CNH completes re-structuring with second worldwide brand

CNH, which is owned largely by Fiat, is to merge all its brands, apart from Case, into a second, global full-liner under the brand name, New Holland. This means that the Fiat Kobelco, Kobelco, O&K and New Holland Construction brands will disappear in Europe and many parts of the world.

Kobelco branded excavators will still be available in North America and Asia Pacific, through Kobelco's own networks, and also in some territories where negotiations are currently underway with Kobelco dealers with contracts still to run (Republic of Ireland for example).

The New Holland development will not affect the existing relationship between Case and its excavator specialist, Sumitomo.

The announcement of the New Holland initiative was made in Rome, Italy, at the end of January by Mr Harold Boyanovsky, president of CNH's Construction Equipment Business and recently appointed interim CEO.

In setting the scene for the announcement, Mr Boyanovsky said, “Right now our total volumes are running at around 55,000 units and Case accounts for half the sales, while the other half is fought over by five regional names. Important locally, but not all known around the globe.”

“Over the past two years”, he added, “we have invested in extensive analysis of our business model and conducted the deepest and widest market research project ever carried out by CNH Construction Equipment. The analysis of the business model demonstrated that there was considerable room to improve our brand strategy.”

Mr Boyanovsky described the multi-brand and distribution strategy adopted by CNH since the merger in 1999 as a “post-merger business necessity to preserve the established sales revenues, the dealer and customer base and market positions, while implementing the common platform strategy and all the restructuring initiatives.”

But, as CNH's recently appointed interim CEO added, the business needed to be restructured in order to expand it further. While mentioning current trends in globalisation, the increase in mergers, acquisitions and technology alliances and the global used equipment market, Mr Boyanovsky made it clear that “international construction companies definitely prefer a global machinery supplier for all the advantages of a global presence. Standard international configurations are more and more accepted over the national or regional specifications.”

According to CNH, its analysis of the sales and marketing systems led to the dual brand conclusion. As Mr Boyanovsky put it, the dual brand approach “unifies five regional dealer and customer heritages into a second strong, global full line brand, it strengthens our European and Latin American dealer networks and it allows us to redirect our existing investment and resources in these markets to realize our objectives of growth. It may seem simple, but bigger is better, clarity clears away doubts… there is no question that a global full line brand that unites all the history of our five brands is the solution for us today.”

With the exception of the E805, which is built in Japan, the heavy line tracked excavators are made in New Holland Kobelco Machinery's production plant in Imola, near Turn, Italy. Wheeled excavators are produced in Berlin, Germany, wheeled loaders and crawler dozers are made in Lecce, Italy. The grader range comes from Berlin.

In the compact line, the skid steers are built in Wichita, USA, and the backhoe loaders are made in Imola. Currently all but three of the mini excavator range is made in Japan – the three are made in Imola – but eventually it is likely that full range production will be shifted to Italy. The midi excavator range is produced from Imola while the midi wheeled excavators come from Berlin, as do the compact wheeled loaders. New Holland's telehandler range is produced in Lecce, Italy.

But why did CNH opt for the New Holland name over all the others? In many parts of Europe, for example, the brand is not immediately associated with construction equipment and there is certainly regional loyalty to some of the brands that are to be axed.

Having said that, as CNH is keen to point out, “New Holland's worldwide agricultural sales volumes exceed the combined volumes of Caterpillar, Komatsu and Bobcat”, and the New Holland name “is clearly the most recognisable name within the brand family.” (The brand name will be the same for both the agricultural and construction equipment businesses. Around 66% of CNH's turnover comes from the ‘ag’ sector, 29% from construction equipment and around 5% from financing).

So, why didn't CNH take the dual brand approach at the time of the original Case – New Holland merger in 1999? According to Mr Boyanovsky “The rationalisation process needed time and had to take into account many market situations. It has been especially critical in Europe, where the dual brand distribution networks replace five existing networks.”

“In Latin America”, he added, “we are reducing brands from three to two with minimal implications for our dealer network. In North America, we will continue with the current brand distribution network and product offering, which, as in Europe, includes our partnership with Kobelco.”

New Holland excavators sold in Europe will carry a New Holland Kobelco logo on the body and doors.

European Market

The impact of the New Holland move will certainly be most felt in Europe where the number of dealers is being slashed from around 300 to 180 (not including Case dealers). According to Piero Maritano, president of Construction Equipment in Europe, the retained dealers were selected on a number of factors: commitment to the strategy, technical and commercial competency, territorial coverage and financial solidity.

It was also confirmed that the new dual brand structure will not change the way New Holland views the rental sector. “From a rental point of view, New Holland is not looking to get into rental directly, but it will actively support any of its dealers which wish to enter the market”. (This will most likely be financial support through CNH Finance).

The first public showings of the New Holland brand will be at the SMOPyC exhibition in Zaragosa, Spain, ConExpo in Las Vegas, USA, and Samoter in Verona, Italy.