Eric Raby, senior vice president of CLAAS for the Americas, talked about CLAAS’ future developments, supply chain, and its response to international crises, in a recent interview with Successful Farming.
Raby grew up on a cattle and tobacco farm in western Kentucky, where his family still works today. He got his first job in the farm equipment industry as a service apprentice at a dealership in his hometown. After realizing service wasn’t his forte, Raby entered the sales field. Since then, Raby has a total of over 30 years of experience in the industry, and has been with CLAAS for the last six years.
Successful Farming: What are some of the big things CLAAS is pushing for in 2022?
Eric Raby: Well, I think two things. One is on the challenge side and the other is on the opportunity side. If I take the challenge side, it’s supply chain and it’s really affecting all of our industry, not only from a manufacturer standpoint, but also from a farmer standpoint.
On the opportunity side though, I still see that there is a tailwind, especially in the U.S. and in Canada, too, as it relates to commodity prices, as it relates to farmers’ sentiment — what’s on their mind, what’s their attitude. I’d say it’s solid, and I think that’s only tempered again by some of the unknowns on supply with inputs, but overall we want to keep growing our brand in North America.
SF: What are you hearing from farmers right now?
ER: I think the big thing for them is that fuel prices are too high, fertilizer’s too high — and every other input for that matter. Unfortunately from our standpoint on the equipment side, we’ve seen more increases than we obviously wanted to, but when the costs go up it’s just a sea swell of rising costs for everyone. I think everyone is a little concerned as it relates to moisture, particularly in the Midwest now.
I think once the crop gets into the ground, like every year when we start getting into May and June and really see what the crop looks like, then we’ll have a better handle. But I think the fundamentals for a good year in agriculture in the United States are in place.
SF: With standard fuel prices at an all-time high, where is CLAAS in development with biofuels in the upcoming years?
ER: It’s kind of a triangular equation. You have the engine manufacturers, which in some cases are the same as the company or some cases they’re different. You have the fuel providers and then you have the legislation. When we take a look at biodiesel we’re asking, what are the current standards? What are the current requirements? How does that become a flywheel effect within our industry? The more of our own commodities that we can consume in operating our equipment, the better off we’ll be. We don’t use gasoline engines, but we are a huge supporter of ethanol. I think biodiesel is going to be one that we all work on. We just kind of need to collaborate maybe a little bit more as an industry than we have maybe in the past.
SF: In your conversations with farmers, what has been the sentiment toward biofuels?
ER: I think it’s generally positive. In past decades when biodiesel was being used, we either had an inconsistent supply or we had inconsistencies in the performance and I think that’s gotten a lot better. For the farmer who may not be as into sustainability now as he wants to be in the future, he sees that as number one, it’s going to provide me with the same performance that I get with regular diesel fuel, but at the same time, it’s also more of a sustainable way to do it. I think there’s generally positive support for that. But I think like electric vehicles, everyone wants to do that, but the commercial viability has to be there.
SF: How is CLAAS handling the crisis in Ukraine right now?
ER: We’re focusing solely on the humanitarian part of it right now. We have employees both in the Ukraine and Russia, and we’re wanting to make sure that they’re taken care of. If you look at the position of the Ukraine and Russia in their supply of cereal grains, not only in Europe, but the rest of the world, there is going to be a significant impact and we just want to be ready to do whatever we can to make sure that we can take care of as many people as possible. It’s just really difficult, it’s such a fluid situation. Right now we have a number of employees in Ukraine and safety is a big thing. Really, we’re watching this unfold with the rest of the world and keeping a close eye on how we can help people.
We had an office in Kiev, it’s closed. We’ve had a number of our employees who have done their part for their country. In Russia right now, because of the supply and stopping shipments that one is temporarily paused as well. I don’t want to harp on too much, but whether it’s a Russian colleague of ours or it’s a Ukrainian colleague of ours, it’s still a CLAAS colleague of ours. We just want to make sure that we stay in touch with them, and be there to support them however we can.
SF: The supply chain is obviously an issue on everyone’s minds right now, how is CLAAS managing that in 2022?
ER: We actually got some pretty good practice during COVID. Not practice in supply chain issues — it wasn’t component component shortages — but it was having people who weren’t able to come to work, or it was lack of ships. It was more on the logistics side, supply side. So I think we learned a lot of good things.
One of the things that we did is we went to our dealers and said, “Can we ask you to forecast out a little bit farther?” We were forecasting 12 months out and now we’re 24 months out. That’s not our lead time, but that’s our forecast time. We’re saying it to our dealers and to their customers, not to saddle them with an unnecessary burden, but to give them transparency and for them to give us transparency as well. So we can kind of work through, “Okay, if you need this machine at this time, and we have these known supply constraints, what can we do to plan for that?”
One of the main things is being much more transparent. We were always good communicators, truly transparent on what the situation is week to week, even day to day, and trying to understand what their position was as well. So we could work through that. But I will tell you, it is challenging.
SF: Are there any specific hold ups you’re running into with the supply chain?
ER: Logistics. Whether it’s ships or containers, whatever — that’s still quite a bottleneck. But if I go to actual component supply — rubber is a big one. We’ve been able to manage through that one pretty well, but it’s one of those things, you see the clouds kind of coming and you prepare as well as you can, and hopefully when the storm comes, you have your umbrella up. The other is on electronics, everything from cables to ECUs. Anything electronics and especially those that contain rare earth minerals like palladium or nickel — those are becoming more and more constrained.
SF: In your long career, what are some surprises you’ve seen come out of the industry?
ER: I would say the level of autonomy in machines, whether it’s covert or overt autonomy. I would say overt autonomy is like a driverless tractor. Covert autonomy is like our Lexion combine that sets itself on the fly — you still have a human being there, but the machine is basically doing all that together. I think the adaptation of that consistently throughout our industry went probably a little bit quicker than I expected, and I think it’s going to just continue to accelerate. It’s like consumer electronics, it’s not a gradual incline, it’s an exponential curve.
We have also seen a little bit more consolidation in the land in certain areas of the U.S. and Canada that maybe I didn’t anticipate as well. I still think there’s a number of, middle size farms or smaller dairies or beef operations that are still an important part of North American agriculture, that are still around and they’re still thriving. I think we as manufacturers not only owe it to our large customers, but all customers that are in agriculture, is “Hey, we’re all in this together and what can we do to support you as well?”
SF: What is CLAAS’ path forward to the future? What, what do the next five years for technology look like?
ER: I think we’re going to continue to see machines that are able to take care of themselves with adjustments on the fly, for changing crop conditions or whatever. I think you’re going to see more and more diagnostic capabilities, so if a machine is not feeling well, it can automatically tell the doctor (the dealer or the customer) “Hey, I need you to look at this before it becomes a big problem.” I think remote service and remote diagnostics through telemetry are going to continue to be big players.
I also think that with autonomy, driverless tractors for example, there’s two schools of thought. Do you take a lot of little ones and put them together as the job gets bigger? Or do you take what equipment you have now? I think that’s still something that’s going to have to be worked out in the industry. We’re starting to figure out what our next steps are as it relates to technology. Everything from a round baler to a forage harvester and everything in between is going to see more and more technology.