Robert: I’m Robert J Ratliff I like to be known as Bob Ratliff and probably will be known more for founding AGCO Corporation located in Duluth Georgia. That’s the end of the story more than the beginning. I was born in Kansas and at a young age the family moved to Baltimore Maryland and that’s where I matriculated to Grammar school. I went to a unique high school that I want to mention and that’s Baltimore Polytechnic Institute it’s one of the oldest high schools for boys at the time I went there in the United States. It had a program whereby you could go either as an advanced student and enter MIT as a sophomore or as a regular college preparatory course you could go on to any university you wished.

Then it had a technical course that was terrific although you couldn’t go to college because you were missing a few of the basic courses, it prepared you for the businesses that supported the community, so it was a great school. A lot of my references go back to that school. At the university I wasn’t the best student, I found that there were opportunities to involve myself in activities I’d never done before. That one might even say leadership activities because I was a member of a fraternity, they made me participate in the student activity the politics of the student government which I would never have done prior to that.

Because basically my interests were sports and I didn’t think that was really the big thing. As a result I found out that while I didn’t really enjoy being a political entity on the university campus, I really enjoyed running the campaign and I became the campaign manager for about three years and really had fun learning a lot of intricate pieces of campus politics on a small time scale. Now but that just was probably changing my personality a little bit from being a little more introverted to somebody who was a little bit more extroverted. As such it opened me up to opportunities I hadn’t even thought about.

I left school in the middle of my program and went into the air force my objective was to be a pilot I was admitted to flight school in the US air force at the time. This was a period of the Korean War. Unfortunately the war ended while I was in training and I know that isn’t the kind of unfortunate thing you want to talk about. My objective was to be a pilot and immediately the budgets were cut and so was school so I wound up my military services and enlisted me in. for the balance of my enlistment which is a period of time I gave more credit to than almost anything else I’ve done. It exposed me to guys from all over the country all walks of life, all levels of education and commitment and religious faith.

As such I just listened and learned from my associates about the rest of the country which I hadn’t been exposed to. That gave me a better perspective I think of the work place and the market if you will later on as to the variety of interests that people have. After the service I went back to school and finished my college education and graduated in what would be called industrial

engineering. I started out in electrical engineering but changed to industrial engineering. Upon graduation didn’t follow that which I think is another story somebody ought to talk about some day is that even though everybody asked you what you were going to be, most people don’t know. It’s something that they are going to learn as they go on and get a job and begin to find out what they want to do.

I was employed initially by International Harvestry Company in about 1957 and as a management trainee. That meant the typical things you could imagine getting coffee and organizing meetings and things that really didn’t seem to motivational for me. Nevertheless stuck with it and finally worked my way up to be a retail salesman. Which again put me in the public environment of trying to convert an idea to people. It was exciting, it was frustrating and you lived on commission so you better get good at it or you didn’t have any money. From that I was promoted to what was called a zone manager and then moved out to tell dealers how to run their business.

Which was quite interesting since I had never run anything like that and I learned more from those dealers than I ever taught them. They were really the early if you will role models that I had for doing business. I began to realize the challenges that they had most of them were from mom and pop type backgrounds, stores that really were dependent upon their own efforts nobody helped them. It was a tremendous experience and then I worked my way up through various jobs at International Harvester in the truck group not in farm equipment and that will become more significant later. As a management trainee as long as you did things properly and you were challenged and you met those challenges you got recognized and you were given new opportunities.

One of the more significant ones that I’d share with you is that I was sent to Rochester New York to manage the company owned dealership. It had lost money for 13 years and the managers prior to that had all been fired so I wasn’t feeling too good about that as to whether it was a promotion of recognition or my death sentences. I studied the situation and I think applied the determination you had even from sports that I had to win the game. As such tried to rally the people that were there towards the same goals that we had to make this business successful. That being measured by profitability not how much but just profitability. We laid out a three year plan and my biggest sales job was to convince upper management that they give me three years and they finally did.

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Although it was difficult for them to hold still for that long I think one of the first major achievements I made in business was to make that business profitable in three years. As I look back on it, it really had a lot of the ingredients of good planning, sticking to the plan in spite of a lot of difficulties and even lack of confidence and people finally would say to you about whether you were going to make it or not but we did. When you have wins that you can put in your pocket, they are almost like another degree in college. You can fall back on that and say I did that and that’s something that I’m proud of and I don’t need to talk about it. I know what I did and it worked.

From there they promote you to a bigger branch and I went to Washington DC which exposed me to a lot of the business that goes on with the government and this was already a profitable place. My job there was make it bigger and we did. That that led to a position that I hadn’t expected. Whenever I got a job it was like put your head down, work as hard as you can to achieve at least what you were asked to do and if you could do more than that that was fine. The next thing you’ll be challenged to move some place else and start over again. That was okay because I loved the challenge I think if you are successful people keep throwing new challenges at you and that’s the kind of thing that I’ve fed of off.

Because I didn’t really believe a lot of the noise that it couldn’t be done. My dad had always pounded into my head don’t ever use the word can't and I learned not t use it except in this kind of a presentation. I was then asked to go to a general management training program that the company put on in Chicago Illinois. Which lasted a year and a half and through that learned all about the company and all of its other facets of industry. They had other divisions such as farm equipment, construction equipment, finance and so forth as well as a credit company. That was quite an opportunity to get a broad level of hands on experience and we worked on all those different areas through that 18 months.

Which then sent me back out into the field and I went to New York City. Working in New York City was unique in the sense that I’d always said it’s a place I didn't want to work and I would only share with you that’s probably a bad thing to ever say to anyone because that’s where you’ll end up. In New York City you get the test and my first test there was managing over 19 company owned operations like dealerships and the union that was very strong the teamsters and their influence on those businesses. How you had to get along with them or you weren't in business. It was another experience and I guess as I look back now at the rest of my career as well, it’s one experience on top of another that if you

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put it away in your pocket you keep it, you remember it you use it for other circumstances.

I began to build what I call my little post office box, I don’t know what it’s like in the post office today but in the old days when I used to work there at Christmas time to make some extra money, it was a homeless of little boxes on the wall and you put the letters in whichever box they went. I used that same mental image about people, when I met someone and if they reminded me of someone else I put them in the box with the other person. I could keep an image or a reference or a reflection that they were similar. I began to fill my little post office box in the sense that it made my acquaintanceship move a lot faster. If I met somebody and they reminded me of a person that I knew, then I treated them a little bit like I would have treated that person.

It multiplied the speed with which we became friends or acquaintances or business relationships, New York City was a great place to do that. From there I became manager of all fleet sales in the northeastern part of the United States. That meant dealing with major companies at the top level. These were companies that would buy multiple numbers of trucks like a Hertz or a [Penski 00:12:59] or something of that nature which would buy thousands of trucks a year. We moved in to a very high level of purchasing and relationships that extended not just in the northeast but all over the country because most of these companies were all over the country.

After a period of that I was given the opportunity to run or to manage the whole southeastern part of the United States in all of its facets whether it was retail business through those company owned business. Or our business through our dealer distribution networks or the fleet sales. I was pretty young at that point I really moved a lot faster than I had anticipated and I think it’s appropriate to go back a moment and share something that taught me a lesson. When I was back in Rochester which was pretty depressing that first couple of years. The company used to send out a bulletin every month as to how you ranked with all the other 250 operations in the country.

Obviously we ranked last because it had lost money for so long we were really on the bottom. Every time I got that bulletin every month I’d rip it open to see where we were and we were always on the bottom. I was frustrated with the fact that I couldn’t seem to get off the bottom. A fellow gave me some good advice he said, “Why don’t you throw that thing in the trash and forget about it

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and some day everybody will see where you are and you won't have to look.” I seized to try to measure myself against everybody else but to measure myself against me, what did I expect what were my goals. I kept that with me for a long time I think it’s kind of a way to establish your own objectives and not lose sight or focus of where you are heading.

Back in the southeast my offices were in Atlanta Georgia and I got exposed to the good life if you will and unfortunately I think the company knew that because I didn’t get to stay here very long. I had the opportunity to change things and put in new ideas on a regional basis that were products of other experiences that I had had and to build some new methods of doing business. That led me to moving to Chicago to the upper management of the group. That was a rude awakening from the way International developed its people. I went from managing a major portion of the United States to personnel and I was in charge of personnel. Which was a rather stuffy job that didn’t really motivate me to highly but they also threw in business strategy.

That was something I could really get my arms around but the company frequently moved you back and forth and staff to line to give you perspective and it was a good idea, it did do that. In that situation I made some new acquaintances of people that I’ve long respected and really have added to my experiences in many, many ways. We not only had the opportunity to work with just the truck group but now we had the opportunity because we were in the same building to work with corporate management about all kinds of other activities. I can remember I have to share a story with you that was quite humorous. One of the ideas I had tried in Atlanta was to develop what was called a used truck center.

This may not mean anything to anybody but you know whenever you sell a car or a truck you take a trade in type of thing. The trade in is money it’s value and if you don’t treat it right you didn’t make a very good deal on the front end. We had developed in Atlanta a different approach, we made it a business center. The used truck center manager bought the trade in from the salesmen. The salesmen couldn’t make a deal until he had sold it to that manager so the used truck center manager had control of his cost. He could recondition it, he had control of his added value and then he had control of the sales price and he managed the deals. He had a business model all of his own whereas before it was like everybody’s burden and nobody paid attention.

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We turned the whole business around and began to make much more money than we had ever made before. When I got to Chicago I brought that idea several ideas but that was one. That everybody kind of looked at and said oh that sounds horrible was non traditional. I was frustrated trying to get in from personnel you really couldn’t develop those kinds of things. As opportunity would have it one day I was made manager of the United States the sales and marketing effort and we put it in. We put those used truck centers all over the United States and it worked so well. We had made very big profits with it and a fellow came to my office one day who I had known in the corporate level. He was a corporate accountant and he said we have a serious problem with the books here in the truck group.

You’ve done something wrong we’ve got to straighten it out and I couldn’t imagine what it was. He said I said, “What can we do?” He says, “Well you’ve got this huge profits in trucks it’s fouled up my entire tax program because he had been using the losses for tax advantages in other words. It was the kind of thing that allowed you to understand then that sometimes you do things that don’t make a lot of sense because they are being handled in another way. Actually as you can imagine that if we could make money at it well we didn’t worry about the tax part of it. After they audited everything and realized that it was not a bad idea that it was an accepted program. It gave me the opportunity and I worked for a very, very fine person who … and I think it’s critical that you get those opportunities.

A person that gave me a lot of latitude to try things to innovate. Fortunately most fortunately I was still pretty young on the totem pole of experience or age in the business. My entire staff was older than I was they were the guys that had brought me along, they were the guys that had taught me many business issues and theories of how to deal with situations. They had disciplined me from time to time and I respected them so much and when it turned around and I was their boss, I didn’t worry for a moment. We worked together like you wouldn’t believe and we changed the entire phase of that division of the company into one of the most profitable divisions they ever had.

The story goes on at an international in there a lot of things I could reflect upon that are important in my development. I think it’s appropriate at this point to say International Harvester ran into a problem at the end of the ‘70s they had a major strike. When they came out of the strike everyone should remember for posterity sake that prime rate was over 22%. We couldn’t borrow money

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effectively we were in real trouble and the company had to go through a liquidation of different divisions. It was traditionally a farm equipment company it was started by Cyrus Hall McCormick who invented the reaper. It had a history of the industrial revolution that undoubtedly was one of the major blue chip companies for many, many years 150 years old.

It really got devastated and they had to sell off the construction equipment and the farm equipment business and kept the truck business because it was the most profitable. It still exists today it’s called International Trucks and it’s a great company and I owe almost everything I ever learned in business to the experiences I had there. That’s a very important part of my career success or experience is what I got there. I can't leave that by just saying I had experiences I mean they instituted in me a work ethic. I may have had good ethics but they didn’t understand work ethic. You could be fired at International Harvester for making a mistake on your expense report of one penny, it didn’t matter.

You learn you don’t make those kinds of mistakes and you could go out and give away $100,000 in a business transaction but don’t misplace a penny. There was a level of understanding of what was right, what was important and what wasn’t. I share another little story which probably most people wouldn’t pay much attention to. Because I was athletic in my youth and felt that supports were very, very important and I wasn’t possessed with great athletic ability I had to make up for it somehow. I tried to stay in good shape, I never smoked and I never drank all the way through college and the military. That’s me, nobody forced me to do that, nobody made me do that but I believe that that was important if I had to make up for any other shortcoming I had.

Having said that I was worried when I went to work in major corporate world that if you didn’t drink and have a long lunch with martinis and so forth you’d never make it. I thought I’ll never make it because I don’t do that that didn’t matter. Corporate life made it possible for anybody to succeed and participate you didn’t have to take on their social status the way they wanted to live. That never became a problem for me and I respected them for that. That isn’t to say I never had a drink I learned how after that but I just wanted to point out that it was at a time in the late ‘50s that that might have been an issue. I thought it would be it wasn’t. I think it’s important to also say that while I was at International it was an inbred company all of the people were developed up from the ranks.

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You had to go through to be there so the people you worked with had had similar experiences although in different geographic locations. They gave me the opportunity to go overseas and work in all kinds of things because the truck group was worldwide. I was responsible for the global activities of the company. It allowed me to go in and begin to make friends and acquaintances in Europe, Germany, Spain, England and so forth with different companies that were competitors and so forth to see how they operated. I was responsible for business activities in South Africa, Venezuela, Mexico, the Philippines, Australia and so forth around the country. We had joint ventures in India so I became at the behest of the company their representative in the truck business around the world.

