New Holland N.V.
New Holland N.V.
Incorporated : 1991 as N.H. Geotech
Employees : 18,619
Sales : US$5.55 billion (1996)
Stock Exchanges: New York
SICs: 3523 Farm Machinery & Equipment; 3524 Lawn
& Garden Tractors; 3531 Construction Machinery &
New Holland N.V. is one of the world’s leading manufacturers and distributors of agricultural equipment and a major producer of construction equipment. The company is the market leader in Europe and many parts of Latin America and Asia and ranks third in the North American tractor market. New Holland was formed through the 1991 merger of Fiat Geotech S.p.A. and Ford New Holland, Inc., both of which had grown into industry giants over nearly a century of product and sales expansion and timely acquisitions. Fiat Geotech S.p.A. continues to hold a 69 percent ownership interest in New Holland, having sold the other 31 percent in a 1996 initial public offering. New Holland currently operates 18 production sites in 24 countries, as well as 13 engineering centers around the world. More than 1.5 million New Holland machines are now engaged in agricultural and industrial work somewhere on Earth.
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 incomeplummeted, 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, self-tying hay baler. The baler, invented by local thresherman Ed Nolt, was an instant hit among farmers. It almost single-handedly put New Holland back on solid footing. In fact, the company has continued to manufacture updated models of the baler ever since.
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 high-quality 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, a period that saw Tenneco, the parent company of the J.I. Case tractor and farm implement operation, take over the farm implement business of 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 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.
The mission: To be a customer-driven organization, flexible, agile and innovative, with our people, dealers, suppliers and partners working together with pride to be the best globally positioned company in the agricultural and industrial equipment business. This is New Holland’s mission —the mission of a truly global company, present around the world through its production plants, research and development centers, industrial and commercial joint ventures, and worldwide dealer network. New Holland offers one of the widest, most flexible ranges of agricultural machinery and industrial equipment. This outstanding commitment stems directly from its worldwide industrial and design skills, and a market approach which begins and ends with the customers.
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 are 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. The company is determined to continue developing new products designed to meet the ever-changing needs expressed by its dealers and customers.
FiatAllis Latino Americana Ltda (Brazil); FiatAllis North America, Inc.; Fiat Finance U.A.A., Inc.; New Holland Australia Pty Ltd.; New Holland Belgium N.V.; New Holland Deutschland GmbH (Germany); New Holland France S.A.; New Holland Braud S.A. (France); New Holland Canada Ltd.; New Holland Credit Company LLC; New Holland Danmark A/S; New Holland España S.A. (Spain); New Holland Factoring S.p.A. (Italy); New Holland Finance (France); New Holland Italia S.p.A.; New Holland Holding Ltd. (U.K.); New Holland Latino Americana Ltda (Brazil); New Holland Ltd. (U.K.); New Holland Mauritius Ltd.; New Holland North America, Inc. (USA); Holland Tractors (India) Private Ltd.; New Holland Tractor Ltd. (U.K. and Belgium); New Holland Trade N.V. (Netherlands); New Holland UK Ltd.; New Holland Logistics S.p.A. (Italy; 80%); Fiat-Hitachi Excavators S.p.A. (Italy; 57%); Fiat-Hitachi Excavators Belgium S.A. (57%); Fiat-Hitachi Excavators France S.A. (57%).
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Nesbitt, Scott, “Ford, Fiat Merger Brings Speculation,” Implement & Tractor, September 1990, p. 1.
“New Holland Grows As Global Leader,” Lancaster (PA) Sunday News, March 23, 1997, p. 32.
“New Holland Marks 100th Anniversary,” Implement & Tractor, May-June 1995, p. 26.
Osenga, Mike, “A Look at New Holland’s New Tractors,” Diesel Progress, July 1997, p. 10.
Sturani, Maria, “Fiat’s Offering of New Holland Shares Expected to Swell Coffers by $1 Billion,” Wall Street Journal, November 4, 1996, p. Bll.
—Robert R. Jacobson