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Dive Brief:

  • CNH Industrial has confirmed that agriculture will be treated as a core business, directly overseen by the CEO. This decision is part of a series of leadership adjustments implemented by the company during this transitional period.

  • Garrit Marx, who assumed the CEO position in July, stated during his initial earnings call that his main focus will be on the agriculture sector. He also mentioned that the construction division will operate somewhat independently within CNH.

  • This shift in management follows the exit of Derek Neilson, who led CNH’s agriculture division, and aligns with Marx’s broader strategy announced on August 1, which restructures the leadership team, increasing its size from 11 to 16 members.

Dive Insight:

As CNH reports a challenging second quarter marked by declining sales and high inventory levels, the new CEO is taking decisive steps to reestablish the importance of its agriculture division.

“We must acknowledge that agriculture is and will continue to be our foundational sector,” remarked Marx.

In this quarter, agriculture net sales reached $3.9 billion, representing a 20% decrease compared to the previous year, largely due to falling commodity prices and sluggish retail demand for tractors. The company has reduced production rates by 30% this year and plans to continue this trend with a 25% reduction moving forward.

With both agriculture and construction sales declining, CNH is focusing on cost optimization throughout 2024. Marx mentioned that the company aims to decrease dealer inventory by approximately $1 billion by year-end and is collaborating with dealers to facilitate the sale of used equipment.

Marx will also proceed with a transformation plan initiated by former CEO Scott Wine, which included layoffs across the organization. However, Marx is reversing some of Wine’s structural changes by restoring regional and support roles to report directly to the CEO once again.

While the restructuring team consists of current members, it introduces key positions, including chief quality and customer advocacy officer as well as chief sustainability officer, which will be taken on by Chun Woytera, CNH’s President of Asia Pacific.

Looking forward, CNH anticipates a sales decline of 15-20% in 2024 compared to last year due to adverse market conditions affecting margins and cash flows more than initially projected. This marks the second downward revision of its sales forecast for the year.

Tough economic conditions in farming are impacting agricultural equipment manufacturers, prompting many to cut back on expenses or realign their operations. Recently, Deere began notifying its

salaried workforce

after eliminating nearly 1,800 factory and office positions throughout the year.

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