Which later on became an experience that helped me with other things that I did. In contrast to today’s professors who promote that you should have seven different jobs before you will find what you should be doing, I had one and I worked there for 20 something years. Until a situation came along that was quite unusual and I want to share it with you because I think as someone listens to this, they might think well this guy never had a problem it just went real easy. As I look back I don’t remember the tough issues but there were some tough ones. This one is very significant. The company as I said had gone through this divestiture period and the company was shrinking and it was a very difficult time. It was questionable whether the company would make it or there would be any survivor of the company.

As you can expect in corporate life the chairman was let go and the chief operating officer was let go and they started changing people because basically we were in the hands of the banks. We were trying to work out the financial structures of the company. Monday the temporary chairman called me and said to me I know you I’ve worked with you for a long time but I’ve got to tell you something and it’s important. We are going to have a new chief executive officer of the company and that would be corporate and we’ve got four people that we’ve identified for this job and you are number four. I didn't know whether to sing or sink I mean it was the three ahead of me I know all these guys who could this be. He told me who the other three were and they were good guys at least I knew them well.

I said, “Okay if that’s your decision I have to live with that your corporate wisdom is that’s what you want to do will you do me a favor.” He said, “What?” I said, “It’s unlikely that number is ever going to be the CEO so at this point in my

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life I’d like to retire early and go find something else to do.” He said, “Well you are eligible you aren’t old enough yet and I was actually 54 and at 55 you could get an early retirement and I said well that’s what I’m asking.” A couple of weeks he came back he says yes I’ve talked to everybody you can retire early and then when you are 55 you’ll retire and we’ll start and I left International Harvester. It was a very tough thing for me to do tougher than he knew. My dad had worked there for 35 years I never crossed corners with him he was in the finance part of the company and didn’t have any activity directly with him.

If at that point I could say to you when I was 54 years old they had fed me, they had clothed me, they had educated me I was really quite indebted to what they had done for me and I left, it was very tough. I became the president of the Uniroyal Tire Company in Detroit and I learned another piece of the corporate world, completely different. A completely different environment and how important the environment was but I didn’t even realize how good it was when I was in it and how bad it could be if no one cared about it. The kind of if you will ethics that existed in other companies. We would step out of our way at International Harvester to do the right thing and at Uniroyal they would step out of the way to do the wrong thing.

It was almost a complete opposite. I don’t want to be too critical of that company and its management core because I learned again you can learn more sometimes from a bad situation than a good one. While I was there I learned about multiple brands, most people don’t realize but if you are in the tire business you can make hundreds of brands of tires. It’s a very small process to change the plate on the side wall and change the name. We at Uniroyal we made probably 100 different brands. It’s okay the point was with multiple brands you could increase your manufacturing volume and have a multitude of positions in the market place for different profit structures to meet the competition.

As such that became something I thought was quite unique if you knew how to manage that and later on I got a chance to apply that. There are also other challenges that Uniroyal that were very important. One was that this corporation had taken all of the burden of their unfunded pension which included other divisions and placed it on the tire division. I had all the unfunded pension and my objective was eliminated. To do that we had to make significant profits that had never been reached before but that’s the goals we set and we did it again within about three years. The moment and I want to clarify something most people again just don’t catch on.

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While we were an unfunded pension company, our stock languished it wasn’t worth anything because we had this living porcupine there which was called unfunded pension. Nobody figured we’d ever pay that off so that the value of the company could not really be realized. The moment we cleared that hurdle and paid off that pension that fund the stock got all crazy and we had a guy that is pretty famous now by the name of Carl Icahn manage a take over or he decided to take over the company because now it was worth something. The senior management of the company the board became very adamant that he wouldn’t do that and they weren't going to pay him green mail and a lot of other strategies that went into it.

As a result Uniroyal made a financial decision to liquidate the company and the benefits went to some of the shareholders more importantly some investment speculators at the closing. I won't go into all the details of that but I exercised my exit and decided that I had gone about as far as that business was going to go and look for a new opportunity. I did a few what I’d call industry things in the automotive industry for a period of time until the phone rang one day. An individual asked if I was available to work for someone and I said sure I’m always available and he said well … he was a head hunter from Chicago and he had brought me people from time to time when I was with International.

He recognized that I was available so he said I’d like you to have an interview with a company that’s a German company and perhaps you can help them out. I met with the executives of a company by the name of Klockner-Humboldt-Deutz for ease we called it KHD. They were from Cologne Germany and a few years earlier they had purchased the farm equipment division of Allis-Chalmers and I have to go back in the history books a little bit to find information on Allis-Chalmers. Prior to the ‘80s it also had a huge history for over 100 years in American industry a product again of the industrial revolution. Among their divisions not only was farm equipment but construction equipment and electronics.

Electronics most people didn’t realize how big they were but I invite you to go to Hoover Dam just outside of Las Vegas and you’ll find about 23 huge Allis-Chalmers generators that operate all of that electrical output for the Nevada and the Southern California Valley. Certainly they were big but they had gotten into severe trouble also in the early ‘80s and began to sell off their different divisions electronics went to Siemens and the construction equipment went to Fiat we may come back to that later. Then the farm equipment they sold to KHD of

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Germany in about 1985. When the German company purchased that business, it was an opportune time for foreign companies to participate in the US market because of the exchange.

The German company felt that this was going to be really easy because the exchange was so favorable in other words they could bring their product in rather cheaply and they could sell it through the Allis-Chalmers distribution this would be a win-win situation. As a result they didn’t need the Allis-Chalmers factories so we could shut those down and close them up, tear them down and they did. An unusual thing happened which most companies don’t have any control over is the exchange reversed course and it became that the German company was higher in price. Therefore did not have a structural price advantage in the North American market.

Speaker 2: The Germans were losing this time I think this one …

Speaker 3: Yeah scratch it.

Robert: The German company had the disadvantage now of a higher price and so the business was not as lucrative as their purchase had anticipated. Instead of making money the new venture which was called Deutz-Allis began to lose great sums of money. At the time I was contacted in 1988 they had just finished a year losing $80 million on $300 million of sales. It was beginning to adversely affect the parent company as you can imagine. They were looking for someone to do a turn around in the traditional way at least from their perspective break even. They didn’t care whether they made money anymore it was just stop the losses. Since I wasn’t doing anything at the time and looking for another challenge, I accepted the job as president of Deutz-Allis.

At this point I think it’s important to share that I had never worked in farm equipment but I had worked with a dealer distribution system very effectively at International Harvester and at Uniroyal. That was not strange to me and an area I really enjoyed anyway. I also went out at this point and asked two colleagues that had worked with me both at International Harvester and at Uniroyal to come and join me. I didn’t know anyone at this company and the challenges were quite significant. I think it’s fair to say that a company in trouble will stay in trouble because all kinds of things begin to compound the situation unless they just can erase everything and start over.

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Because at that level of lose they were in a very severe disarray. There were no real polices and procedures being followed anymore it was desperation for almost anything. Among the employees a considerable amount of fear that the company would not survive so it was an interesting challenge. I want to point out for a moment that it was quite interesting for me to visit their offices and they are located in West Dallas Wisconsin right outside of Milwaukee. It was the typical old corporate building; my office was in the fifth floor and you couldn’t get there unless you had a key to the elevator that allowed you to get there. There were only five people that worked on the fifth floor and my office was big enough to have a ball.

I was lost in this office and it included an apartment I could have lived right there. Talk about mahogany walls they had spent lavish amounts of money all over the place. I was astounded with seeing tradition that I had read about in textbooks that was still there. I think I could tell you so many funny stories that went on but to give you an idea of the level of desperation. I wrote down some ideas and they were being sent to the head of marketing and I asked my secretary to type this message up and get it to him. She said, “There is no point in doing this.” I said, “Why not?” She said, “Well we’ve tried all these things they didn’t work.”

Even at her level she was sure there were no solutions. I called a meeting one day and asked the certain managers to come to the boardroom and we were going to discuss the assets of the company. Well the first problem was most of them had never been to the fifth floor. They didn’t know how to get there and they didn’t have a key on the elevator. It became a real turmoil to get all these people it was only about 10 of them to the fifth floor which I could not believe. I was just astounded at these policies and traditional things that had existed in that old company. When I got them there I said okay we need to really hone in on the assets and see what we can get rid off that we don’t need.

What assets do we have? We asked the controller who obviously should have known and he said we own this building we are in. I said, “Well that’s good now that’s a start what else?” He didn’t know and I was really upset in the sense that that should have been something easily identifiable. We set them a task for a week to come back, find all the assets and come back and I have to share with you that the other two fellas that I brought to the company we had moved to Milwaukee and we lived in an apartment together. It was a three bedroom

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apartment where at night we could pull together over a pizza and decide what was going on because we couldn’t figure out this company.

It was kind of the odd group if you will but we worked that day and night. We would make our list at night of what we would do the next day and then the next night we would review that and find out where there were opportunities. I had gone there in December and by about … by the way I had to go back to Cologne every month and report on our success which was not very pleasant. Because after the first month I was just as bad as the guy that lost 80 million because that was my business. You can't keep blaming it on somebody else you are responsible for it but we were able to identify a lot of things that we could do. It was in very traditional business terms no mirrors, no magic nothing out of the ordinary just down and dirty basics.

For instance one day I decided I would visit one of the other floors. I went down about I just got off the elevator and I didn’t know where I was and walked up to some girl and said hi and introduced myself and I’m the president of the company. She says, “No you are not,” and I said, “Yeah I really am.” She said, “No you couldn’t be.” I said, “Why can't I be?” She said, “I’ve been here 20 years I’ve never seen the president.” You began to get a flavor that the management and the people really weren't in the same boat together and so I wandered around introducing myself and meeting people and it was astounding that they just weren't tuned in. it wasn’t their fault they just hadn’t had that invitation or opportunity.

I was looking for the guy who gave away discounts a dealer would call in and say I have a tractor for sale and I’ve got somebody that will buy it but he won't pay that kind of money I need a $2,000 discount, under cost. Somebody would authorize it they had to we knew we were losing money somebody I said, “Who do they call?” It took forever and I personally wandered around trying to find this person who I eventually found. It was a nice young man who had only been with the company about a year and a half sitting back in a corner and he got the phone call and he wasn’t the authority he was the record keeper. Because they would say I need 2,000 he’d say okay and he write it down and say okay and it was done.

There was no control whatsoever on the transactions I mean it was just basic stuff. We tried to change that and alter it to some degree and it was quite difficult. There was tremendous resentment to everybody not us necessarily

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because we were new but the attitude to us was good try but you aren’t going to make it which caused us more determination. I finally realized that this was a difficult task to try to change and although there may have been methods that could have worked in a longer approach, we didn’t have time. We said we were moving and we went out and decide where we would go. I went back to Germany and said I’ve got to move and of course that was the last thing they had thought about and said why would you be moving.

I said, “Because we can't get it there the environment, the morale, everything that’s involved there is just not going to be conducive to a turnaround. At this point you don’t got much more to lose so we are going to move and they allowed me to move. I picked out Atlanta Georgia for the reason I remembered it was pretty good back when I was there in the ‘70s. Not only that it had a workforce that wanted to work, it had a lower cost structure for a business. It had good transportation and certainly and environment that was positive. Whereby in Milwaukee no matter what you did you had to go to Chicago or people didn’t want to go to Milwaukee, people didn’t want to go there to get a job.

It was not a good spot by the time I got there in the late ‘80s. We moved to Atlanta in June of 1989 with 35 people out of 250, a very sad decision but there were only 35 people that we took to Atlanta the others were terminated. We began all over again simple straightforward processes and all of a sudden it started to look better. By August when I went to Cologne for my meeting my boss who was a wonderful person said to me, you may make it. I said, “But you hired us for we are trying.” He began to say, “There is a possibility.” I said, “Just keep that until we get there.” I guess you can go through life and work your head off, do a lot of good things and probably say you know I never had any luck. Luck I guess does play a part in life and you have to recognize that sometimes you make your own luck by what you do.

You wouldn’t be in a situation or you wouldn’t have gotten to this point if you hadn’t had a little luck that came afterwards. In October of 1989 something happened that was extremely significant in my life. Mr. Gorbachev tore down the wall and changed Europe back to a republic type of environment. If you think about what he did it’s overwhelming in the sense of the tension that had been created prior to that and the political unrest that was in Europe. Obviously when he did this the Germans went literary crazy. They could reunite with Eastern Germany and the history books will show that they opened the doors and

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actually gave them money to come in and be part of a unified Germany. Well as this is going on the company that I’m working for is a German company.

They got so excited with this change in the demographics of the political scene. They called me quickly and said we have a special … we want to meet you we are going to buy you dinner and I knew something was wrong when they said they were going to buy my dinner. We were invited to dinner on the river in a beautiful setting and my boss said you know I think you might make a profit before the year is over. This was the first year and I said well it’s possible we are still coming. He said well we have an interest in doing something different and I said, “What would that be?” He said, “Well we would like you to buy the company. He said we have such opportunity in Eastern Germany we don’t need that business in America anymore.”

Well they really didn’t need it at all they were trying to get rid of it and while I was throughout this whole year they were trying to sell it but there really wasn’t anyone standing up to buy a company that had lost the kind of money they had lost. He said, “I’d like you to buy it,” and he said, “Would you be interested?” I said, “I don’t really think so I’m 59 years old and to take on something like that I really don’t think that’s what I should be doing.” He said, “Well what if you did want to buy it,” and on it went I kept denying he kept offering that maybe it was something I should look at. Maybe my associates wanted to join me and I have referred to this as the godfather of dinner. Because it didn’t matter what I came up with he kept pursuing the situation.

