was an increasing presence in the agricultural and construction equipment industries.

These measures helped reduce losses for 1992, but revenues were also down. Operating losses were reduced by about 75 percent while agricultural equipment sales were down by about 30 percent. The year closed with revenues of $3.8 billion, and operating losses of $260 million, not including restructuring charges. From a high of 30,000 in 1990, Case’s employees now numbered 18,600.

The farm economy appeared to have stabilized at the end of 1992, but construction equipment sales were sluggish. All manufacturers suffered from weak pricing, lower unit volume, the economic slump overseas, and cautious dealers. Caterpillar had a sales increase, but Deere and Case both reported losses. Though Case’s performance improved, its progress was uneven, with profits in the second quarter of 1992 and losses in the third. Tenneco announced a $2 billion restructuring plan to revamp Case into three divisions: sales and marketing, manufacturing, and engineering. Jean-Pierre Rosso became president and chief executive of Case in 1993.

Mid-1990s: Case’s Recovery and Short-Lived Return to Independence

Case launched a three-year, $920 million restructuring program in March 1993. The program involved further plant closings and consolidations, revitalizing new product development with a renewed emphasis on customer input, abandoning money-losing product lines (such as smaller tractors and heavy construction equipment), and the gradual privatization of the 250 Case dealerships owned by the company. Sales of farm equipment were up by the summer of 1993, especially large tractor sales. Most farmers had not purchased new tractors or combines since the farming boom in the 1970s. Case announced that its 1993 combine production was sold out by June, but its Racine tractor plant was closed for 17 weeks following a $17 million loss in the first quarter of that year. The heavy equipment markets were proclaimed healthy by the end of 1993. The year ended well for Case: operating income was $82 million in 1993, an improvement over its operating loss of $260 million the previous year, and revenues were $3.7 billion. Case was aided by a vast reduction in inventories, higher retail pricing, and increased demand for new products late in the year.

Case appeared to have recovered fully by 1994, as revenues increased to $4.3 billion while net income tripled to $165 million. The health of the company was also evident in Tenneco’s successful sale of 56 percent of Case Corporation stock to the public during 1994, marking Case’s first return to the public trading arena in nearly 30 years. During 1995 Tenneco further decreased its ownership of Case to 21 percent, then sold this remaining stake in March 1996, completing Case’s return to independence.

Under Rosso’s continued leadership, the revitalized Case adopted a more aggressive approach to developing new farm and construction equipment, earmarking $835 million in new product spending for 1996 through 1998, more than double the amount spent in the early 1990s. At the same time, Case also pursued growth—particularly abroad—through acquisition and joint ventures. The company in 1995 had already entered the burgeoning market in China through the establishment of a joint venture with a leading Chinese construction equipment firm, Guangxi Liugong Machinery Co. Ltd., to make and market Case loader/backhoes. In 1996 and 1997 Case completed 11 acquisitions, nine of which were of agricultural equipment companies with the others being makers of construction equipment. Among the firms purchased in 1996 were Australia-based Austoft Holdings Limited, the world-leading maker of sugar cane harvesting equipment, with annual sales of $74 million; Steyr Landmaschinentechnik GmbH, an Austrian tractor manufacturer with annual sales of $176 million; and U.K. construction equipment maker Fermec Holdings Ltd., which had annual revenues of $154 million. In 1997 Case acquired Fortschritt Erntemaschinen GmbH, a German maker of harvesting equipment, and the assets of two other German firms; the combined annual sales of the products acquired was about $110 million. The new and acquired products helped Case increase its revenues to a record $6 billion in 1997 while the company’s cost-consciousness led to record net income that year of $403 million.

