Q&A: Martin Richenhagen, AGCO CEO

Longtime AGCO CEO Martin Richenhagen has announced he will retire at the end of this year. Eric Hansotia currently serves as the company's senior vice president and chief operating officer. He will take Richenhagen's place effective January 1, 2021.

• READ MORE: Q&A:Eric Hansotia

Prior to his role at AGCO, Richenhagen worked for many years in the steel and heavy equipment industries. Recently, he sat down with Successful Farming for an exclusive interview reflecting on his 16 years with AGCO.

SF: Give us a snapshot of what AGCO looked like when you joined.

MR: When I joined the company, the company's top line was something like between $3 billion and $3.5 billion. Earnings were around $1 per share. The stock price was more or less between $8 and $10. There was no dividend, no credit rating, no investor relations. There were about 60 different IT systems. There were a lot of acquisitions, but no postmerger integration, so it was basically a puzzle.

I liked the opportunity because together, with a great team which I built myself, we could basically make it a real company.

SF: What was the new product that farmers were most excited about when you joined in 2004?

MR: There were not too many products that farmers were excited about because we had 26 brands at the time and the company had not invested in research and development. The technology was somewhat dated, and the quality was not very good. We had a lot to do in order to get where we are today.

SF: Highlight the changes that have happened in the last 16 years.

MR: When I started, I first traveled around, visited all the factories, and talked to a lot of people. I always asked the same question, "What are you expecting from me?" Everyone was expecting a strategy. With a small, cross-functional, international team of less than 12, we basically developed a strategy, which we then rolled out.

One thing is to have a strategy, the other thing is to make things happen. We had a portfolio of about 70 strategic initiatives. We held some internal strategic consulting, and from there we basically were in a position to grow the business.

In a good year, we should be at $10 billion, when the market is there. Our stock price does very well. Even now, we are about $65 to $70, depending on the day. We were at $80 before the coronavirus crisis. We've paid a dividend for many years now. We have a credit rating. We are a Fortune 300 company.

When it comes to product, our peers would agree that we are the technology market leader in conventional wheeled tractors with Fendt and also in tracked tractors, which are now branded Fendt. We have a super advanced planter called Momentum. It's so state-of-the-art, we basically acquired a small company that helped us close that gap. We have a very good line of hay and forage products, globally.

We are a market leader in many countries like Brazil, Argentina, and many European countries. In China we have a strong position. In India we are No. 2. That means overall, we are doing very well.

SF: How has the U.S. market changed for AGCO over the last 16 years?

MR: First of all, we reduced the number of brands. In America, we are operating mainly with three brands – Massey Ferguson, Fendt, and Challenger. Challenger is basically the brand for the Caterpillar dealers.

As a next step, we invested a lot of money in research and development in order to get the product where we wanted it to be. We want to be perceived as the No. 1 in quality, which is difficult. It's an ongoing thing you always have to work at every day with your people.

We reduced the number of dealers. We had, by far, too many dealers and very small dealers, which diluted the franchise value for the stronger ones. Now we have a pretty good dealer network.

SF: In the U.S. and globally, COVID-19 has disrupted supply chains and canceled large events. How has this specifically impacted AGCO?

MR: I think we did much better than our peers. We reacted very quickly. I came back from Europe in late January and saw things coming. We immediately stopped all international traveling. We also decided that all office jobs work from home, which has worked well. Even today, I'm here in my home office.

We have 25,000 people, and only a few people got sick, but not in our operations.

We immediately focused on reorganizing our supply chain. We had to shut down certain factories because the local governments required that in Germany, Italy, Finland, and France. We were in a position to run all factories at capacity in the United States and in South America. We hope that we can continue to do so we can catch up.

The demand is good, therefore, I'm optimistic we can continue to deliver a strong year despite the crisis.

SF: As farmers look toward harvest, how can they expect to interact differently with AGCO or the dealer?

MR: We will support our farmers through parts, service, and of course through new equipment. Whoever needs a combine or tractor will get one from us.

SF: Should they expect social distancing measures or more virtual interaction with their dealers?

MR: We are already doing that now. The impressive thing is, through social media or video conferencing, we have even better contact and communication with our farmers than sometimes we had before. We also have our people still visiting with social distancing, face masks, and things like that.

Inside AGCO we do testing for free. Different than some of our political leaders, we believe in face masks, and we believe we shouldn't be in big meetings.

SF: Looking beyond the pandemic, what is the next big thing for AGCO?

MR: We hope we can continue to grow our Fendt business here in the United States. We certainly want to gain market share in the combine business with the Ideal combine. We have some nice product launches in front of us. We'll invest as much money as in any other year in research and development, which is about 4% to 5% of our sales. I think next year we will be in a position to grow our top line again.

SF: What sort of advice would you have for young leaders of companies who are going through this global pandemic?

MR: Whether we face a pandemic or not, I believe it is important to be willing and prepared to learn. I am in a lifetime learning mode. I never was shy asking questions. I always wanted to learn something new.

What is very important here in America, because it is a weakness of our educational system, is to learn languages. I would strongly recommend not only to study agricultural engineering or business, but also to learn at least one language. The more languages you master, the better you can communicate. When you are managing a global company, that's very important.

SF: How many languages are you fluent in?

MR: I speak French better than English. My mother language is German. I speak Italian, and then I speak some languages nobody speaks anymore – Latin, historic Greek, and Hebrew. That comes from my initial studies. I became a high school professor before going into the industry.

SF: If you could write a letter to your younger self about what you've learned over your career, what would you say?

MR: My strongest belief is say what you think and do what you say. That's something I would write to myself as a young guy.

That's what I did, and it was not always easy. When you really say what you think, sometimes people disagree. But, I think it's important that you speak up, and that you offer solutions and implement those solutions.