Even to the point of saying well now if you were to buy it where would you get the money? Over in the United States we just go to the bank and borrow the money and he says okay which bank would you go to it kept rolling. Finally I said, “We better stop and I better go home and talk to my buddies that I work with.” I did and they all were quite surprised he had also indicated make an offer. We decided without much study that we’ll just make a wild offer and see what the lay of the land is. We offered them a very modest number modest in the sense that it was about 40 cents on the dollar for their business and he accepted immediately. Then I thought I didn’t go low enough you always look back at maybe you should have been a little more aggressive.

Then he said where are you going to get the money and well we’ll just go to the bank and one thing led to another and in 1989 in the fall of ’89 banks weren't lending any money anymore than they are … in the year 2009 it was very

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difficult. We tried everything, I went to every bank I never heard of, we made presentation after presentation and we could not get anyone to entertain our need. We then hired a very significant individual in my life to help us put this deal together and give us council as to how to buy a company and we’ll call it a management buy out. His name was George Hand and he is from Atlanta Georgia very significant individual and he would never … he just every morning started out with we will never give up, we’ll never give up.

It may take 12 nos but we’ll get it on the 13th round just keep going. Anyway with his assistance and perseverance one day we struck up the idea that this company held a lot of assets. In other words when we produced a tractor we shipped it to a dealer he owed us for it so we had a receivable. Those receivables were quite large and if we could sell the receivables their receivables and get money for it we’d had cash to pay for the company. George [Anula 00:57:05] the Westinghouse was starting up a finance company and we called Westinghouse. They were looking for business and they said sure we’ll buy your receivables at a pretty hefty discount but we’ll do that and we had a deal.

We sat down in June almost will that be June 1990 it took us quite a while and closed a transaction whereby we took their receivables, sold them to Westinghouse, received their cash and then turned around and used their cash to pay them for their business. We borrowed nothing and we put money in the bank. A transaction that was somewhat creative among our management group to get it to that point they were desperate to get out. We woke up on June 21st and owned a business. We had a partner a financial investor I would say a speculative investor who would only put about seven million in the company but nevertheless he gave us credibility. Certainly was always very supportive of our efforts as we went forward.

This system of buying the company with someone else’s receivables seemed to be quite interesting. Within the year we heard of another company that was for sale and they had receivables and we made an offer and we took their receivables and sold them to Westinghouse and bought that company. It was called [Hasten 00:59:04] one of the best farm equipment companies in United States Hasten Kansas. Soon there was another company called White Tractors and they had receivables and we just kept moving acquiring businesses that were in trouble they were the fall out of the ‘80s. They didn’t quite go bankrupt or go out of business but they got into trouble and it gave us a chance to start to assemble a complete business.

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Now there are some real pitfalls in life that you don’t always expect but if you remember earlier on the Germans were bringing the product from Germany the tractors and selling them in the United States. Their cost was extremely high so in the transaction of the purchase, I made as a stipulation commit to providing us tractors for the next three years which was going to cost them a little bit of money. They agreed but on Monday morning after our closing we received a telegram that the tractors were available the price had increased 80%. Obviously clear out of sight for us to purchase. Then we were in real trouble, we had no tractors this was the small tractors. The large tractors we actually bought from another company White and we bought the White company so we had large tractors.

Without any small tractor you are in real trouble because that’s bread butter type of the business. I asked one of my colleagues and I think this is the beginning of reinforcing the fact that you must surround yourself with very, very good people. Because nothing happens on your own watch you can't do it all and I asked one of my close associates and by the way just so that it all ties together you need to know that that point that’s 1990 almost 20 years earlier he was a used truck center manager for me in Atlanta Georgia. The relationship, loyalty, confidence and I asked him he was one of my partners in this venture. I asked him to go find a tractor that we could buy to sell and he said where and I said, “I don’t know where I have no idea but get out there and see what you can find.”

He took off around the world everywhere and he called me from different places what he had found. Interestingly enough we found a tractor in Italy that was the same color as ours. Not only that they made an air cooled engine which is what we used in the prior German tractor. They also had a different color tractor that was the same color as the white which we had bought. We made a transaction with these people and began to source tractors from Italy and we never bought another German tractor after the transaction. We had enough inventory that inventory we had gotten receivables on that we didn’t run out of tractors. We were able to just keep selling and we put ourselves in a business model of cash management.

We had no loan we didn’t borrow anything from the bank we just had to make cash and keep rolling. We continued to sell our receivables to Westinghouse and did so for about three more years. In those three years we were strictly cash management we never had a loan never borrowed from the bank. We were able to go public in the second year on NASDAQ and got on the exchange and was

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able to raise a little bit of money. Then a couple of years later we went on the New York Stock Exchange. The business transactions of AGCO which was the name we gave to this new business our story all in themselves. They were born out of necessity as usually is the case and a lot of creativity of a lot of good people.

Today AGCO has grown as your research could tell you to be over eight billion in sales and it’s been profitable every year since the day it started. I guess there are a lot of ways to reflect on that and think about the development of a corporation where in most of the parts were failures. They were either bankrupt, losing money, going to lose money or whatever and we kept putting things together that made for a good package. You have to also realize that in every acquisition we were always faced with the fact that 80% of acquisitions fail which doesn’t give you a very bright outlook for your success. Nonetheless if you study the business that you are acquiring in significant detail and assess values accurately, you can usually build a plan to make that a successful venture.

I believe in reflection that most of these acquisitions that failed are businesses that the buyer knew little about. You have to keep in mind that everybody we were acquiring was in the farm equipment business which is what we were in and we knew how it would assimilate with our distribution. In short order we had the opportunity to make a very big acquisition and that was the distribution of Massey Ferguson Tractors in North America. Massey Ferguson is a very old product heritage and had a good market share in the United States for a number of years and Canada. Fundamentally they were produced in England and France and we brought them into the United States. It was quite a big move for us so much so that I want to share a story with you that was quite significant.

We really didn’t go out and look for Massey Ferguson but it was an outgrowth of another effort. While we were growing we realized that there was money to be made in financing the tractor to the farmer. John Dear is quite successful one of the strongest elements of their company is their finance company we figured if they did that well maybe that’s what we should do. I said, “Well let’s find a finance company we can buy and we’ll get in the finance business.” They brought me several names of companies they had identified and one of them I called the first one I called. Got the owner and told him I wanted to buy his finance company introduced myself I didn’t know him he didn’t know me I think he thought I was a little bit crazy. Nevertheless he said, “You really want to buy the finance company?”

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I said, “Yes sir give us a good price we’ll see what we could do.” He said he’ll call me back and two weeks later he called me back and he said I’m sorry we’ve studied this and there is no way we can sell our finance company because we use it to finance our tractors. Then I said, “Well who in the world are you I didn't know you had tractors.” He told me he was the owner of Massey Ferguson and I said, “Well why don’t you sell me Massey Ferguson?” he said, “Are you serious?” I said, “Well if that’s what I got to do to get the finance company let’s talk.” He said, “I’ll call you back.” He called me back in two weeks and said, “Let’s talk,” and we bought Massey Ferguson and got the finance company.

The finance company was called Agrocredit and became a major portion of our company. More importantly it lead us to their source of money for a finance company they needed a good bank behind them. The bank that was their support was called Rabo Bank R-A-B-O Bank, it’s a Dutch bank. Today and as then the only AAA rated bank in the world a wonderful operation and we met them and became acquainted with them. Finally said you know maybe it’s time we began to act like other companies and created a loan structure and did away with these receivable, selling receivables and we did. It was 1994 and at the same time my friend now my friend at Massey Ferguson called up and said, “Would you like the manufacturing side of it in England and France?”

We went and bid on the business I think it’s important to share with you that this individual his name was Victor Rice also owned the Perkins Engine business. Perkins Engines made in England were in all Massey Ferguson tractors the small and medium sized ones. It was in his interest to make sure that he sold the Massey Ferguson tractor business that it had a success formula to continue to use his engines. We were not the low bidder or high bidder excuse me buying the tractors but he gave the business to us anyway. We got Massey Ferguson in the UK and France and became an international company kind of by 1994 four years later. It was around the 4th of July quite significant for us and this was a traditional old farm equipment company.

If you go back in the history of Massey Ferguson you’ll find that Mr. Ferguson was knighted by the queen this is traditional British, Massey was actually a Canadian and they put the company together many years before. Massey had developed the reaper not the reaper but the combine for harvesting wheat and Ferguson was the tractor guy and that’s how they got together. Ferguson by the way had a long history he also had made a very important transaction in his life to produce a tractor with Henry Ford and it was called the Fortson. It was a little

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gray they sold hundreds of thousands of them and he did that on a handshake with Henry. Henry according to Mr. Ferguson didn’t do quite right so Mr. Ferguson sued him and won against the handshake deal.

Kind of interesting business history which tells you a lot don’t always give up if you are right stick the course stay with it but we had a great heritage there. Certainly a good quality product, probably at that point the best we had. Again, we’re adding to this also implements and hay tools and other items. Well, now in the United States at this point we had several different brands. We had the Allis brand which was the old Allis Chalmers brand but we just called it Allis AGCO brand. Then we had a White brand and then we had a Massey brand and we thought … and then we had Hesston which was hay tools.

If we could strategically tie this together it would increase our business without major capital expense. We took the hay tools and made them into Massey Ferguson hay tools as well as Hesston. We did that by changing the paint. The product was the same so the technology was excellent and we were able to do that with a few other things. We also had a combine. The Gleaner combine was the only thing left over from Allis Chalmers that they actually had made. The Gleaner is the oldest self-propelled combine in the world and it was invented under Allis Chalmers many, many years ago.

A very famous name in combines and we still had that factory in Independence, Missouri. [Lorraine died 01:13:46] of course and most people know that Harry Truman was born and lived in Independence and he took his morning walks which was a tradition of his and he would frequently come by the factory, come in and say hallo to all the guys and go on, on a day’s walk. Again, a piece of history that I think gave us some strength and stability and heritage that we didn’t have because we were the young guys on the block really as AGCO.

AGCO became a holding company for these different brands but it was one company. Now, from there we began to look where there are other opportunities out there for us. A number of them come to mind, I’ll just kind of tick them off because we made nearly 20 acquisitions, they’re over 20 in a period of 15 years. We looked at Massey Ferguson in Brazil. Massey Ferguson had a number one market share in Brazil but it had been sold off to an individual. We went to see him and asked if he would sell his business.

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After some serious negotiations we purchased the Brazilian Massey Ferguson business. We now were able to ship products made of Brazil elsewhere and other products to Brazil. We began a cross shipment which helps diminish the negatives of foreign exchange. We took that equation out. We bought an old Deutsche business in Argentina and brought that in. We began to look around in Europe some more and finally it was an interesting stroke that I want to share this with you because all the best predictors of what’s going to happen often are pretty far off.

They only get locked in to the wrong story. One day we were contacted by KHD that things were so bad they wanted to sell their tractor business. This is the whole company. Basically, they only made tractors, engines and they did some installation work for foreign shipments in foreign countries in loading, unloading type system. They wanted to sell their farm equipment business, the tractors. We couldn’t help but be amused that here we were the foster child that got span off and now we’re back to the point where we could bid on buying that company.

We gave it our best effort. We worked at it hard and by that I mean we assessed everything we could. We tried to identify the advantages and the positives and so forth or disadvantages to make the proper price bid. We lost. It was devastating and when you work so hard and you lose. A competitor bought them which made it even sting a little bit more but I think there’s a point in life where you gain respect for doing things right. If you do things right, you stay the course. There’s somebody that takes care of you.

You’re not on your own. There are other things that happen and within a year I was told that there was another company in Germany that was for sale but it was a quiet situation. It was a company called Fendt F-E-N-D-T. Fendt is and was the number one technology tractor in the world. It would have been ideal to buy but no one thought they could get it but Mr. Fendt had died and it was in the control of his estate. Privately I threw contacts and this goes all the way back to my days of International Harvester and working in Europe.

I had the opportunity to finally sit down with him and discuss buying the company which was very difficult for them. Because, they were a traditional family owned German corporation. Quite successful. Interestingly enough, his children wanted nothing to do with the business. All they wanted were three things. They wanted us to keep the name, that was easy. They wanted us to try

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to keep the factory which was located in [Ober North 01:18:49], Bavaria in Germany and that was an old small town.

The whole town was employed by the factory and they just felt obligated to do that. Third, if we could give them a decent price they would appreciate it. No one knew about this sale. If we had, there would have been all kinds of competition. I want to share with you an exciting moment in our business that goes with this transaction. I needed money to buy. I needed about $270 million which at one time we couldn’t even discuss numbers like that but I went to rob a bank. I explained to them that I had to tell them then I had the money.

Our line of credit at that point was only $300 million and we only had 100 million that wasn’t being used so I needed an additional couple of hundred to cover me. He said, well when do you want to [inaudible 01:20:05]? Tomorrow. He said, well we can’t work that fast. This money that you have in your line of credit is held by 25 different banks. He said, I’ve got to go pull all of them to get approval to change the terms. I said I got to have it by tomorrow. He said, who is it you’re buying? He didn’t even ask that and I told him. He said, Deutsche company, Deutsche Bank and he immediately know the value of Fendt.

He said I’ll go to work on it and the next day he called me and said okay, this was a ridiculous request on your part and we know we’ve got to help you. What we’ve done is buy out the consortium. We didn’t pull them, we just bought it all out and we’ve changed your line of credit to a billion, go get it. That kind of support, that kind of business relationship doesn’t come by fighting and arguing. It comes by living up to your commitments. By doing the things you said you were going to do and our reputation at the bank was the most important thing we had in the company that we were going to always make sure we met our obligations.

I was astounded. We closed the deal. Fendt is the most profitable company AGCO has and will be long into the future. It is the highest tech tractor which may not mean much to someone who is not very familiar with tractors but they have won so many awards and medals and everything you can think of that is just unbelievable. As such, for a company that had started in all these various ways we had put together through the different acquisitions, the different major pieces of a good corporation. Fendt became the center of our engineering expertise.