By 1998, however, economic difficulties in Asia and Russia, which reduced the grain exports of U.S. farmers, coupled with three straight years of record crops, drastically reduced crop prices—to 20-year lows—and in turn sharply depressed demand for farm equipment. Agricultural equipment makers, including Case, began once again laying off workers. In 1998 Case fired or laid off 2,100 workers; then, late that year, it said that it planned to lay off 1,300 more employees by the end of 1999. The latest downturn in the agricultural equipment market also led to pressure for consolidation within the industry as one way to cut production overcapacity and lessen competition, and in May 1999 Case agreed to be acquired by New Holland N.V.

The Origins of New Holland

New Holland’s roots can be traced back to 1895, when handyman Abe Zimmerman made his first feed mill at his New Holland, Pennsylvania, repair shop. Zimmerman soon began making other agricultural products as well. He called his operation the New Holland Machine Company and incorporated it in 1903, the same year Henry Ford incorporated the automobile company he had started up in Detroit. Ford came out with the prototype for the world’s first mass-produced agricultural tractor in 1907, and ten years later the tractor, known as the Fordson Model F, went into actual production. Decades later, these two fledgling operations would become linked.

Meanwhile, across the Atlantic, Italian auto maker Fiat was developing a tractor of its own. That company’s efforts resulted in the development of the 702, Fiat’s first mass-produced tractor, which hit the market in 1919. In Belgium, another company, Claeys, was entering the picture. Founded in 1906, Claeys began manufacturing harvesting equipment in 1910. Back in the United States, Zimmerman’s New Holland company was also thriving. It continued to do well until about 1930, when the Great Depression began to hit rural America hard. As farm income plummeted, so did New Holland’s revenue.

Sperry Takes Over in 1947

After about a decade of struggle, New Holland was purchased by a group of four investors. The new owners were able to turn the company around quickly by introducing a new product, the world’s first successful automatic pick-up, selftying hay baler. The baler, invented by local thresherman Ed Nolt, was an instant hit among farmers. It almost singlehandedly put New Holland back on solid footing, and balers were a key company product line into the 21st century.

In 1947 New Holland Machine Company was acquired by electronics specialist Sperry Corporation, creating a subsidiary dubbed Sperry New Holland. In the years that followed, Sperry New Holland developed and manufactured a large number of agricultural machines. In particular, the company carved out a niche as a producer of highquality harvesting equipment. Things were also developing quickly in the European agricultural equipment industry during this period. In 1952 Claeys unveiled the first European self-propelled combine harvester. By the early 1960s, Claeys was one of the biggest combine manufacturers in Europe. Sperry New Holland bought a major interest in Claeys in 1964. The same year, Sperry New Holland made a major breakthrough in hay harvesting technology with the introduction of the haybine mower-conditioner, model 460. This machine was capable of performing tasks that previously required two or three separate pieces of equipment. New Holland would go on to revolutionize harvesting equipment in 1974, with the introduction of the world’s first twin rotor combine.

As the 1960s continued, Fiat became increasingly active in the manufacture of equipment for agriculture and construction. Late in the decade, that company created a Tractor and Earthmoving Machinery Division. Fiat’s earthmoving segment was moved into its own subsidiary, Fiat Macchine Movimento Terra S.p.A., in 1970. Fiat continued to move further into heavy equipment through the 1970s. In 1974 Fiat Macchine Movimento Terra launched a joint venture with American manufacturer Allis Chalmers Corporation, called Fiat-Allis. That year also marked the creation of the company’s Fiat Trattori S.p.A. subsidiary. Fiat finally gained entry into the North American market in 1977, with the acquisition of Hesston, a Kansas-based manufacturer of hay and forage machinery. Fiat also purchased Agrifull, a small-sized tractor manufacturer, that year. In 1984 Fiat consolidated all of its agricultural machinery manufacturing under the umbrella of Fiatagri, the new name for Fiat Trattori.

