Dive Brief:
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CNH Industrial has designated agriculture a core business to be overseen directly by the CEO, part of a host of internal leadership changes taking place under the tractor maker's new leadership.
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Garrit Marx, who took the helm in July, said in his first company earnings call Wednesday that agriculture will be his "primary focus." Meanwhile, the construction division will be managed as a "fairly independent" operation within CNH, he said.
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The change follows the departure of Derek Neilson, who oversaw CNH's agriculture unit. It also comes as Marx announces a broader leadership reorganization, effective Aug. 1, that bolsters the c-suite team from 11 to 16 people.
Dive Insight:
CNH's new CEO is taking ownership of the company's agriculture division as the manufacturer reports a challenging second quarter mired by weaker sales and a surplus of inventory.
"We need to recognize that agriculture is and will remain our home turf," Marx said.
Net sales in agriculture for the quarter totaled $3.9 billion, down 20% over last year as commodity prices and retail demand for tractors continued to weaken. After running production 30% lower than last year, the company has plans to keep rates reduced at 25% for the coming months.
With sales down for both agriculture and construction, CNH is looking to optimize costs on all levels for the remainder of 2024. Marx said CNH is looking to lower dealer inventory by about $1 billion before the end of the year and is working with dealers to sell used inventory.
Marx is also continuing with a transformation plan started under former CEO Scott Wine, which included layoffs across the company. However, Marx is undoing some of Wine's steps to reorganize leadership, moving to restore regional and support function roles and have them once again report to the CEO.
The team doesn't include any fresh hires, but does add the newly created role of chief quality and customer advocacy officer and chief sustainability officer, which will be filled by CNH's President of Asia Pacific Chun Woytera.
Looking ahead, CNH is expecting 2024 sales to fall between 15-20% over last year, noting adverse market factors that have led to tighter margins and cash flows than first expected. This is its second downward revision for the year.
Tough farm economics have dragged down agriculture equipment manufacturers, forcing some to cut costs or restructure operations. Deere last week began giving notices to its salaried workforce after cutting close to 1,800 factory and office jobs this year.