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Today, much of the technology they developed, is now in the other products. We still have many, many brands and Fendt was continued as a brand. It’s number one in Germany. No one is close to it. It’s a very strong product and very profitable. I can only say to you that there were a few start up hick ups if you will walking into a German plant and you’re an American. I learned a couple of things and I think it’s the kind of thing that I should share because there are so many misconceptions about your Europeans and other countries.

As you can well imagine the Germans and the British don’t get along too well. If you didn’t imagine, the French and the British don’t get along too well. Just to make it complete, the French and the Germans don’t get along too well. When you’re trying to create a harmonious transaction among these people it is most difficult. What I learned was they may not like America but they respect us to the highest order. They will pay attention. They’re not loving in the sense that they’re going to reach out to you but once you earn your spur so to speak, there’s a lot of mutual respect for each other and our relationship there is second to none.

I cannot say enough about the way they handled their side and I think we did a pretty good job on our side of not trying to force our way to own them but mutually finding ways to work together. We’ve exported the Fendt tractor into many parts of the world. Generally speaking it doesn’t do too well because it’s so sophisticated and farming in most corners of the world is very unsophisticated. It’s way ahead of its time in some areas. It has technology that is now being used in cars and I have to share a story with you that is again the experiences I picked up.

When I was with International Harvester and in charge of their worldwide truck business, one of the companies that we did business with was in the Netherlands and it was called Daf D-A-F. We owned about 25% of the company so we had a corresponding relationship which was my responsibility. At the time, they were working on a technology for trucks called CVT, continuously variable transmission. They had tried it in cars, it didn’t work. Quite frankly it didn’t work in the trucks either and my role there was well why do you keep spending money on this thing that doesn’t work.

Mutually, they sold it to Volvo and that was the last I heard of it. When I got to Fendt, they said the greatest thing they had was a CVT and I thought this is ironic and because this is now 20 years later, 25 years later and here it’s being

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discussed. I wanted to see it and it worked. Mr. Fendt had figured out how to make it work. Mr. Fendt was an engineer and quite an engineer and had found a secret to the success of that transmission. Today, they’ve built well over a couple of 100,000 of them.

It is a major technology breakthrough and I think you’re going to hear more about it even in the future in other products because it is a fuel saving device as well as everything else. You don’t have to shift gears with it or anything like that. It seeks its own level and it controls the engine so you use less fuel. Very efficient, very successful. All ours, all belonging to AGCO. It’s an example of their technology leadership in many areas.

I’m going to divert my thoughts here for a moment to something else that kind of came to me over time. I mentioned about my post office box and I put things in boxes but one of my conclusions in trying to work with people is again to get over the humps as quickly as you can and get down to being friends or at least good straightforward business associates. I realize that we are products of our own environment and we should recognize that more frequently than we do. If I were to stereotype an accountant almost everybody would say, yep, I know what that is.

Or if I stereotypes a lawyer they might think, yeah I know what that is and we can stereotype manufacturing people. We can stereotype salesmen, we know those guys and engineers. They’re pretty easy to stereotype. You kind of get the idea what they’re after and if you broaden that a little bit, the stereotype isn’t far of. Allis Chalmers in its heyday was a very inventive company loaded with engineers. They just forgot to make money and went broke. As soon as International Harvester got in trouble and by the way the people running it were more sales people who didn’t know how to keep the money the banks took over.

Now, it was in real trouble. Now you’ve got financial people trying to manage a big corporation and you’ve got all these different mixes of, I’d say special attitudes or feelings or education. You have to blend those carefully as you work with people and sometimes they never blend. Sometimes you just have to make arrangements for them to get together. I’m relating that to staff functions where you have a board or a management group. If you look at the backgrounds it helps you understand where somebody is coming from.

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It doesn’t mean you’re wrong. They have a perspective that is borne out of their environment, just as yours is, whatever it is. The only one I of course, you’re going to expect me to give credit as being more broad than that is the marketing person. Because, I feel as though the marketing guy has to take all those others into consideration in the market place because he’s selling everybody not just certain people. In a business I have had a problem with the fact that in my career, period, we have created marketing.

Before it was sales and now there is a constant mix of somebody referring to sales as marketing or marketing as sales. I would be strong to say they’re different. They’re very different. Marketing should be strategy, marketing should be looking at the big picture. Marketing should be setting the objective, setting the cost, setting the prices, setting the advertisement. All of the support material that goes into getting the results and when I operated AGCO, I looked at the marketing guy as to what the profitability was because he set the price.

He bought the product. He told them what to build. I didn’t ask the salesman, I didn’t ask any of the others. Now, if manufacturing wasn’t getting their cost targets, there was another subject but nevertheless there was somebody who was looking at the big picture and it’s unfortunate these great divisions of strength in a corporation you did get a little isolationism. It’s not my fault, I didn’t do it and washed my hands whereas the marketing guy keeps bringing them back together because he is control.

I think that’s a business strategy that I began to romance with when International Harvester sent me to MIT for an executive program. I was there for well over half a year and had some of the greatest instructors I have ever even knew existed in business and so forth. It was the Sloan School that put it on and out of that began to see some of these pieces that I think are so critical in creating the business harmony you need to be successful. That doesn’t mean it always works but maybe it’s a leg up.

Back to the experiences of the career, I think there’s another area I would share while we’re talking about people and some of their differences. Having experienced the relationship with the board of directors of International Harvester in the early 70s which was, in the history books you’ll find maybe referred to as the good old boy system or you scratch my back; I’ll scratch yours. I think there was interlocking memberships on board and the board didn’t function as independently as individuals might have represented.

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They were all good friends. Certainly was the case at Unioil and I had made up my mind that this was something I wanted to avoid at AGCO. I went with great purpose to select and develop a board after time that we got started. That was certainly diverse that we had them from all walks of life. We had engineers, we had manufacturing, we had sales, we had lawyers, we had every kind of function you could think of from their backgrounds.

I thought that was going to be perfect. Perfection is a little more difficult than just putting a bunch of people in the room. As a matter of fact it was more like trying to lead a group of cats because they all had their own idea which way they were going and then often it was not the same direction. If you could manage the situation, you were in a tremendous position to draw upon all kinds of viewpoints and ideals or whatever that you could put together into a wonderful solution.

While we took a little longer and it may have stressed everybody on a few occasions, I look back that one of the better things we accomplished at AGCO was to develop a very independent diverse board of directors. You can understand that one year when I was contacted by CalPERS. CalPERS is the largest public pension fund, public employee pension fund in the country. The Californian employees’ pension fund and the impose themselves in a lot of places as the perfect shareholder and how all boards should be.

They called us to tell me that they didn’t believe we had equity on our board. We didn’t have minorities, we didn’t have women and so they wanted to see us before they would endorse our stock. I went to visit with them. One of the statements they made to me which was quite irritating was that our board surely was not very good because we didn’t pay them very much. I know that compensation is usually a significant way to determine quality and value but in our case our board was more dedicated to the job they had than just to monitor.

They didn’t really need the money and as such that was not the measure of their value. Irony always sets in and a couple of years later CalPERS almost imploded because of the too high pay they gave to their people. What comes around goes around I suppose. I talk about the board because here we are in 2009, a lot of corporate discussion going on has two things that are happening in public companies. I think boards should be made responsible. They’re the ones who approve all these things. They are the creation of any one person and yet they’re

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often ignored in the press or whatever. It’s always blamed on one person yet the whole board has been part of whatever the action taken was.

With the government involved in it, more and more in public companies, you begin to question what the role of the board is going to be and what priority do they have. They were really there to represent the shareholder. Are they still in that role or do they still have that authority? I think it has to be redefined. When I look back at what we had at AGCO I’m very proud of the way they handled themselves and it wasn’t easy.

I don’t mean to think it was. If I go back again now to our continued growth of AGCO after the major acquisition of Fendt there were several good ones but I’m going to just focus on two because some of them were not real large. I had always been a part of the fact that we used [part contingents 01:37:18] once I mentioned to you. Mr. [Rice 01:37:21] who owned that company sold it to Caterpillar. We ended up having to buy the engine from Caterpillar and that was fine, good relationship.

They’re an excellent supplier but each year the chairman would come by and say is everything okay and I’d say yes, he said thank you and he left. Each time I said everything’s okay except I would like to buy your farm equipment business and he would frown and suggest that it wasn’t for sale. Caterpillar who almost everyone knows is second to none in the construction equipment that entered into a truck tractor. They had made a farm tractor had trucks on it like their bulldozers. They had been in that business about 10 years, 15 years and they had not done well.

I knew they had lost money at it and it’s very difficult to get in the middle of an industry with one product and you’re not able to trade and so forth. Their dealers were not enamored with the idea although they kind of handled it. I kept asking and he kept saying, no we’re good friends but he said no and I kept asking. After a number of years he retired and then I started in on the next chairman. I think I had asked him a couple of times and finally he called me one day and he said, were you serious? Do you really want that farm equipment business?

I said yes, sir I sure do and he said, well if you can put a deal together in 30 years, it’s yours. I wasn’t quite ready for that but we quickly assembled our team and made an offer and was able to buy this product. We didn’t pay very much at all.

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We bought a factory. We bought a completely new set of technology for the next new model. We bought the existing production and the parts business that went with it and most importantly of all the things we wanted in the deal was access to their dealers.

You couldn’t get access to their dealers without them approving it and they weren’t going to approve anybody because they wanted the dealer just for themselves. Since they had previously promised their dealers that they had sold this farm tractor they couldn’t very well prohibit them from continuing. They gave us the authority to do that and we implemented in less than 45 days and an overwhelming strategy. We took all of our products that we made and created a complete new line called the challenger which is what this structure was called, that Caterpillar made.

It was called the challenger. Today, we have the challenger line of products. They’re all painted yellow like Caterpillar and they’re sold through Caterpillar dealers. A complete line being every size tractor, not just the one. We gave them everything. By the way it was a Massey painted yellow and it was a Gleaner Combine pained yellow and it was a Hesston hay tool painted yellow and a complete line. Some might laugh and question the judgment there but you have to accept the fact that we believe in our marketing strategy that you have to provide the product in the eyes of the customer, not in yourself.

We often get to enamored with our own name or our own brand or our own color. By the way color is very important in front of equipment. I mean it’s very important but if you recognize that as a customer, a farmer, the first thing you’re going to do when you need a product is go see your buddy. Whatever he sells, you’re likely to buy from your buddy because the farmer is looking maybe for extra financing terms or somebody that will come out on the fourth of July and fix his tractor so he doesn’t lose a day in the field.

Or, is up all night getting some repaired so to run the next day. That’s where he’s going to go. The product is not the first thing. It’s the dealer and the value of the dealer is over everything. Now, some will argue with me on that one but that’s something I think I’ve gathered over the years shouldn’t be misunderstood. If, and I’ll go back on another story in a moment about the value of that dealer and how he continues in the business regardless of what products he sells. We had all these different brands and the technology we introduced to the cat dealers of this full line we did that in about 45 days.

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We brought them into a meeting and they thought they were going to see one tractor and they saw this whole line and they signed up to be our dealers. It was a major breakthrough and gave us a tremendous distribution system, there is nothing like it. They were going to not so much deal with the little guy as the big guy. They were going to go after more the corporate farm which there are a lot of today that by bigger equipment and it was a different approach into that market. Unfortunately and sadly just before we introduced these products we lost our CEO and our VP of sales in a plane crash.

I only point that out because they were two of the founders with me. One of them had been one that had come from IH to Unioil all the way. There were only four of us so here half of our team was lost one day. It caused me to go back to work in the sense that I was moving more towards retirement as just the chairman of the company but I went back in to create a transition to a new CEO. The reaction of the employees which was unheard of I think was overwhelming.

Everybody pulled together in the sense that more than ever they had to show that these guys that were lost that we could do it. That they had been trained well, they knew how to do their job and support the ideas that they had presented. We had a great year that year in spite of that major tragedy which happened in January. I only mentioned that in the sense that there are a lot of companies who never recover from major tragedies and they end up foundering around and blame it more on the tragedy than themselves.

It’s more the discipline you have within yourself to remember that when you lose somebody like that or you have a major tragedy, whatever it might be the objectives didn’t change. If they were here we’d be doing them. You have to get everybody back on course and I could go on for a long time about both of these gentlemen but they were great friends of the dealers. That was our tradition. They were partners with the employees and respected and as such a tremendous tribute to the company and the model that we have.

I think you have to realize that we had a few philosophies in our company that were far acquired from Allis Chalmers. We were close to our employees everywhere. I made it a practice to answer my own phone, not my secretary. You didn’t get an answering machine, you got me and it became more humorous than critical because I never knew who was calling and I would, as an example one day a guy called and I said, Ratliff speaking what can I do for you?

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He said, well I’ve got a problem with my bailing machine. Well, I knew it was a Hesston customer and that’s the only one that made the bailers. At that moment I’m the president of the bailer company or the Hesston company and I said well, what can I do for you? Whatever it was I would direct the call to the guy to get it fixed because I sure couldn’t get it fixed. The funniest story was the day a call came in and I told them Ratliff speaking, what can I do for you? He says nothing and then I said, well who is this?

He told me and I said, well what can I do for you? He says nothing, I just want to see if you answer the phone. I heard you did and he said, I just checked to see if you were there. I said, well I’m there, where are you? He says, I’m in my Combine cutting wheat. The relationship you built with customers and dealers and employees because something that was expected and known throughout the country. I think you cannot buy that. That’s part of the experience. That’s part of the company that people got to know and I think it helped us become successful.