The 1980s Belong to Ford

All the while, Ford was also becoming a global force in agricultural equipment. Its Ford Tractor division had been responsible for a number of industry breakthroughs, including the use of rubber pneumatic tires, power hydraulics, diesel engines, and the three-point hitch. Ford’s inexpensive tractors had been largely responsible for the replacement of horses and mules by machines on United States farms over the first several decades of the 20th century. By 1985 Ford Tractor had 9,000 employees, about one-third of them located in North America, and 5,000 dealers worldwide, again about a third of them in the United States.

In 1986 Ford purchased Sperry New Holland and merged it with its Ford Tractor Operations to create a new company, Ford New Holland, Inc. By this time New Holland had grown to become one of the best performing companies in the farm equipment business, with 2,500 dealers and more than 9,000 employees of its own, working in 100 different countries. The merger was part of an overall consolidation taking place in the farm equipment industry at the time, occurring just one year after Case took over International Harvester. With combined annual sales of $2 billion, the new company made Ford the third largest farm equipment manufacturer in the world. Most of Ford Tractor’s executives and managers were moved over to New Holland’s Pennsylvania offices, which became Ford New Holland’s corporate headquarters.

Within months of this merger, Ford New Holland added on the agricultural division of Versatile Farm and Equipment Co., an agricultural equipment manufacturer that had been founded in Canada in 1947. The combination of Ford’s tractors, New Holland’s harvesters, and Versatile’s large four-wheel-drive machines created a company that produced a wide spectrum of agricultural equipment, and, best of all, there was almost no overlap in what the three entities manufactured and, therefore, little pruning to be done once they were united. One of the few major changes at New Holland was the gradual elimination of its company-store system. Between 1987 and 1989, New Holland’s 53 company-owned outlets were sold off or closed, in favor of a dealer development program that provided training and assistance for independent dealers.

Back in Europe, changes were also taking place at Fiat. In 1988 the activities of Fiat-Allis and Fiatagri were merged to form a new company, FiatGeotech S.p.A., which now encompassed Fiat’s entire farm and earthmoving equipment sector. By the end of the 1980s, Fiat was Europe’s leading manufacturer of tractors and hay and forage equipment. FiatGeotech’s revenue for 1989 was $2.3 billion.

1990s: The Fiat Era

By 1990 Ford New Holland had 17,000 employees, revenue of $2.8 billion, and plants in the United States, Canada, Belgium, England, and Brazil, plus joint ventures in India, Pakistan, Japan, Mexico, and Venezuela. In 1991 Fiat purchased an 80 percent interest in Ford New Holland. Ford New Holland was merged with FiatGeotech to create a huge new industrial equipment entity dubbed N.H. Geotech—though its North American operation kept the name Ford New Holland for the time being. The purchase surprised nobody in the industry, since Ford had been looking for a buyer for its tractor operation for the better part of a decade. The new international behemoth, headquartered in London, instantly became the world’s largest producer of tractors and haying equipment, the second largest producer of combines, and one of the largest producers of diesel engines.

Between 1991 and 1993, the company undertook a number of measures designed to better integrate its many pieces into a coherent whole. Among the goals of this group of projects were a reduction in the time needed to bring new products to market and to focus manufacturing operations on core components. The company’s supply chain was also streamlined. N.H. Geotech changed its name to New Holland N.V. in January 1993, although the company’s North American operation stuck with the Ford New Holland moniker for two more years. The year 1993 also brought the introduction of the company’s Genesis line of 140- to 210-horsepower tractors. The Genesis line proved so popular that it took only a little more than two years to sell 10,000 of them.

New Holland made the completion of its integration process official at its 1994 worldwide convention, at which the company unveiled its new corporate identity and logo. For that year, the company reported net income of $355 million on sales of $4.7 billion. Fiat eventually acquired the other 20 percent of New Holland previously owned by Ford, and in 1995, the 100th anniversary of the New Holland brand name, Ford New Holland was rechristened New Holland North America.

