Retooling the company founded by Cyrus McCormick in 1831 is going to take more than building great tractors. The company needs to take a new look at how it works with its dealers.
When Doug Rehor talks about making McCormick USA into a better tractor company, he adds, “I hope you understand that I’m not talking about building tractors at all.”
He says that he’s confident that McCormick makes great tractors and offers them at a fair price with competitive quality features and content.
“This is a great brand, but the way you separate in this business is not through the equipment, it’s the business wrapped around all of that,” Rehor says.
“How good of a business partner are we with our dealers? Do we have their back? When we have an issue, when they need a part, are we going to get it to them on time? When they’re trying to troubleshoot a wiring harness, do we provide them with the right technical information so they can quickly troubleshoot the problem and get that customer back in the field working?”
These are the things, he says, that will set the tone for the company he aims to create as McCormick USA’s new CEO.
A Competitive Arena
Considering the North American farm tractor market may be the most competitive segment of ag equipment in which to expand, Rehor says he’s well aware of what he’s stepped into.
Prior to his appointment as the head of McCormick USA, Rehor spent the last 14 years of his career working for Case IH and AGCO.
“I found my way into the U.S. Air Force in the early 1980s, served for about 8 years and left the air force to go into the defense industry and worked in the Washington D.C. area about 5 years in the National Security Division of Batelle, and Batelle Memorial Institute. I feel the military background and its discipline prepared me for a leadership role,” he says.
In 1996, he joined Case IH as the program manager for its AFS or Advanced Farming Systems group as it launched yield monitors, application control systems, site-specific farming and GPS technologies, and worked out the company’s Burr Ridge, Ill., engineering and testing center.
“Using my technical background I literally learned the industry from the ground up,” Rehor says.
He joined AGCO in 2007, where he worked in the area of business improvement. “This is what really prepared me for my role with McCormick because I worked across sales, marketing, transportation, got involved in pricing, organizational development, working capital management, and all the things that are wrapped around this business,” Rehor says.
He became CEO of McCormick in late May 2010.
At a ‘Crossroads’
Rehor says that McCormick USA is at a crossroads. The brand, which is owned by the Morra family of Italy, was re-introduced into the U.S. market 10 years ago. “This business is all about what happens once the customer takes delivery of that tractor. Are you going to be there with parts and service? Are you going to help them with operations, are you going to answer their questions, are you going to have their back? For the decade of the 2000s, McCormick hasn’t focused on that area as much as we should have,” Rehor says.
“After a few months on the job, I’ve come to the conclusion that we have an opportunity to do a better job as a business partner with our dealers and with supporting our tractors after the sale.”
What evolved from his initial assessment is that the company needed to “walk in the shoes” of its dealers and their customers.
“If we do that, if we understand that when a tractor’s down and that time is money to the farmer, and if we don’t get that part to him in a timely manner, that we’re now costing him money. And it’s also the pressure of not getting crops planted within the window of optimum yield, and I don’t want our company to be responsible for that. And the only way that we’re going to solve this, and the way we’re going to be acting going forward, is to make sure we continually walk in the shoes of our dealers and their customers, and that’s really what this is all about — walking in their shoes from the first step.”
Rehor says that the conviction to “walk in their shoes” must be companywide. He says that the accounting office must understand what a territory manager feels when he’s explaining to an owner-principal why his account hasn’t been updated in a timely manner. And if they understand how that impacts the territory manager’s ability to sell tractors and otherwise support their dealer, they’ll be more responsive to their needs.
For example, Rehor says if the marketing people understand how the quality and timeliness of the product literature they produce and the depth of information they provide impacts the company’s ability to sell tractors, they’ll view their responsibilities differently. If they understand that, they’re going to do a better job.
“Most importantly for me, if I need to understand what our dealers and their customers, our employees and industry partners expect from us, then I can better act on behalf of the whole family that surrounds McCormick as a tractor company.”
High Expectations for Dealers
With his experience with Case IH and AGCO, Rehor understands the unique pressures of vying for market share in the highly competitive farm tractor market. Nonetheless, he believes that given the right products and support, McCormick dealers have the opportunity to succeed with the brand, even if it isn’t a dealer’s primary tractor line.
“This is a different business, this is a special business, and I’m looking for dealers with a history of success selling ‘new’ tractors. This to me is a business imperative,” Rehor says. “I emphasize ‘new’ because it’s a whole different business than selling used tractors or being a service center.
