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2008 Speeches

Robert W. Lane     Robert W. Lane Foreign Policy Association
90th Anniversary Dinner

New York City, New York
Remarks by Robert W. Lane
Chairman & Chief Executive Officer
Deere & Company
May 29, 2008

Thank you Noel. Good evening, ladies and gentlemen. It is a great privilege to accept this impressive award on behalf of Deere & Company's more than 50-thousand employees throughout the world.

For 171 years, Deere & Company has aspired to build a great business by offering products and services that contribute to human flourishing. We do so by partnering with those close to the land — producing food, fiber and fuel, creating infrastructure and shelter, and even beautifying and protecting the land.

All of us have been starkly reminded in recent weeks of the paramount importance of the global agriculture system with the sharp run-up in food prices and resulting political instability in some countries.

Although this is a complex issue, to be sure, it comes down to three key factors: a burgeoning global population, expanding from six to nine billion people by 2050; improved global diets supported by widespread economic growth; and the emergence of renewable fuel sources. These factors are responsible for a new global agricultural renaissance.

Looking forward, we believe significant productivity improvements — using the world's resources in a far more efficient manner — will enable consumers to enjoy improved diets, natural fibers, and renewable fuels.

Let me briefly explain how John Deere has moved from a Midwestern farm equipment company, to a major player in helping feed, clothe and fuel the world.

Today's Global Reach
Although we sold our products outside North America as early as the late 1800s, we did not begin international manufacturing operations until the late 1950's. Today, John Deere does business in more than 130 countries, and operates manufacturing facilities on four continents.

Since the late 1990s, our growth has been strong in emerging markets experiencing major population growth, rising incomes and changing diets. Our objectives are to serve the local markets, by building manufacturing and distribution networks and at the same time, accessing efficient production of goods and components that enable us to remain competitive in our established markets.

Extending the John Deere brand to an ever-widening global customer base is a top priority. Last year, sales outside North America surpassed $7 billion — that's the same level our entire ag division had just five years ago. Deere's sales in the emerging markets of Brazil, Russia, India and China nearly doubled last year, as these economies continued to grow and develop.

The worldwide agricultural potential is great. Russia and the former CIS countries, for example, have the same arable area as North America, and an even larger forestry area.

I was just in Kazakhstan and Russia and witnessed firsthand the unbelievable growth prospects there. I met two Kazakh farmers, one reputed to be the world's largest farmer with some 2 ½ million acres, and the other, slightly smaller, with 1.9 million acres. They have been able to convert vast expanses of once unproductive land into these 'mega-farms,' thanks to the use of new technology/low tillage practices using our modern air seeding equipment and satellite guidance systems.

They call this technology 'revolutionary' because it has displaced deep plowing in this low-rainfall production area and enables greatly improved water management, reduced input use and dramatically improved grain yields — 50 percent higher in some cases.

As evidence of our confidence in Russia, we recently announced an $80 million investment in a distribution, replacement parts and training facility, southwest of Moscow.

Brazil offers significant growth opportunities as well, with as much as 40-million hectares of pampas — not rain forest — still available for conversion into sustainable agricultural land. We just opened a new state-of-the-art tractor factory in Montenegro, complementing our leading position in combines and seeding equipment in that country.

Ten years ago in India, I walked across an expansive open field near the city of Sanaswadi, considering Deere's entry into the world's second fastest-growing economy and largest tractor market. Today, we operate a modern manufacturing facility on that site, producing small horsepower tractors, engines and transmissions, not only for the Indian market but also for export. And we have a world-class technology center nearby, with more than one thousand employees.

In China, we've moved from a single joint venture operation less than ten years ago, to a significant presence in this fast-growing market, manufacturing tractors, combines, drive trains, and excavators. Our most recent acquisition, the largest tractor manufacturer in southern China, expands our product line for farmers in that country and beyond.

Social Responsibility
As we deliver quality products and services to a growing number of customers in a growing number of places, we do so mindful of our commitment to serving communities and society at large, to fair dealing in all relationships, and to minimizing environmental impacts. By operating in this manner, we seek to ensure that our actions result in performance that endures.

Wherever we do business, John Deere aims to improve productivity and minimize environmental impacts. At our new tractor facility in Brazil, for instance, one-fourth of the 237-acre site is maintained as undisturbed nature habitat. Minimal-energy-use principles were followed to select energy-efficient motors, lighting design and the facility's energy management systems. Environmentally-safer refrigerants are used for cooling systems.

In 2007, all of our facilities began work to reduce greenhouse gas emissions as part of the company's participation in the U.S. Environmental Protection Agency's Climate Leaders Program. We continue, as well, to support alternative energy sources such as wind and ethanol. In fact, we are something of a pioneer in the wind energy business in the United States. Working with partners in rural areas, our investments in projects now exceed $1 billion and generate over 600 megawatts of electricity, sufficient to power 180,000 homes for an entire year.

John Deere products are known for productivity and efficiency. The company's investment of more than $2 million a day in research and development is aimed at maintaining that focus for our customers, even when it could disrupt our business.

For example, we pursued low tillage technology in the 1980s, a time of serious business downturn for us. We knew it could dramatically reduce demand for the plow, which it certainly did, and require less tractor power and usage.

Reduced tillage technology, however, as I mentioned a minute ago, brings enormous environmental benefits in reduced soil erosion and energy use, improved moisture retention and enhanced carbon sequestration, now important in addressing climate change. Now that, I contend, is social responsibility!

As I noted at the outset, feeding a growing global population with increasing affluence, especially in developing countries, is a major challenge for this century. Greatly increasing the productivity of the existing agricultural resource base, in an environmentally-friendly way, now must be seen as a top global priority.

In addition to the high specification products widely used in many agricultural areas, John Deere has developed machinery well-suited for farming conditions across the developing world. From India, we now export tractors to 55 countries, including the United States. Our recent acquisition in Ningbo, China, will enable us to provide an even smaller tractor ideally suited for many more farmers in the developing world.

Permit me to mention one additional example, a relatively new product line for Deere — water technology. Water trails only arable land as the most critical resource constraint in food and forestry production.

John Deere Water Technologies provides high performance plastic macro- and drip-irrigation products for the agricultural, nursery and greenhouse markets, as well as products and services such as irrigation systems for golf courses. Both businesses help customers effectively manage water to improve plant health and reduce the use of chemicals, thus placing Deere in the forefront of the advanced water technology business.

As you can see, corporate citizenship is a vital part of daily operations at John Deere and plays a major role in our business success. This approach provides performance and productivity to customers as well as exciting career opportunities to employees — all of which results in a valuable return to investors. These elements, applied sustainably, lend crucial support to our pursuit of performance that endures and contributes to human flourishing around the world.

Thank you for your attention and for this meaningful award.