Parts and Labor

There are several industries that enjoy a bad economy — auctioneers, education, accounting, repossessions and vice products (to name a few of our favorites). These are anti-cycle businesses. The parts and service markets also tend to grow in depressed economies. When contractors aren’t buying new equipment, they’re usually holding onto older machines longer. So smart dealers and manufacturers are putting an extra focus on the maintenance and service markets in these slow growth times.

CNH Global N.V. is a great example of a company retrofitting its repair and supply chain. A majority-owned subsidiary of Fiat Group (the same Italian company that just became an owner of the new Chrysler Group, LLC), CNH is providing after sales parts and service with a new facility, while upfitting its remanufacturing operations.

CNH Parts & Service, the product support business for the Case and New Holland brand families, recently unveiled plans to occupy a newly developed distribution center in Portland, Ore. CNH Global N.V. has also agreed to develop a full scale remanufacturing operation and services company as a joint venture with Springfield Remanufacturing Corp. (SRC) to be called CNH Reman. The partnership brings together CNH Parts & Service product expertise (its access to equipment and dedicated dealer networks) with SRC’s remanufacturing operations, capabilities and expertise.

“We see remanufacturing continuing to grow in importance in North America, so CNH is expanding its long-term relationship and partnership with SRC,” says Eric Bippus, vice president of sales and marketing, CNH Parts & Service, North America. “Together with SRC, we are positioned to reach aggressive growth targets designed to serve our dealer and customer needs and meet investor expectations.”

Remanufacturing is the process of recovering used systems and components, repairing and/or replacing worn out or obsolete parts to make a new, yet also used (and cheaper) products for the buyer. Dealers and customers will realize several advantages with an expanded selection of reman products. Remanufacturing gives customers the opportunity to purchase replacement assemblies and components that are just like new, sometimes better than new due to engineering enhancements, at a reduced price and with a

competitive warranty (to read more about the construction equipment reman industry, turn to page 26).

“For us, this is like coming home again,” said Jack Stack, president and CEO of SRC. “The creation of CNH Reman takes us back to our origins, and we’re excited to partner with CNH to provide a more robust line of reman products.”

CNH plans to improve and increase product coverage across five product lines so that dealers can better serve their customers:

1. Engines and components

2. Drivetrain and components

3. Rotating electrics

4. Electronics

5. Hydraulics

CNH Parts & Service also unveiled plans to occupy a newly developed 250,000-sq-ft distribution center in Portland, Ore., last month.

Company officials expect the state-of-the-art parts distribution facility to be fully operational in the first quarter of 2010. The facility will serve more than 130 New Holland, Case IH and Case Construction equipment dealerships in the Pacific Northwest and is expected to bring 35 to 40 new jobs to the Portland area, according to Anu Goel, vice president of North American Parts Operations for CNH Parts & Service. CNH is investing more than $15 million in the new distribution center, which also allows for future expansion.

“This particular site was chosen for its proximity to the Portland International Airport and port facilities, as well as its access to the major interstate highways in the region,” according to Goel. “Once it is operational, we anticipate that the new Portland distribution facility will be a key logistics and transportation hub within our network and our new gateway to the Pacific Northwest market.”

Finally, CNH Global N.V. and Fiat Powertrain Technologies (FPT), both companies of the Fiat Group (FIA:MI), announce a joint agreement to expand the FPT North America (NA) dealer network. FPT NA and CNH Parts & Service will cooperate in the areas of after sales service and parts. FPT NA will select and designate approximately 300 independently owned dealers from the CNH family of brands, to operate as authorized FPT service dealers.

“The dealer principals have expressed a high level of interest, capability and commitment for expanding their participation in the North American engine business,” said Ted Bregar, general manager and COO of FPT North America.

“Case, New Holland and Kobelco Construction and Case IH and New Holland Agriculture dealers are attracted to the unique opportunity to become a part of the FPT brand in North America because of its international reputation.”