I would only say to you that after the Cat deal we moved strongly to develop the cat business. It cost us about $25 million to get in that business and the revenues were well over $500 million the last I heard. It’s global. We sell it to Cat dealers all over the world. It was a major acquisition. The one big one after that I think was my last acquisition. By the way for what it’s worth in most corporations when they make an acquisition, they hire an investment banker to go out and figure out what to do.

We never did that. I wouldn’t allow that to occur because unfortunately the investment banker didn’t have to run it after it was over. Here, I got your deal, now you try to run it. What we did was do our own. We had a team within the company of very qualified people that knew what to look at about five of us. We were going to love at a company to determine what was valuable, what isn’t, what we got to look out for. What’s the problem and come back and put it all together and say how much can we afford to go for this.

The last one was a company I had been trying to buy all along. I had been to Finland a few times because they had a good tractor business there that I thought would be fit for the Northern region of Europe and they were number one in that area. Trying to put the pieces together and it was owned by the government and we got very close. I thought we had it purchases but the union

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got a wind of that went to the congress of Finland and stopped the deal because it wasn’t a Finish company which is understandable.

Yet, we were very disappointed that we didn’t get it but I always kept it on the radar and kept watching and pretty soon what they did was the government sold it off to a private enterprise in Finland who was in elevators. I thought he doesn’t want the tractor business so I went to see him and I introduced myself and said, look we’d like to buy that tractor business you just bought. He said, well okay I think I’d sell that. He did accept, he did hire an investment banker to sell it and it ended up open for bids all over the world.

For the first time after making 20 something acquisitions we had serious acquisitions. Again, knowing what you’re buying is quite important. Obviously, the company was located in Finland. Obviously, their position was very strong in Finland and obviously that was what everybody thought we were going after. The bidding got a little reckless but nevertheless it got up to roughly a billion dollars and we bought it. We got it. Right away, the investment community was quick to say, you overpaid, what in the world have you done for this?

What they didn’t realize was also a part of this transaction was their division of this company that was in Brazil. They were number two in Brazil. Remember we were number one and with number two we had 60% of the market. Most people didn’t even know that they had a division in Brazil. It was quite good, quite strong. Some were worried that we wouldn’t get government approval. I wasn’t too worried about that. Brazilians are wonderful people and they’re very practical. If you explain that hey, we’re not getting rid of anybody’s job, we keep the brands.

Look at us, all over the world we got all these brands. You won’t know the difference but we will get some assembly of [inaudible 01:52:15] and engineering and things like that that make it a better product so we can export it. Now you get export credits and we got approval. Nevertheless that acquisition really took the company up another notch and we were very strong in Europe, very strong in South America. We have number one in South America all over the place. Actually, smaller here in the United States that in those areas of the world.

China is opening up but that’s still primitive and amazing that for a country that has so many people it’s agricultural program is in the dark ages. I have to share a story with you. You go after everything, you hear is the place to be so I went and

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met with the minister in China and said, how can I get here into your country? How can I build tractors here in China? He said all right, he would build the factory, he would bring the workers. All we had to do is bring the technology and train the workers and we can build the tractors right there.

This is easy. This was easier than anything and then I said, well now we’re going to need some dealers and he said what for? To sell the product. No, we’re going to export all of it. We don’t want it and I said but you’re farming with sticks and rakes and primitive things. He says yes and if I replace that we’ll have a riot that we can’t control. You’ll displace people with mechanization and we have a 25 year plan to get to mechanized farming. Not all the world is the same and sometimes we sit here in the United States and look out and think everybody is just like we are.

They aren’t and they have other problems and other issues. As you travel around the world, the one piece of advice I can give to anybody would be you have your own values here in the United States. Respect others’ values just as you respect your own and don’t push them on somebody else. If they want them, they’ll ask because when you push them you are the ugly American and you don’t want to be that if you’re going to do business with those people.

Along the way, I guess it’s worthwhile to mention a couple of other experiences that might be of value to someone. In Chicago when I worked at International Harvester I used to commute to the office on the Northwestern Railroad. I got on the train one day and sat down next to a guy who I knew worked at International. I wasn’t that familiar with him and we introduced ourselves to each other and he was the new corporate VP of marketing which I thought was a good step forward. I got acquainted with him a little bit and he was, in his new position he was working with the farm equipment division so I didn’t run into him very much.

One day after we kept riding the train back and forth and coincidentally sat down with each other he indicated to me, he says I’m having a terrible problem selling my idea to this other division. I said, why don’t you explain it to me, maybe I can tell you how to do that. When he explained it to me it sounded so good I wanted to try it and so I asked him to help me and he did. It was through his ideas that we were able to help make the truck group as profitable as it was because he gave us a different way to segment the markets in the profit boxes rather than share.

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This individual was Dr. Henry Claycamp and Henry had a very extensive background as a professor at MIT Stanford and Purdue. He really had credentials and he knew the real world and became a source of ideas and probably a tremendous resource is the best way I could put it for just dealing with problems and issues. We became very close friends from that ride on the train but I think you have to realizes that sometimes Academia doesn’t know how to maneuver in the corporate world as easily as they might in the university setting.

In this situation you need a little help. We went to work with him and learned that his ideas which he had created himself in a program he had developed were very, very profitable. As I started to indicated the company or our division it always went very strong in school buses. We had well over 50% of the market but as I learned when I got to the sufficient level to understand we lost money on all the school buses. You might wonder how could you do that but they are bid type businesses and you are bidding against the other guy and if your objective is to maintain market share, the price becomes relatively insignificant.

Unfortunately, if you go to the factory and watch how the trucks are built you’ll see that as the truck comes around on the production line there is no body that goes on a school bus. In other words, we don’t sell a cab in a hood. While that happens those guys just stand there while the bus slowly goes by. It’s a loss and you’re paying for the labor but nothing happens. In Henry’s equation he was able to show us that if we sold more dump truck we made more money. If we sold more of this, more of that and began to focus our advertising, our promotion and all of our sales effort into those profitable boxes.

A matrix type of approach that really became the salvation of our business. Obviously, with new found respect for Henry I dragged him along wherever I went and he was extremely helpful to me at Unioil and being able to pinpoint the opportunities and the ways that we were able to come up with the profits. Then most importantly when we started AGCO to help us organize our marketing management program that I mentioned to you earlier where marketing is the control unit. He sat on our board for a number of years and is in my own personal relationship probably more important in how I turned out than most people.

He has been a lifelong friend for 30 something years and as such you cannot say enough for having a mentor like that. A few other pieces I’d like to just let you know, as you can remember one of my lucky points in life was the fall of the

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Berlin Wall. One of my objectives in life was to thank Mr. [Gorbachev 01:59:53] and I got to do that. I met him through the bank. The Deutsche Bank got him so that I could speak to him and I have become very good friends with Mr. Gorbachev and met him on several occasions.

I did thank him on behalf of the world and then me too. Because, without his intervention in the political arena for what he did we would have never had our opportunity perhaps. The one other thing that I would mention to you is the situation that happened to me at one of the farm shows. A young reporter came up to me and introduced himself and said we want to get a story, would I comment and I was certainly in. He said, one of the things that I have observed in studying your career is you’ve been extremely lucky. How did you manage that?

At first I was a little taken aback because I never really appreciated that luck was the only thing that was going for me. Finally, I said well I’m going to tell you something and I hope you get it and that is this may be the luckiest moment in your life, right now. If you don’t do something with what I tell you it won’t matter; you won’t even remember it. It won’t be the right time at the right place because nothing will have taken place. It takes action on the part of the individual to make it the right time at the right place.

He stood there looking at me and he said, do you really believe that? I said, yeah I really believe that. He said, well I hope you’re right and off he went. I thought about it often that people just look at others and say, well they were lucky, they hit this or hit that but it isn’t really just the luck. If I weren’t at Deutsche Allis and the wall went down, nothing would have happened but I moved because somebody gave me an opportunity to buy that business. Yes, we’ll do it and so I think you have to be an activist with your career and not expect it to take care of itself.

You have to give it direction, you have to give it focus and then commitment and live by the rules. If you deviate and you get of course everybody knows it. It’s not a secret. Now there are other stories I could go into but I would only suggest that a great deal of intelligence and business comes from watching your competition. Not in an obsessive way or just to laugh at them if they make a mistake but granted what they do right and what they do wrong and assess it. I’ll give you a couple of examples.

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Along the way in the divestiture of companies when International Harvester sold this farm equipment to a Case company. It became Case IH. The chairman ad that time had figured it all out. The market share of Case and the market share of IH and it was bigger than John Dinger 02:03:18]. No, [inaudible 02:03:21] because he had it and then he made a fatal mistake. He bought the companies and said, we have too many dealers, let’s get rid of half of them and he closed half of the dealerships. One and one didn’t make two, one and one made one and a quarter. He never made it.

You have to understand your observations and if you make judgments, you better follow through on them and understand how they got there. I think there is another situation that you might recall from my experiences and that is that fellow that told me I was number four to be the CEO, he’s a big guy and I’m sure his job went really easy that day. Several years later I was checking into a hotel and he was standing right in front of me. I tapped him on the shoulder and said, how’s everything going?

He turned around and gave me the biggest hug you ever saw. He realized that just saying hey you’re not going to go this route didn’t stop me. I jut had to make some more decisions and get to the right place to do other things. I’ve had many people say, don’t you wish you had stayed at IH? Well, if I had boy would I have missed the trip. You have to be rational and open about opportunity and then move. You can’t sit and think about it and say well I did have that opportunity but I didn’t do anything. That’s not going to be very interesting.

I think that it’s probably worthwhile to summarize this in the sense that I started AGCO at age 59. I woke up one day when the board said, you’re 75, you’ll have to retire and I didn’t realize that there was a mandatory retirement program. I probably wrote it but I forgot about it and I said, okay that’s right. That’s what it said, I’m out of here and I was out in 30 days, I was out. To me that was a chapter that is never going to be forgotten. It’s something that I’m very proud of and at the same time, I’ve moved on because I’m not dead yet.

I think retirement is the opportunity to use all those experiences for other things that don’t have to be personal enrichment. It’s nice but that isn’t the total objective but you can share experience, share ideas and share thoughts with people that maybe make their judgments a little bit better. I’ve been pretty busy in retirement as well.

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Speaker 2: What have you been doing?

Robert: Well, one of the things that I got involved with was an individual was trying to invent a motor that was an alternative source of energy with drive power from magnets. It was an idea, he had worked on it for a while. I guess I got caught up in the idea as well and we supported his efforts for two or three years until it didn’t materialize. That didn’t mean it wasn’t a good effort and it didn’t mean that it was a wrong effort, it just didn’t materialize. It’s not the kind of thing you throw in the trash. You put it on the shelf and say there may be an answer to that yet.

That’s one of the things I have done for a few years. I went out and helped organize and found a community bank and became the chairman of the bank. At the time when I joined I thought banking was pretty easy. Since then it’s needed all the experience you can find to keep it solvent and afloat and just recently engineered a merger with another bank so that it will survive. Sometimes you do have to take detours and change direction but never lose sight of the objective. Make sure you’re in control of your own destiny and not in somebody else’s hands.

The third thing is I am a director of the museum of, National Museum of Patriotism and it’s something I have a warm feeling for in a sense that I think it’s a facility that has the ability to educate the public and most importantly children on the heritage we have of patriotism. It’s something that’s just passed down automatically but through the museum it becomes a venue that adults and children alike can remember and learn about what made this country great which causes me to reflect on another item.

Every time I flew back home from overseas and I did a lot of travel and I pinch myself to say my gosh, how did we ever do this? I always remembered never could this happen anywhere in the world but the United States, could you create an AGCO. That’s even more true today than it was when I was making those trips. The fact that you can just a guy from Kansas can get to this point and be a part of that is something that is so unique in the world you have to go see it to believe it but is true, then you better protect what we’ve got so that kids after us have that same opportunity.

I’m also reasonably active in another area. I’m a chairman of the manufacturing institute which is a subgroup of the national association of manufactures out of

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Washington. We provide education and educational and research for activities of business. For instance price comparisons worldwide, the cost of manufacturing here versus the rest of the world. Or right now, our major program is creating a standard for jobs in America so that people can be qualified when they get out of school to get a job.

Unfortunately there’s a gap that has developed so that the average kid out of high school can enter industry easily without remedial programs. I’m active in that. I’m also a director in the association of equipment manufacturers and they are the group that is mostly construction or farm equipment, forestry type equipment. I’m an honorary director there. I was a member of that for over 15 years and I’m still kind of active in that and I also manage the committee there on education and trying to bring kids into the manufacturing sectors.

It’s not a dirty word, it’s good business and without it we’d be in a terrible mess. One other incident I thought I should share because it also made a strong impact on me, part of my job at AGCO I was in the lobbying so I went to Washington to meet with the house and senate members of the agricultural committee. Because, after all I represented agricultural business and perhaps I could add something. I was there and visiting with a congressman about eight o’clock in the morning on a day called 9/11.

At that moment I realized our country was under attack. The congressman ran off to the intelligence committee and he went outside to find smoke coming out of the Pentagon. By the way I was in the capital which as I later learned was the target. The chaos, the confusion, the utter devastation mentally that went on at that day and the fact I was stuck there for two more days because I couldn’t leave town gave plenty of time for reflection and way, way plenty of time to watch the buildings of the twin towers fall down on TV several times.

You begin to reflect on how small you are. Meaningless, a lot of things are if you don’t have your freedom and you can’t do the things you want with your family. Of course during that day there were several hours where you didn’t know where your family was and they didn’t know where I was and these things are remembered even strongly in a family group as the event itself. Because, I reflect on that and it certainly is something that at the time makes you very angry, makes you very mad but it really also forces an action on the part of everybody that even knows it existed.

