BIRMINGHAM, Ala. (DTN) -- DTN/Progressive Farmer spoke earlier this week with Scott W. Wine, CEO of CNH Industrial N.V. and an executive director on the company's board of directors.
We talked to him about the constraints of supply chains CNH -- and every other equipment manufacturer -- is managing its way through this year, about CNH's recent purchase of Raven Industries, parts availability for farmers and about right-to-repair.
Wine said he spends much of his time dealing with parts and materials issues -- he pointed to the Case-IH combine plant in Grand Island, Nebraska, as one example of where CNH is encountering parts issues. There, he said, "hundreds" of combines are built, but not finished due to parts shortages. In another instance, CNH had been airfreighting engine blocks from Brazil to Italy to keep tractor production lines operating.
Here are 12 questions DTN/Progressive Farmer posed to Wine and his responses:
DTN/PF: Scott, thank you for your time today. What is your outlook for the next several months at CNH Industrial, on the agriculture side, Case-IH and New Holland?
SCOTT WINE: We feel good about everything except the supply chain and that is really where I spend the vast majority of my time seeing if we can find new and different and better ways to solve supply chain challenges.
DTN/PF: Would you talk more about supply chains? That seems to be vexing every manufacturer.
WINE: As you know, in early 2020, everybody underinvested, and then demand surged. Raw materials became constrained, and you've got problems with ports and shipping. I think that very fast snapback in market demand across so many sectors at the same time just put tremendous strain on the supply chain, and that affected everything from steel and aluminum to tires. In the semiconductor space that the automotive guys have been dealing with, (that is impacting) the heavy equipment sector. It will be solved. It's just going to take some time for capacity and capability to ramp up to meet current demand.
DTN/PF: Regarding parts and repairs to farmers, what have been your processes in that effort?
WINE: If you speak to anyone who says parts aren't hard to find, you ought to check their pulse because they're not living in reality. In some cases (Case, New Holland), are forward deploying parts so they're more ready for customers in the middle of a harvest season; we're allocating parts from our factory and getting them to customers. One thing we're doing -- and we always try to avoid doing it, but now there's really no choice -- is we build things short of parts. At Grand Island, (Nebraska) where (our) combine plant is, we've got hundreds of combines that are built but unfinished because we don't have all the parts for them. We normally don't do that. But because demand is so high, if we lose the capacity, we'll never catch up. We do that in order to best serve our customers. Keeping our farmers and construction customers at the forefront of our decision making, that is driving us.
DTN/PF: Has CNH found any workaround, new ways to secure parts and materials?
WINE: We are literally leaving no stone unturned to find ways to build and ship products to our customers. There were five or six months this year where we were airfreighting engine blocks from Brazil to Italy to build tractors. We were paying 20 times (the normal price) for semiconductors just so we can continue to build (product). In Malaysia where a lot of the chip and chip assembly work is done, (plants were) taken down because of severe COVID outbreaks. (But) I'm really pleased and impressed with the work that (our) team is doing to manage through it.
DTN/PF: You were in the Navy, graduated from the Naval Academy and worked in Naval supply. Does anything you learned in from those days carry over to today?
WINE: One thing that I learned when I was a supply officer is (what's called a) 'Message to Garcia.' It meant that whatever it takes, you will get the parts to keep the ship operating. No matter what job I have now, I'm not too big or too important to (not) be expediting parts. I've been on regular calls with some of our key suppliers, and I've made trips to see suppliers because that's my role. Parts supply hasn't changed much in the 30 years since I was in the Navy.
DTN/PF: Let's shift to CNH's purchase of Raven Industries. That was a big technology buy. How will you incorporate it -- and its technology talents -- into CNH, especially Case-IH and New Holland?
WINE: We were Raven's largest customer. We knew them well. The (CNH) board has challenged me to ensure that we are not just competitive but at the forefront of technology (in) our ag businesses. We all felt like we could do that better and faster if we own Raven. (Raven President and CEO) Dan Rykhus has built a very strong team. Their technology is really good, (and) what they're doing with autonomy is impressive. We're really encouraged by what we can do together.
DTN/PF: What do you think is going to come from that purchase in say -- you pick the time frame -- say in two or three years?
WINE: We should be able to give (our customers) the best precision solutions in the market. That starts with precision technology. Ultimately, we will move into autonomous technology. Raven will become our tech hub -- Sioux Falls, South Dakota, (where Raven lives) is going to be the tech hub of CNH Industrial.
DTN/PF: What demand do you anticipate for autonomous farming operations?
WINE: I think, for small farmers, I think it's going to be awhile because they enjoy driving their tractors. When we go out west, into Montana, up into Canada, those farmers would take it right now if we had it. (They've got) 11 combines running at one time, and they (would) just (rather) have one guy be the lead and everything else follow. Lack of labor and the need for autonomy will dictate that we move there faster than people think.
DTN/PF: Scott, where does CNH sit on right-to-repair?
WINE: We certainly believe in giving our customers the best value that they can possibly get. And if that means that they're on the farm in northern Wyoming and they want to be able to repair (their machinery), we would certainly welcome that. (But) safety is paramount, both in the repair itself and then for the person operating that machine afterwards. And we want to make sure that all of the care that we've taken to build the machine the right way, the warranty is not disrupted. We believe in the right to repair; we just want to make sure it's done the right way.
DTN/PF: How do you make that division, between the guy who wants or needs to make his own repairs and your concern about the repair of that engine, those pollution controls, those kinds of things, aren't affected?
WINE: I spent a few years at different companies before I came here. And, you know, one of the things that we did is we just took most every aspect of repairing our vehicles and put it on YouTube so that customers could figure out how to do work the right way. If they bought a part online, (a) video would come with it. This can be done. It's just takes a concerted effort.
DTN/PF: Is this something CNH is looking at?
WINE: I'd be surprised if we don't.
DTN/PF: Let me ask you about one of those other companies you worked for. You were chairman and CEO of Polaris Inc., manufacturer of off-road vehicles, electric cars, motorcycles, snowmobiles and boats. What did you take away from Polaris that you brought to CNH?
WINE: Well, you know, success in power sports (is) really based on three factors -- product, brand and distribution -- and being great at all three. And, guess what? Winning at CNH Industrial is going to be all about getting the best products, the best distribution and leveraging our brands in the best possible way. That's part of the reason that I took the job is because it was so familiar to me in that regard.
Dan Miller can be reached at firstname.lastname@example.org
Follow him on Twitter @DMillerPF
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