Operating as a wholly owned subsidiary of Fiat, New Holland brought in just more than $5 billion in sales in 1995. By this time, the company controlled 21 percent of the world market for agricultural tractors, 17 percent of the world market for combines, 42 percent of the market for forage harvesters, and significant shares of the world markets for just about every other category of agricultural or construction equipment one could name.

An IPO in 1996

By 1996 New Holland was selling about 280 different products in 130 countries around the world. Globally, 5,600 dealers were selling the company’s agricultural equipment and 250 were peddling its construction machinery. During the last quarter of that year, Fiat sold 31 percent of New Holland’s stock, 46.5 million common shares, to the public at $21.50 per share, to raise capital to bolster its sagging core automobile business. On November 1, the first day New Holland stock was traded on the New York Stock Exchange, it was the most heavily traded stock on the market.

In addition to the stock offering, 1996 also brought a number of technological innovations and new product unveilings as well. New Holland’s new E-Series backhoe-loaders were chosen by Construction Equipment magazine as one of the construction industry’s 100 most significant products. The company also introduced several new tractor lines, four Roll-Best round balers, and two large self-propelled forage harvesters. New Holland was also active in conducting research on futuristic, driverless machines. Working with NASA and Carnegie Mellon University as part of the NASA Robotics Engineering Consortium, New Holland created a prototype of a self-propelled windrower that cuts, conditions, and puts alfalfa into windrows without requiring a human operator. One further 1996 development at New Holland was the appointment of former U.S. Treasury Secretary and Vice Presidential candidate Lloyd Bentsen as its chairman of the board.

In July 1997, the 25,000th New Holland Twin Rotor combine rolled off the company’s Grand Island, Nebraska assembly line. As the year continued, the company announced the creation of a new Boomer line of light diesel tractors, including four brand new models. Building on its longstanding philosophy of manufacturing products close to where they were sold, the company moved production of the light tractors from Japan to a new facility in Dublin, Georgia. The launch of the Boomer line reflected New Holland’s commitment to the production of the kind of compact but powerful machines sought by customers for a variety of off-highway uses.

New Holland + Case = CNH Global

New Holland, like Case, was buffeted by the downturn in the worldwide agricultural equipment market in the late 1990s, and cut its workforce by 1,300 during the second half of 1998. The company in early 1999 announced that it would make further job cuts, then in May agreed to acquire Case. Completed in November 1999, the $4.6 billion acquisition involved the purchase by New Holland of all of Case’s stock at $55 per share. Fiat thereby maintained its 71.1 percent stake in the new New Holland, which was renamed CNH Global N.V. A symbol of globalization at the turn of the millennium, CNH was incorporated in the Netherlands, headquartered in Racine, Wisconsin (adopting Case’s headquarters), had its stock traded on the New York Stock Exchange, and was majority owned by an Italian automaker. Rosso, a Frenchmen, was named cochairman and CEO, while the head of New Holland, Umberto Quadrino, an Italian, was the other cochairman.

As a condition of approval of the merger, the European Commission required CNH to divest itself of four business lines, including Fermec Holdings. CNH also began consolidating the operations of its predecessor companies, aiming to generate annual cost savings of around $500 million within three to four years. In early 2000 the company announced that it would close or sell ten of its 46 manufacturing plants around the world, cutting its 36,000-person workforce by 7,000. CNH also planned, within a few years, to reduce the number of chassis platforms used in its various products from 50 to about 35. With commodity prices remaining depressed and sales of large tractors and harvesting combines in the United States down ten to 15 percent, CNH warned in June 2000 that it was expecting to post a loss of $90 million for its first full year of operation, before restructuring charges. In July 2000 the company announced that it would close its manufacturing plants in Racine by 2004, ending production of tractors in the city most identified with the Case side of CNH. The painful nature of the integration of New Holland and Case was becoming increasingly evident and indicated that the emergence of CNH as a formidable competitor to Deere, Caterpillar, and other rivals was not likely to occur until well into the first decade of the 21st century.