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To take more respect for this country and the freedoms that we have. Life is not a bowl of cherries in the sense that you can just get up and everything takes care of itself. You do have to be motivated and I would suggest self-motivated works better than any. As such, take yourself whether it’s through school or through industry with always seeking a new challenge. There’s one more to get. There’s one more to be and every time you get one, stick it in your pocket. It will carry you through the next one.

As such if we take advantage of the opportunities we have in our countries and continue to be the strongest country in the world, then your opportunity to succeed or mine or my kids is more assured than it would be if we don’t pay attention. I’d like to suggest that you apply yourself in what you do and don’t forget the environment that you live in creates the opportunity for you. When I came out of college it was obvious that you had to find a job and I applied in places that were relative to my education which was somewhat industrial engineering.

My first employment was with Westinghouse which those days was somewhat the electronic commerce if you will. I was scheduled to go to work but I had gotten a call from an individual at International Harvester company. I had to come and see him before I went there and I knew this person because my dad had worked for International Harvester company and I went in to visit with him and he said you’re not going to this Westinghouse since you’re going to right how.

You’re going to work right here and he was very persuasive almost to ridicule me that I would go anyplace else because my father had worked for that company for 30 something years and that it was only right that I should try my luck at that. That wasn’t completely fine to me in the sense that it was a truck division of International Harvester Company. I was somewhat enamored with cars and trucks weren’t that far away from that end of the technology side.

I thought, well I could give it a shot and see what happens. They had a management training program that allowed me to matriculate if you will through everything from getting coffee, working in a grease pit and the parts distribution area, into retail sales, knocking on doors, sales promotion and so forth. I really got a broad education as to the fundamentals of a retail business. It stuck and I guess they kept moving me so frequently I never had time to think about not liking what I was doing or had the time to look elsewhere.

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I think that it was important for me to recognize the ethics of a major corporation in the sense that I had always grown up with pretty good training. My father was a wonderful role model and he had very definite rules and regulations about how to handle yourself with other people and with yourself but when you get into corporate life some of those things in some companies are lost. At International Harvester in the 50s when I joined them there was a very strong work ethic. The company was considered a blue chip type company.

It was in one of the Dow average stocks that had been around for 100 years or more and I grew up out of the Midwest, our of the farm and as such had a very good strong fundamental ethic if you will. The things I learned growing along with that were on the basis of what was right, what was maybe, could be reflected in a story that I frequently shared with other people that I hired. That was, if you had the authority you could give away $100,000 but if you misplaced the penny you’d be fired.

That was the way the company operated at least to set you straight and in your relations within the company and with its customers and suppliers. I really learned something stronger than I knew until I left and then I really appreciated it much more as I saw other corporations were. After I realized that my future was not at International Harvester Company in the long run being number four for promotion to the CEO job, I was interested in where I could go. I realized that I had some capabilities that might be valuable in other industries.

Sometimes you never know where the opportunities come from. Almost, simultaneous with the situation of learning my future plans at IH, I received a call from the chief operating officer. I should say the prior chief operating officer at International who had been terminated. A gentleman who really worked me over when I was there and I would not even have considered him as being interested in my fate or future and he didn’t know that I was being passed over but he called and said if you want another position you have good potential and I have a place that I would like to talk to you.

I said sure, what is it right then. Because I knew I was moving on and he said, well it’s Unioil tire company which I had no idea about before that and so I went to Unioil, took the interviews and so forth and they were looking for a very unique situation. Their stock had fallen dramatically over the years because of an unfunded pension within the corporation. As such they were I think the number

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one or number two unfunded pension in the United States. The stock was, just didn’t move. It didn’t matter what we did because it had that huge liability.

I was asked in my being hired that I take that as one of my number one objectives was to try to pay down the unfunded pension. Little did I know at that moment that the unfunded pension was the whole corporation and I only had one division but they had placed the entire liability in the tire group. I was able to influence my employment contract to some degree so that I could cover some of the unknowns because when you move like that there are going to be unknowns.

The basic business was designing tires, manufacturing tires and distributing tires and that’s for cars, trucks and at that time farm equipment tires as well. It was an industry I knew very little about other than having to replace them on my own cars over the years but I think it’s important to share with you something that caught me. These are just a couple points with Unioil I can remember going to the design centre where they design treads on tires and talking to the engineer that did the design work, it was a whole row of maybe 25 or 30 tires with different tread designs.

I had no idea there were so many tread designs and it was difficult for me to really without some education understand why they were different and why one was better than the other but I was asking the engineer and he was trying to explain it to me quickly and of course that wasn’t adequate but finally he said, “Now look at that tire.” And I looked at it and he says, “Isn’t that sexy?” And I looked at it for quite a while trying to figure out why that design was sexy and I never could figure it out and I didn’t want to ask the question.

But I did learn a lot that most people as consumers of tires don’t know about; the qualities of a tire and the fact that most of the automobile companies build the car around the tire. They build the car and then they tell the tire company “Design a tire that will work on this car.” So you get the car when it’s almost ready for production and you have to create a tire that will get it with the miles per gallon limits that it should have, the cornering, the breaking, high speed. All of those factors that go into tire performance after the car is built and if you qualify with those manufactures then they adopt your tire and it is the standard tire when the car is announced.

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As a suggestion to anybody that’s watching, if you got a new car and it had a certain brand tire on it when you got it put the same brand back because that was built for that car. The others might fit in size but not in performance, just a sidelight. But we learnt that we sold both to the manufacture and of course retail throughout the United States, Mexico and in some cases Canada and Europe.

I went to work on trying to increase the sales activity and the only way to do that in huge volume was with the, oh yeah original equipment manufacturers; General Motors, Ford, Chrysler, and so forth and to go into them and try to get more business. I did that and I think it’s worthwhile that you might like this list a little than yet and that was that I decided we needed so many tires to help bring down that unfunded pension that I had to go to the biggest. I had to go to General Motors and met with the chairman at that time, he was somewhat of a difficult person who didn’t want to see somebody selling tires.

Nevertheless he did give me the courtesy of a visit and I told him my problem and that was that if we didn’t pay off this unfunded pension we might not be around. We were having our own difficulties and I needed more tires to be sold and he was the largest buyer, “Please would you buy some more tires.” And he heard me with some sympathy but generally speaking it was my problem not his and we visited a while about it and finally he asked me, “Do you know anything about a paperless society of doing business?”

I told him I didn’t. At that point, this is about 1980, 81/82, I told him I didn’t know anything about that as such in business yet and he said, “Well I’ve been reading about it.” He said, “If you could do that, I probably could buy some more tires.” I said, “Then we’ll do it. How many more tires will you buy?” We negotiated a rather sizeable number as a matter of fact and it was the amount along with some other efforts that actually helped us achieve paying down the unfunded pension which we did do.

The paperless society by the way is somewhat more commonplace today in the sense that you could order over the internet or communication systems, you could bill the same and you could transfer funds the same way without creating any paper. I went back to our Information Systems people and called them together and asked them if anybody knew anything about a paperless society and they all looked at me as if I had crawled out from under a tractor or

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something. I found out none of them did and I said, “The job is, find out because we’re going to do it.”

They went to work, great group of people and they loved the challenge of innovation and we did it. We pulled it off, we were the first ones in the trade to ever create such a transaction and it really paid off for the company. I think it’s important I make some comments that it was a different, a different culture and certainly then I could reflect more distinctly on the difference of ethics and behavior from what I had learnt at International Harvester. It was a little bit more cut throat, it was a little bit less compassionate and it was more short term than long term and by that I mean your relationships.

Our dealers, in almost every case, were what we would call a multiple line dealer. He sold everybody’s tires so he was no more loyal to Unioil than he was to Good Year or he may have been more so to somebody else so he didn’t have that relationship with your dealers in every case. You did in some. The other side was the dealer was dealing with the consumer market, always trying to stimulate retail sales activities through any kind of promotion that would work.

You always feared, and it happened many times, that you very best tire would be put on sale to bring in customers and they would sell them somebody else’s tires; it’s called bait and switch, a very active program among tire companies. This was something I was not used to prior business and certainly something that’s not looked upon favorably in any retail situation. I think that the management of the company of Unioil, although I don’t want to get in into all of the details, reflected that kind of style or if you want to call it culture or ethics you can, but it was not a situation that I was very comfortable in.

As they went forward they came to a point where the unfunded pension had been reduced to the point where the stock began to move and started to grow and as such we became a takeover target by Mr. Carl Icon, who was very, very active in the acquisition business. In many respects he got paid off with what we call Greenmail to go away and leave the company alone. In other situations he actually did take over companies, liquidate them and walk away with a great deal of money. He was considered somewhat of a pirate and our company became his target.

The activities that went on after that as to how to deal with him and how to continue to manage the business are a story in themselves that I was not on the

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board so I didn’t have the opportunity to understand their deliberations but shortly we held a meeting and it was decided that we would buy the company ourselves. In other words, we’d do a management buy-out. I personally could not get the calculations to prove that was a good transaction.

I continued to try to do my homework to figure out how that would work out and this was in the day of selling junk boards, today is not referred to that same tone but same difference. We also were introduced to some of the buyouts company speculators that led this kind of things. So the company went to the shareholders and bought the company at a very attractive price. They had to borrow all the money from an investment group and then turn around a year or so later, not even a year or so, a year later, within the year and liquidate the company.

They could buy it just to give you an idea of the magnitude, they could buy it from the shareholder who was really disgusted with the stock which hadn’t moved over all these years at let’s say 20 dollars a share, and these are just estimates I don’t know the exact figures, and turned around within the year, liquidated the company at well over 30, almost 40 dollars a share. It was worth more than was on the books and it was worth more than the shareholders gave it credit for and the people that walked away with the money; the investment group, the top management, executive management.

And I left before that happened. I did not want to be a part of that transaction. I guess you could say its ethics but it’s also the fact that it’s a lot easier to sleep at night when you don’t have things hanging over your head that it affects maybe reflects upon your performance for somebody else. And when you work in a corporation, you’re working for the shareholder; He’s your boss and if you don’t respect him and take care of his value in giving you money to work with then they shouldn’t be there.

I left the company before; it was after they decided to a buyout but before it was completed. It was also possible because I had written a clause in my employment contract that allowed me to leave. It was quite an experience into corporate life not only in another company but in a tremendous industry like the automobile industry where it’s somewhat unique to Detroit and to that area as well as all over the world and how they do business with automobiles.

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I enjoyed the experience and I think it’s important at this point to make a very important notation. Wherever you go, whatever you do, you learn, you have experiences and if you don’t pay attention and keep those experiences in your pocket you never know when you might need them again. They are extremely valuable and I bring that out because the big thing I learnt at Unioil was that dealers selling all these different brands of tires, I guess I didn’t tell you that Unioil made a lot of different brands of tires.

The treads that were sexy and all that they just switched the labels on the sides of the tires and made other tires and I can tell you some of them were the K-Mart tires, Big O tires and there’s a whole mess of them that could be made by putting a different name plate on the side of the tire when its cooked if you will. So I learned about how to do that down the same production line but more than that I learned how it could be done in the retail market. How could a dealer sell a Good Year and a Unioil?

Well there was a method and it didn’t have to be bait and switch but it could be a good marketing technique and I used it later in the development of [Edco 02:35:35] when I was hired by Doicks Alice. I don’t know if I made it clear or not before but I did call two very good friends and asked them to come and help me with a situation; it should take a second to let you know who they are and why I called on them.

The first guy was a fellow named John Schumeider. John was someone that I had hired from right out of college when I was in New York City with International Harvester Company in Manager Fleet sales for the Eastern area there. and John was an Automotive engineer, graduate of Western Michigan University, a young man that had a very unusual youth if you will, loved cars he could take them apart and put them back together with his eyes shut. He didn’t participate in sports when he was a kid, he worked for his father who was a contractor and also operated a number of low income housing apartments.

I learned that John was the type of young man who did what his dad told him when he told him and he made John in charge of those low income apartments, not so much collecting the rent or anything like that but to keep them running. It was not unlikely that in the middle of the night he’d have to roll out of bed, that’s when he’s a very young person still in college, and go into these apartments and fix the furnace so that it would keep warm and keep working.

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I asked him, I said, “How did you know what to do?” And he said, “I couldn’t go home till got it fixed so I learned how to do that.” Now his dad was the type of person who gave him things to play with that most kids never would ever get. He would give him an old engine, John would get the engine to run and test it without oil to see what would happen and it would blow up and he understood. Or he would test it in other ways to see what would happen; he built his own racing cars. He was a master at boats; he was a technical genius in reality with his hands and his mind. He was not a book worm, he was a doer.

I enjoyed him so much when I hired him and he was able to go out and sell trucks as an engineer not as a salesman but on the performance of the vehicle and the technology that was in it which was something that it just rolled off of him. He was so effective. We increased our market share so dramatically in big cement mixers and dump trucks because he really knew what he was doing. And the typical salesman we had at New York was more into the smaller trucks and didn’t even understand the big ones but John made a big difference.

Even though I moved on pretty soon he moved on and I had nothing to do with his advancement in the company and he finally went to Fort Wayne, our engineering facility, he developed quite a reputation and was eventually given the responsibility to bring on a new product for the company. The lead product we had as an over the highway tractor to pull the big trailers. John did a magnificent job at that and when the trucks were introduced he was really given a lot of credit for all the things he had contributed to managing that process which took almost two years in his area.

Subsequent to that, riding down the road and seeing one of them pulled on the side of the road with the hood up or being looked at, he made me stop, got out, went back and fixed the truck because he knew every part of it. He was the kind of guy who just was a technical genius and I could go on and on about him or hours. He got me into many things, taught me many things but he was also a product of the work ethic at International Harvester. When I went to Unioil, he was the first person I called and said, “John, if you’re unhappy I’d love to have you.” He came right away.

