The ongoing global shortage of semiconductor chips has created difficult times for farm machinery makers, but there may be light at the end of the tunnel.
CNH Industrial CEO Scott Wine says equipment makers, such as the company’s Case IH and New Holland brands, still have some tough months ahead and are “probably nine months away from returning to some normalcy.”
Wine, who took the company’s CEO reins in January 2021 after leaving a similar role at Polaris Inc., has been around supply chains all his career. “This is the worst I’ve seen,” he says, but he’s impressed with how the Case IH and New Holland teams have tackled the challenge.
The global chip shortage, caused mainly by the COVID-19 pandemic and cascading production impacts, has affected a host of industries, creating major shortages and queues amongst consumers for video cards, video game consoles, cars, trucks, farm machinery and more.
Wine says CNH Industrial has been able to manage through the crunch reasonably well for the first eight months of the year because the volume of chips required for farm machinery makers are relatively small compared to large automotive companies. But CNH is “hand to mouth” with the components they need and in many cases supply is “not even hand to mouth,” he notes.
Despite the production challenges, Wine believes the Case IH and New Holland brands are well positioned to deliver the needs of farmers. “We’ve continued to drive a lot of R & D spending which yields innovation and I think we’e understanding what customers want and need from us,” he says. “We regularly hear that our iron is as good as it’s ever been and now with Raven, we think our technology can also be in that same category.”
(Listen to CNH Industrial’s Scott Wine and RealAg’s Bernard Tobin discuss chip shortages, supply chain challenges, increasing automation and prospects for the North American farm machinery market — story continues after the interview).
Earlier this summer, CNH Industrial reached an agreement to acquire Raven Industries for US$2.1 billion in a move to enhance CNH’s position in the areas of autonomous and precision agriculture technology. At the recent Farm Progress Show at Decatur, IL, Raven announced that its OMNiDRIVE, a driverless technology that allows a cart tractor to sync with a combine, would be available on select Case IH, New Holland tractors in October.
Wine says CNH believes that there is not much more tillable acreage for farmers to work and technology will play an even bigger role helping farmers increase yield and productivity. He feels the Raven acquisition and other technology partners allow CNH to be leaders in technology that provides solutions to farmers.
Wine notes that CNH, even before the acquisition, had been Raven’s largest customer. “They are already integrated into our products, but what I think you are going to see is rapid deployment of some of their autonomous and precision deployment into our various products.”