“Even if you’ve had success selling related equipment, if you don’t know what it’s like to plant corn in the spring when you’ve got a narrow planting window, if you don’t know something about agronomy, crop science, commodity prices, or if you don’t know how to service the tractor that passes through your dealership, you’re not the type of dealer we’re looking for.”
McCormick dealers don’t necessarily need to carry just the McCormick brand, according to Rehor. Only 20-25% of its dealers currently carry McCormick tractors exclusively.
“As a matter of fact, I believe this industry is large enough that there’s enough business to go around. We respect our competitors. We respect our dealers’ desire to add partners that give them the full range of products to meet their customers’ needs. And even if there’s a direct product overlap, smart dealers know that it’s good to have two partners because they keep each other honest. So frankly, going forward, I see us as being a very strong second, or maybe even the first tractor OEM in a dealership,” he says.
“We realize we’re in a multi-brand environment right now, and this gets back to my point of walking in the dealers’ shoes and being the better business partner. If we’re the company that consistently get parts delivered on time, with solid technical information, and if we walk in the shoes of that dealer, they are naturally going to buy more of our product than from our competitor.
Rehor adds, “I didn’t need to go to business school to figure this out. There’s room in this business for everybody, and if we do the right things, our dealers will gravitate toward our brand.”
First Things First
The new CEO believes that, first and most important, his company must improve on its responsiveness to its customers. No more hiding behind voice mails or e-mails.
To demonstrate that and reinforce its commitment to customer service, Rehor says, McCormick is implementing a new system to handle inquiries, comments and complaints called “Ask Cyrus.” It’s named after the company’s founder and agricultural pioneer, Cyrus McCormick.
McCormick USA’s new CEO, Doug Rehor, believes the company’s new dealer/customer inquiry system called “Ask Cyrus” in itself will transform the way company interacts with and responds to its dealers on every problem or question they have.
Ask Cyrus was developed to not only stress responsiveness to customer inquiries but to add accountability and personalized service for the dealer and other customers.
In a typical scenario, a dealer would go to the dealer portal on McCormick’s system to inquire about payment on a warranty claim that’s past due. He logs on to Ask Cyrus, clicks on a drop-down menu and selects the appropriate topic, which includes warranty administration, sales, marketing, parts, service, bookkeeping, etc.
In this case, they select “warranty” and “not happy with the timeliness of the credit.”
“The real beauty of this system,” say Rehor, “is once he hits send, he sees a photograph of the person at McCormick who’s responsible for solving his problem. He’s given the person’s name, e-mail address, phone number, and a date by which he’ll get a definitive answer. The clock is ticking.
“On top of this, he also sees my picture, which lets him know that I know about his problem or question, and who at McCormick is responsible for resolving it. So the individual who has to fix it, the department head and the CEO of the company all understand that this dealer has a problem that we need to solve,” he says.
Rehor believes that that Ask Cyrus in itself will transform the way McCormick interacts with and responds to its dealers on every problem or question they have. “You know as well as I do, if you know someone’s looking over your shoulder and you’ve got the responsibility to do something, you’re going to act, particularly when the boss is aware of it. It personalizes the whole process.”
What the Dealers Say
McCormick currently has 250 dealers in 47 states, and Rehor isn’t looking to add many more, at least for now. He says he needs to devote his time toward building and improving the company’s relationship with his current dealers.
“We’ve got lots of dealers that are doing an outstanding job that aren’t necessarily going to be selling a 100, 300, 500 tractors a year for us. We’re small and there’s room for small dealers in our world. I would much rather have dealers who can sell 10 tractors a year and do it with quality backup moreso than dealers selling in volume but not backing up our equipment. I don’t have a predetermined notion about how big the dealers are or how many is optimum. We’ll expand the number of dealers when the time is right.”
In his initial meetings with McCormick dealers, they told him, “You’re saying the right things, Doug. We want you to be successful. We believe you’re sincere.” But they also told him, “We’ve heard it all before.
“What they really want to know,” Rehor says, “is whether or not ownership is committed to the market, and are they going to let me run the business. I told them, ‘Yes. The Morra family agreed that there is a different way to run the business, and they’re going to let me run the business the way I think it needs to be run.’ I appreciate their support with that.”
Specialized Tractors, Specialized Markets
Rehor says one particular market that he and Kurt Schenck, the company’s new vice president of marketing and product management, believe aligns well with the brand and where McCormick can make an impact is with targeted rural lifestyle segments.
“There are literally a thousand and one uses for a compact tractor. Frankly, if we look at the traditional strength of our larger competitors, it’s farming, and compacts are a very small part of their product portfolios. On the other hand, small tractors are very important to us, so we’re going to look at a variety of applications that would be considered non-traditional for us,” he says.