There were a few others that did that, quite a few, that came and joined me at Unioil. Unioil was not the greatest experience for any of us except it woke us up to how much we had in our repertoire from International and what we could do with opportunity. The other person that I wanted to bring with me in going to

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Doicks Alice was a gentleman by the name Jim Siever. When I had worked at International and I had [Ridden 02:40:53] sent to Atlanta Georgia as a District Manager over the Five State area there in the South East.

Jim Siever was a new employee just out of college and he attracted my attention because of some similarities. His father had also worked for International Harvester Company as an auditor, the feared auditors that had always lurked around our business with a very heavy hand. Not that his father was heavy-handed but I mean that was their role so I knew that he had a good background and certainly an interest in succeeding. I’ll tell you a story later on about, I’m not sure if I’ve already told it or it’s later on, but the development of Used Trucks Centers at International where we could move used trucks.

I took Jim Siever and put him in the first on we ever opened right in Atlanta. He was a young kid, not married yet and he went to work at it and did an excellent job. I was always impressed with that. Again I left soon and he went on and became a branch manager in different areas, he ran his on retail in Miami for one period and then moved into Chicago and had other responsibilities in Marketing so he had gravitated to leadership roles within the company. And again when I went to Unioil I called him and I said, “If you want to leave I have a place for you.” He came right away.

I had a number of people that rewarded me by coming along to help with situations but they were the two key people that went to Doicks Alice. One other individual who was already there by the name of Ed Swingle, Ed was probably the senior operating person at Doicks Alice but in the Parts Area. He really knew the business and he was a can-do guy that we enjoyed getting acquainted with and certainly knew he had many years, I think 25 years with the company and its predecessor Alice Charmers so he knew the dealers and that was important to us in getting success out of that business.

With that team we began our process and when we were given the opportunity to buy the company, I called them together and said, “Okay,” They were all younger than I was by 15 years and I said, “What do you want to do? We’ve got a chance to do this and we’ll do it or we keep working and somebody else will buy it probably.” And all of them, we visit about it but we were kind of given to the thought at the time we had that offer that we could make it work.

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If you remember we were about October of the year 89 when that offer came to us and we’d been at it for 10months trying to straighten out the company and they came right away by the way in the beginning, back when I went there so we’d seen enough that we thought we could manage this. I know that in many situations, I hope you don’t misunderstand this, Harvard business school would probably suggest that you hire three consultants and a team of auditors, accountants and planners and everything else.

But we didn’t have the money to do that so we didn’t have to get involved with that situation and we elected [Diaz 02:44:57] as our fundamental knowledge of what was it that we would have to do to be successful on one hand and if that didn’t work how do we get out of this thing? What the exit? Well as we studied the business the exit was better than the plan. We were in the parts business; we sold parts for products that had been produced for 100 years. The average age of a Combine At that time was 20 years old; the average age of a tractor was 13 years old.

These things absorbed parts like you couldn’t believe and in these kinds of businesses the margin on parts is far greater than the margin on a new product and the cost to sell them is far less so the parts business is where you really make your money. And that was our exit, that if we couldn’t sell new products we could just be a parts house for all these population. It might only last 10 years, it might last 8years but we would our investment out of it, we’d make a little money and we could go on into something else. That was the exit and we figured the exit out before we figured the plan out.

We didn’t have to worry about failure, if there is such a thing. I think a lot of people go into business and never discuss the fact it might not work. We had done that first. The next thing was to figure out how do we make this thing work and what could we do to make that happen. How could we lead that? We realized that there’s a fundamental in our business. You can take any industry you wish and there are certain one or two items that are fundamental to its success and by example you will understand that we looked at farm income.

If the farmer didn’t have any income, he didn’t buy anything. Pretty simple, but if he had income, there were reasons he would buy. He got tax credits and he could depreciate faster and put more money in his pocket, if he made money. If he didn’t make money he could rent it another year that’s why at the time we got into the business, the average age of products was so old. It had not been a

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good time to buy for quite a period but it was pent up demand that replaced those old products.

We felt that the secret here is “What’s the farm income going to be?” Now that’s anybody’s guess, the commodity guys spend every year trying to figure that out but we went back and began to put together what we knew, what was right in front of us. We didn’t have to research with great detail and we had gone through a period where we couldn’t ship wheat, and now that was released we can now ship wheat. There’s going to be more wheat produced. Corn was beginning to look pretty good.

We’d had a couple of years of bad weather, that’s not going to continue, evolution with time is you’re going to get good weather for a while and so forth and so on. “And what were the demographics of the farm? What was happening on the farm?” And that probably was one of the key factors. We recognized that the kids didn’t want to be farmers. “We want to get off the farm. We’re going to the big city. We’re going to get big jobs; we’re going to do other things.” Mum and pap are left with the farm and maybe one of the kids or even in many cases had to hire what we called a sharecropper, somebody to work the farm.

At the same time, equipment was getting bigger and bigger and bigger; it could do more with less people. Farming was becoming less labor intensive and more mechanized and certainly in the United States, better than any other place in the world; we were far more mechanized than we could really produce agricultural products. Seemed like life was going to be a little better going forward so even though 1989 was a period of time, not depression but recession, where was almost out of business.

They wouldn’t lend money; things were really kind of tight. We concluded we were at the bottom of this cycle and if we could get a running start we might ride this wave of recovery. That’s all we had to do and we’ll just sell these tractors, we’re going to buy them from somebody else. We’re not going to make them and if the business gets slow, we stop buying so we’re not exposed. It all looked rather low risk and so we made the decision plus the fact, I would have to say, the four of us were universally energetic about doing something and we thought we could do it. None of us felt that failure was even remotely possible but we had to be prepared and so we made a decision to buy.

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We made the parent an offer at an average of about 42cents on the dollar for their assets and we would own the company. And you have to remember that we only had one manufacturing plant in the United States and it was in Independence, Missouri and they made combines. The rest of the products, the tractors, were coming in from Germany where the parent company was and we bought some from other manufacturers in the United States. We weren’t a very big company; we were only doing about 200million in sales.

Nevertheless the intensity of buying them was that we hadn’t made any money and how could we buy the company if we didn’t have any money. The four of us together were not in a position to really go out and spend big money to buy this company, we had several meetings and several is an understatement. Dozens of meetings with every back you can ever think of or heard of and we would go through our story, tell them, what we wanted to do and we wanted to borrow enough money to buy this company. Everyone was extremely polite and everyone said no.

I met a lot of nice bankers and so forth but the answer was No and we really tried everybody. It was not illogical in the sense that they denied us the money because we had no profitability and a track record and we certainly, even though we had optimism about the future there was not enough at that point to say the recovery was imminent. We were without a method to do this and we never gave up, I think it’s important to share with you that as we entered this point of purchasing this company and we made our offer and they had accepted the offer if we could find the money.

We hired an individual by the name of George Hand, George worked here in Atlanta with investment groups and he was also involved with some speculative organizations in investments and I called him and asked him if he would come and see our proposal and see if he thought it had merit. He came, he looked at it and I have to tell you that when I look back on what we put in the little loose leaf book, it’s pretty embarrassing today because it was pretty crude but it was fundamental basic 1, 2, 3. He looked at it and said, “I think you can do this but you’ll probably lose the deal 12 times before you get it. Can you stay the course?”

We didn’t have anything else to lose, we were employed by the company, we were busy so we said, “Sure, we can do that.” But it was very discouraging because we couldn’t find the money, the parent was hitting us up every week

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for, “When are you going to come to the party?” When is it going to close? When are you going to have the money?” They were anxious that if we couldn’t buy it, to find somebody else.

One day and I don’t know how you come up with these things but you sit around trying to find the solutions to a given problem, whatever it is and I’ve often said most of my ideas about how to do something occur in the shower and then I can’t wait to get to work to see if I could get somebody else to agree with me. But I got an idea one morning that we had all these receivables that is the products we had sold to dealers, they owed us for those products when they sold them. Why couldn’t we factor those? In other words, sell the receivables to a finance company take the cash for them.

I brought that to George Hand’s attention and he said, “I know just who to call.” And with that he called Westing House, excuse me, Whirlpool; I got the wrong company … who was starting a finance company to compete with Westinghouse Finance and GE Finance. Whirlpool thought they should have a finance group and their new head was somebody George knew and he called him and said, “Hey, we have a deal for you which you would be interested.” And of course timing helps some time and this fellow was trying to grow his business so he was very interested and we had an agreement within about 3weeks that they would do it.

They would buy the receivables and they were pretty heavily discounted. Then we advised the parent that we had the money through selling the receivables. At first they didn’t understand how we could do that but I don’t if they those kinds of transactions in Europe at that time but they understood eventually. It was a little later when they really realized that we were taking their money to buy their company in a sense and we began to negotiate a lot of the details of the purchase. I can only share with you that these negotiations and they were many in our history as we made all these different acquisitions but this first one was quite unique.

I can remember vividly that we had a negotiating meeting in New York City and the table had to be 50feet long with lawyers around both sides and the principals. I had with me our chairman at that time; at that point he was going to be the chairman if we got a new company. He was actually a venture capitalist that was going to join us with an investment and across the table was my boss and he was negotiating for the German company, [Shikri Boschkett 02:57:34] A

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wonderful man, not because he sold to us but he was just a wonderful guy with us and always fair.

We began to negotiate the fine points of the contract, there’s always more meat in the fine points than the price, the price is one thing. We began to negotiate what all kinds of things that lawyers got all excited about and the meeting would come to a halt and Shikri and I would glow off the corner and he finally told me. He said, “Will this be over? I have a 5 o’clock plane to Germany and I have to meet with the board there tomorrow and tell them about the deal.” Well it was about like saying “We’ll agree because I got to go on this plane and that would kind of jeopardize this negotiating position a little bit.”

We made some very unusual demands but rightful demands that if we made a lot of profit because we had bought on a discount basis, they were taxes involved and we might not have the cash to pay the taxes because it was discounted dollars and we got them to agree to pay the taxes and things like that, So there was a lot of others to the transaction but finally it was agreed to, shook hands, and the deal was sealed as far as the people but now you have to go and have the actual contract written.

The lawyers went together and started writing and then we finally had a week of closing, I thought it would be a day of closing but it lasted a whole week. We had three parties or four present, you had to understand that the parent company was there of course and they had a Philadelphia law firm representing them. And then there was Whirlpool and they had a law firm representing them. Then there was us, whoever we were, the management buyout team and we had a lawyer representing us as well. We also had an accounting firm, Arthur Anderson at the time. I had never heard so many arguments come up over a contract but that was the typical format of the negotiations.

Monday night I would have told you it will never happen and then Tuesday it would come alive and by Wednesday night it was dead again. It was up and down, all week long with issues that people wouldn’t bend on and there were more legal than they were substantial as far as the business process. And finally on Friday at about 4o’clock we concluded these negotiations. These were not the issues of whether we buy it or not, but the document of the purchase and when we finished we were exhausted.

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I’ve never put in a more exhausting week of my life doing anything and as I, I think I mentioned before, I invited everybody for a drink and we all fell asleep at 5o’clock so we were just wiped out. To make that decision to buy it was not as difficult because we really had risked nothing, we had some investment in the business but it was rather minor and as such we felt we knew the risk, we knew we had an exit; we were pretty comfortable with the situation. The outside world, the analysts, not many paid attention to us because we weren’t public but even the outside people like Arthur Anderson, they said we didn’t have a chance in the world even though they were our accounting firm.

They were upset with our accounting systems and everything so there were a lot of areas that needed to be repaired and improved but the odds were this was not a slum dunk by any means. Certainly we didn’t make any noise about it we just went to work, as they say the rest is history. Along the way in our business we had used Perkins diesel engines in our Massey Fergusson’s’ product and this was a traditional with that tractor long before we bought it.

As a matter of fact, originally Massey Fergusson owned the Perkins engine company but when we bought the Massey Ferguson tractor we didn’t get the engine business so the prior owner still had that and eventually he negotiated a transaction wherein he sold the engine business, Perkins engine, to Caterpillar and they became our supplier. It was our first direct transaction with Caterpillar and the opportunity to get to know their management and their team and each year their chairman would come by and “Were we happy?” he would call on us as a customer.

I approached him early on that I knew he was making this truck tractor called The Challenger and from my observation, it was a big loser financially and did he have any interest in our distributing his product because I thought we had a better chance at selling it than his dealers who were identified as construction equipment dealers only. He denied that he was of any interest and was very polite but said “No thank you.”

Each year I asked him, it was almost an annual event, and it got to be a little bit funny after a while. Sooner or later he retired and then I asked his successor and that was when I found out that most of the management at Caterpillar didn’t like this project at all but it was the baby of the prior chairman that I kept trying to get him to sell it to me . When I asked his successor he said, “Are you really serious? Would you take the whole thing?” I said, “Well yeah, whatever you’ll

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sell we’ll be glad to have it.” He said, “Well we’re not ready to sell I just wondered what you were talking about.” Now you might say why did we want that.

First of all this product was really unique, it is the largest tractor in the world, 500 horsepower with crawler cracks, it will pull anything that was designed that it could pull. It was the biggest tractor you could imagine and farms were getting bigger. In other words, with every pass the more you could do then you’ve got to get back to the days when they had two ploughs and all you could do was two furrows but now you could hold twelve ploughs and you could do twelve furrows, one tractor. The more the horsepower you could pull more wider equipment, you could do more [per gasket 03:05:34] more land per hour et cetera. Efficiency would go up and size was going to be a factor in the future.

I kept trying on that basis and one day, I also had a couple of other ideas but one day, he called and said, “Are you serious? Do you still want that thing?” It was in November of 2001. I said, “Yeah, we are still interested.” He says, “Okay, you’ve got 30days to put the whole deal together and if we like it, you can have it. You got to buy the factory, you got to take the trucktory, you got to take the engineering, you got to take everything.” I didn’t know much about it other than I knew the product and so we quickly put together, we had a team that went through these acquisitions so we knew what we were looking for, but they sent their team down.

We negotiated buying this, little had I known that the product they had had for some 15years had really been totally redesigned, they had a whole new model ready to announce and I didn’t know that. It cost them 200million dollars to design this new model and here it was ready to go and that was in the deal too, we could have that and the factory and so forth. I made him an offer and he said yes right way, if you can get it closed in two weeks or something like that. We closed in December 21st if I remember correctly. We did it in about 30 days; he had to get it done before the year ends.

This business we then learned had probably lost them an average of 80million a year. It was a bum, it never worked for them and we had to analyze why not. We could have taken the product and just put it into our system but we thought about it a while and started to evaluate this product. It’s when we recognized that our dealers sold mostly small tractors and what were they going to do this

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with this big great thing? Would they know how to sell it? Do they know the farmers that buy this kind of thing?

That was one issue, the issue I was looking at and it’s a little bit more fundamental. You hear the expression ‘it takes money to make money’ well not necessarily if you think of our deal but on the other hand when it comes to independent businesses like dealers, there is no comparison to a Caterpillar dealer. They are the epitome of dealers in the world for heavy equipment. There is no one close to them. They are unquestionably way out in front and everyone of their dealers, without exception is a millionaire, maybe a multimillionaire and I only use that reference because to emphasize their success. They are way, way ahead of everyone.

Our dealers by comparison were the least financed in the country, the weakest, hand to mouth, deal to deal, and it’s pretty hard to grow when you don’t have the wherewithal to advance yourself. Status quo you can keep going but if you told one of our dealers, “You got to grow this business 20% next year.” He couldn’t do it, he wouldn’t have the funds, he couldn’t borrow the funds, he wouldn’t have the stability to do that or the intelligence maybe. He just didn’t have the wherewithal. He was a good old guy, everybody loved him but what are you trying out of me and it was something I didn’t believe was there for the long-term.

My focus was “How could we get the Caterpillar dealers to be our dealer worldwide?” That was a big gamble that was more than what most people could even imagine. I had talked to the Caterpillar guy in the negotiations their group president had negotiated with us. I said, “[inaudible 03:10:19] Do you think that’s possible?” He was very candid and by the way a very good friend who said, “Bob, you’ll never sell anybody to come into their franchise system. That isn’t going to happen.” Well in the transaction of the negotiations, as we ticked off the things we wanted them to do, there were things they wanted us to do and uniquely one of them was, “You must continue to sell this product to our dealers.”

The reason they said that was because their dealers had invested, already hadn’t done very well, they had invested their people to d=service it. They had salespeople, some of them had inventory and they didn’t want to kill it, they’d have to take all that back and pay for that so they wanted us to continue to supply their dealers which I not too reluctantly agreed to do because that was a

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foot in the door. With that under our belt in December 21st December 2001 we immediately launched a very hasty program led by John Schumeider, who was the only person I know in the world who could have pulled it off.

Through the Christmas holiday and so forth to take one of everything we had, every kind of piece of equipment that we had, whatever it was, paint it yellow and call it Challenge, put the label Challenger on it. I didn’t care what was underneath, I wanted the outside to look like a family of farm equipment and we called for a meeting of Caterpillar dealers around January the 10th, 15th of the next year and they worked like mad and got this going.

I called my negotiator friend Katt and said that we have invited all the dealers to come in and see the new model, the one that they hadn’t even seen yet but Caterpillar had designed, “And do you think they will come?” and he says “Well, they may not, they kind of lackadaisical about this product and I said “We got get them there.”

164 dealers turned up. They only had 220 in the world. They came from all over the world and he was dumbfounded. They didn’t know what they were going to see. To continue that story you have to know that on January 2nd John Schumaider was killed in airplane crash with Ed Swingel. I lost was two of my partners. We sat around wondering whether we should go ahead with this thing or not because it the next week or so. Everybody finally Jim Siever and I and others that were in the management team …

So we better do it or they’ll rein hell on us for the rest of our lives because they had worked to get it ready. We put up tents outside of our building there in [Duluth 03:13:40] Georgia and these dealers came in; we had them in grand stands. We finished, here are your new products and we came in with these little baby tractors and they got bigger and these guys were running, “Jeez they are called [Ken Challenger 03:13:52] and they are yellow.” And the CAT guy looked at me and says, “What did you do?” and I was “Well, we have given them two options for something else.” And at the end was the new big tractor.

We asked them to sign up and be a full dealer with a private line called Challenger that nobody else would have but them and they signed up. They gave us immediate entry into the most well financed organization in the world to sell equipment. They had parts distribution second to none. They could support it, they have technicians, they have everything and if you haven’t, if you can’t

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appreciate that, take a day and go to your local CAT dealer and you’ll get an education that is second to none as far as how a business should be run.

They moved rather quickly from a very sad business at Caterpillar to a very profitable business at [Adco 03:14:59] and gave us another niche, another place to sell the big ones. Not only that, the dealer became able to take trade-ins of all sizes of equipment. He couldn’t merchandise a trade-in of small tractor on the big one, he had no market for that one, people didn’t come to him to look for that size tractor. But now that he was in the full business, he had access to the full market.

This took a little gymnastics with our other dealers who were a little concerned at first but we had already proven that years before that you are as good as your customers see you and if you want to be, you want to stay competitive you can be just as good as the CAT guy but you’ve got to get in there and hassle and do the things that provide more customer service than he can provide. It was a point of contention for a while and it was something that management wasn’t really totally ready to deal with.

This is where I missed John and Eddy more than anything else because they had the ability to work with the dealers and probably get over the hump better than anybody else. The hump being that we now were close to conflict between dealers. CAT was so big in their market and we might have 16 dealers around one. But they looked bigger. In my mind, although I never made it totally public, was the long term vision and I tried to work this out with dealers that a mum and pop type store that wanted to get out of business and retire had no way to do so in the prior environment. They could leave it to their son but he went to the city.

My long term vision of solving that problem was based upon the evolution of dealerships and if we sat down with some of our older dealers, the mum and pup type dealer who had a limited investment, he really had no exit, clear exit of getting out of the business for retirement. He didn’t have a strong succession plan. Quite frankly there weren’t a lot of people standing around to put money in dealerships because dealerships had been shrinking over the years. Again as the firms became bigger, there were fewer numbers of customers, the larger volume if you can imagine.

So you didn’t need as many dealers. They didn’t really have an exit. In my mind, they did. They could sell their business to the CAT dealer and have satellite

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operations around the state because most CAT dealers, there is one in the whole state. You can’t have farmers driving three, four hundred miles to get to the dealers; so satellite operations would have solved that very nicely. Over a period of 15 years maybe, you would have a Caterpillar dealership distribution network, 20 years.

Not everyone was with me on that one, but if I was there that’s what I’d still be doing. And as such, it’s kind of grown to a point and stopped. They do quite a bit of volume with the Challenger products and that brand is separate. We began to specialize some of the components to resell that it was in the Challenger or just in the Massey. We began to differentiate more and more between the products so that they didn’t compete so directly and you also could alter the warranties and so forth so that your values stayed similar. You had paid less for a Massey but you didn’t get what you got in the Challenger, things of that nature.

Challenger became the premium product. A very, very successful venture and as well gave us entry overseas and in some countries we didn’t even know existed. You have to recognize that in any of the stands for instance that are over in the mid-east or Asia I should say, there was a CAT dealer in every country and they are big, they were huge and they started bringing in farm tractors. I had a dealer in Denver that I never will forget. He wanted a certain sized tractor and we had it of this new variety but it had a [Vermead 03:20:20] engine in it.

It didn’t have a Perkins, and it didn’t have a CAT and he wanted it to have a CAT engine. He said, “I can’t sell it with this other engine.” In his mind he had ordered a Caterpillar engine so I said, “Well, okay. We’ll try to get it in there but Caterpillar doesn’t have an engine to go in it right now.” We were working out the technology to get in there. He came back and said, “Never mind. Send me these tractors with the Vermead engine so I’m going to lease them and then when the lease is up you’ll have that other tractor ready and in the meantime I’m in the market.”

I said, “What are you doing to do with them after the lease is over?” “Don’t worry about that,” he said, “I’ve got that handled.” I said, “No, no. You better figure out what you’re going to do with it because they will be sitting on it a lot here and you won’t be renting them.” He said, “No, I’m going to send to,” Believe it or not, I think it was Burma. I said, “I don’t even think they use those tractors in Burma.” He said, “Yeah, they use them. I’m the distributor in Burma.”

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You began to realize the strength that the caterpillar distribution network had because a lot of these dealers in the United States had distribution facilities overseas, a tremendous opportunity for long term stability in distribution. I can tell you without any, I know of what I speak, it began to scare John Deer because they had pretty good distribution but their big problem in construction equipment is Caterpillar and they were worried where that would go. It was a good venture and it still is and they’re still in it. I think they make some pretty good profit out of it.

Speaker 2: One of the things that we talked about was, and you did mention it in the interview that finding that you’re only a couple of weeks from 75 and you walk away from it but there was that other component I sort of picked up on this where you retire and other people come around say, “Well we want you to raise money and donate money” and that was really wasn’t what you wanted to get involved with.

The question is at that point in time looking back over your worker day life, what would you leave behind from that? And then looking the other way, looking to where you’ve come since you’ve retired; what were the things of value for you and what turns you on?

Because when I think about that conversation I can imagine your guys coming up and saying, “Here I want you to put money in this tin cup. Or here’s another tin cup for you to walk around with and have people throw money into.” And that was of you, I think you may have gone like if that what you want to do you would have done that earlier in your life. Does that make sense or no?

Robert: I didn’t get to, well back up. When I retired, it’s not something that I had planned with great definition. I have always been a busy person and so therefore I just figured I’d do something else and I’ve never been at a loss for things to do and in wanted to9 participated in whatever was going to occur. I didn’t want to just be on the sidelines as you say just donating money and not have some role in trying to move the ball in some direction.

It wasn’t long after I physically retired that in had two or three opportunities and I’ve probably had several since that continually reach out for what I might bring from my experience to some new venture, to some new idea or even if it is a charitable situation how can I help. I don’t see myself as a good fundraiser, we can talk about different peoples’ styles and I know that in many businesses they

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advocate high levels of participation in the [Choanas 03:20:20] and the Chamber of Commerce and this and that and the other. I never had enough time to really get involved in that to any degree.

I was active in my industry and I was active in national manufacturing. Those are two areas and I still am, where I think its good work that’s being done and important work and through my experience and maybe a few accesses to my network that I can help. Those are the kinds of activities that really have turned me on. On the other hand, I have invested in a few things that are quite different and I find that whether you are making trucks or selling trucks or tractors or tires or whatever it might be.

There are a lot of principles that are still very, very similar and ir goes all the way back if you will to the ethics that you bring along in all those business that pay off just as well in small community operations such as a community bank or the development of new product ideas. They may be more of a venture than the stability of a large corporation but it’s a time when you can afford to do that, you have the time to do it and some resources to help see that through.

And of course the one thing that happens as you get older it Is like “I’ve been down this track, I made it, I got this far and by golly I want to tell you how you should do it” And you find out that you have a lot that you want to transfer to someone else and yet you have to be cautious to recognize that things have changed the world has changed and some of the situations have changed.

And the best contributing factor you can share with people is that ethical basis for your business activity and certainly the rewards of being creative and taking a chance every now and then. As I pointed that out once before I think you have to do something to be successful, you can’t wait for it to come to you. You got to be active. You can still do that, it doesn’t matter how old you are and you can’t sit home and watch television, that won’t do it.

Speaker 2: Vickie keeps telling me I can’t just sit at home and watch TV all the time, she must be talking to you.

Speaker 3: Do you? I can’t imagine you doing that.

Speaker 2: This has been a good long run.

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Robert: Well it’s a long run I know, why you got to put it all …

Speaker 2: Anything that’s a burning reflection that has to be put out there?

Robert: I guess there probably is something that I should reflect upon that should be a great point of wisdom but on the other hand I think you have to have somewhat of a built in desire to be successful at whatever you do and not focus on the reward. Just let it happen; if it’s there its there, if it isn’t it isn’t. I think you have to please your inner self that you’ve done the best job you know hoe or that you could have done.

By the way, it isn’t all just a nice easy walk in the park. There are a lot of trying issues, there are a lot of conflicts, there are a lot of situations you just wouldn’t believe were ever going to happen to you but you have to keep your senses about you. I guess the other thing I would share is that my wife is a good one and pointing out the stress issues. “You’re under stress, you’ll get sick if you’re under stress, and you’ve got to be careful about stress. In medical professions they talk about stress all the time.

She often would ask me, “Are you stressed?” I’ve never been stressed. I don’t even know what stress means. To me it’s part of the game and I get up with that, I go to bed with that and it’s another challenge. Stress is kind of when you are over the top, you are walking oblong then you’re really stressed because you don’t know what to do. But I think you want to have a career and activities that are within your stress level, if I could put it that way. There’s a lot of examples to that.

I always remember a professor once that I was trying to talk about Peter Principle or one of these theories and he said, “If you take a cork and you hold it under water and you let go it will come clear out of the water and then it falls back to the water. In that sense there are a lot of people that you witness in your career that have gone beyond their level of competence and are very stressed and they’re not happy. It’s far more worthwhile to be at a level of self-gratification than just striving blindly into something that you can’t do.

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