Hunting and hunters are a good example of a non-traditional market for McCormick tractors. “If someone thinks that this is a limited kind of market, the fact is there’s an awful lot of hunters out there. So, now think about a tractor available in a habitat-building configuration. We believe there are enough guys out there who would like to know that there’s a company focused on that specialty,” says Rehor.
To pursue a market like this, he says they’ll seek out web sites and other sources where hunters look for information and like to hang out. They’ll seek partnerships with them to educate hunters about specialized tractors and how to use them.
“These types of customers are looking at tractors but don’t know much about them. They just know that they’ve got a fellow hunter who’s got one, likes it and they’d like to get into that game. So take applications like hunting and spread them across all of the different applications out there.”
Of course, McCormick won’t ignore its traditional markets, but intends to spread its reach into other markets and create configurations that match what different customers want.
“If you think about McCormick and our size and focus, this is the area of the business we can make a sea change in our performance and establish ourselves as specialists in specialized rural lifestyle configurations,” says Rehor. “The only way to appeal to these types of customers is to offer something that matches their individual needs. This is the kind of identity we’re aiming for with the rural lifestyle segment of our business.”
McCormick’s Rightful Place
After just a few months on the job, McCormick’s new CEO believes the company is pointed in the right direction, and being “big” isn’t where it’s heading.
“I really think we’re heading toward our rightful place in the industry,” Rehor says. “We have a strong brand. We make great tractors. We don’t want to be the biggest, that’s not what we’re all about. But if we walk in the shoes of our dealers, their customers and our fellow employees, and if we understand what everybody expects from each other, we’ll become the best tractor company in the U.S. We will have a very strong argument for that. That’s where we’re going.”
McCormick Rolls Out Newest Utility Tractors at Farm Progress
Doug Rehor is enthusiastic about McCormick USA’s first major product launch since taking over as the firm’s CEO in late May.
“We’re showing our new T-Max tractor. It’s a utility tractor, it’s in the 83-102 engine horsepower range that’s available in both platform and a cab versions,” he says.
“The way I look at the T-Max is it’s a high quality, productive, efficient tractor that has the expected features and content to do any number of chores around the farm, from light tillage, loader applications, or you can put a backhoe on it. We see it as filling an important slot, designed for the U.S. market. It’s something that our dealers have been asking for and we’re proudly launching it here at Farm Progress.
According to Kurt Schenck, McCormick USA’s vice president of marketing and product management, the heart of the T-MAX Series is the 4-cylinder Perkins 1104D Tier 3-compliant diesel engine. An innovative design allows the air and fuel to mix at the greatest possible extent to help ensure better combustion and efficiency, resulting in higher power and torque backup with reduced running costs. The T 90 MAX features a turbocharged 83-horsepower engine while the T 100 MAX and T110 MAX (92.5 and 102 horsepower respectively) use a turbocharged after-cooled engine.
Power Shuttle Transmission. The company says that it’s built a lot of additional flexibility into its newest tractor model. These include a power shuttle transmission that provides 36 forward and 12 reverse speeds and allows the operator to change direction (forward to reverse) via a lever integrated into the steering column, without using the clutch pedal. The power shuttle transmission is also equipped with a de-clutch system, allowing the operator to change mechanical gears simply by depressing a button placed on the gearshift lever without using the clutch pedal. A factory-installed creeper is available, which expands the transmission to 48 forward and 16 reverse speeds.
More Hydraulic & Lift Power. The hydraulic circuit provides a total flow of 21.7 gpm and offers up to 4 auxiliary spool valves. Operators can control 2 of the valves using control levers integrated in the console on the driver’s right-hand side. Joysticks provide control to the other 2 valves for loader operation. This versatility allows the operator to work with a variety of implements, helping to increase overall productivity. With a lift capacity of 9,590 pounds and draft control function on the lower links, the T-MAX Series can handle demanding farm implement requirements.
Axle & PTO Options. Customers can choose between a 2WD and 4WD front axle with optimum ground clearance. The 4WD front axle features electro-hydraulic engagement and offers a 55-degree steering angle for maneuverability in confined spaces.
A 540 or 1000 rpm PTO is standard on the T-MAX Series. The wet-disc clutch, operated by push button, engages smoothly and progressively to ensure operator comfort as well as long life operation of the PTO driveline. Ground speed PTO is also available as a factory-installed option and is ideal for spraying and seeding applications.
