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Robert W. Lane |
(Remarks as Prepared)
25X'25
Second National Ag and Forestry
Renewable Energy Summit
Mayflower Hotel, Washington, D.C.
Remarks by Robert W. Lane
Chairman & Chief Executive Officer
Deere & Company
March 8, 2006 |
Partnering To Build Great Businesses
My special thanks to Ernie Shea and to your partners, Ernie, who have
diligently applied their unique resources and thinking to place the possibilities
of energy from renewable resources before the citizens of the world.
We assemble in Washington to exchange views on building a new business:
A business as great as all the bountiful resources of our agricultural lands
and forests; a business as great as the global competitive demands for capital
might possibly envision; and, a business as great as the needs of a healthy
environment. This is a business based on an abundance of energy and mindful
of the security interests of all nations.
This morning, I had the honor to testify about aspects of the state of our
nation's health care system before Senator Grassley's Finance
Committee. Walking the halls of Congress, traveling Pennsylvania Avenue
to meet here with you and recalling recent meetings with the President where
I discussed the interests of those gathered here today, I reflect with you
this morning about the strength of this democracy and its world-leading
economic engine. But I simultaneously challenge us to understand our generation's
demand to move forward at this unique time in history with the renewable
energy opportunities that lie before all the people of the world. Let us
all now give thanks for our bounty while applying the conviction necessary
to provide the food, fiber and fuel needs of our children and their children.
In my brief remarks entitled "Partnering To Build Great Businesses,"
I will explore three points: First is this unique time in our history; second
is the potential of a renewables industry of great businesses, which provides
compelling economic, environmental and security benefits to all; and, finally,
this talk will explore the immediate challenges in the ongoing work of this
25X'25 consortium.
Attention to renewables comes at a propitious moment when global economic,
environmental and security interests have converged to create the "perfect
storm:" a concurrence of public desires evidenced by:
- a demand to reduce dependence on foreign oil imports and finite energy resources;
- goals to minimize environmental impacts of fossil fuels production and use;
- the development of new value-added opportunities for agricultural producers
and foresters;
- investments in rural economic development;
- a reduction of the reliance on trade-distorting agricultural supports in
favor of fully accessible markets; and,
- the enhancement of the global competitiveness of farmers.
Purdue University Extension Economist Chris Hurt writes, "The ethanol
revolution has arrived." Just two weeks ago, President Bush remarked,
"Applying the talent and innovative spirit of our citizens, we will
foster economic growth, protect and improve our environment, move beyond
a petroleum-based economy, and make our dependence on foreign sources
of energy a thing of the past." New York Times columnist Tom Friedman
opined recently, "The energy question is the big strategic issue
of our time, overtaking 9/11 and the war on terrorism." Thought
leaders are pressing our case.
It was almost one year ago that USDA and the Department of Energy issued
their study concluding that the combined forest and agriculture land resources,
in addition to meeting food and fiber demand, have the potential of sustained
supplies to replace more than one-third of the nation's current
petroleum consumption. Ladies and gentlemen, this is real. We can do it.
It is well worth the enormity of the efforts required.
Because we are all involved in some way with the land, we know well the
opportunity this moment presents. We understand the strategic importance
that the agriculture and forestry sectors must play for our future security
and prosperity. It is through sustainable commercial enterprises in a
growing, thriving industry segment that the long-term promise of renewables
will be met.
The topic of building sustainable enterprises to develop this industry
is one I will turn to next.
At John Deere, our goal is to build, and indeed to grow, a business worthy
of the products we make and the people who make them. Certainly, there's
plenty of challenge in that goal. Yet through aligned high-performance
teamwork, we remain confident that our disciplined efforts to create an
even more resilient, growth-oriented enterprise are on track and will
provide benefits to all with a stake in our success for years to come.
My simple proposition to you is this: All of us who are engaged in bringing
renewable energy into the marketplaces of the world should seek to build
enterprises worthy of the rich resources of our croplands and forests
— and of the excellent people who toil to bring forth this bounty. Just
as a factory must become competitive through judicious use of assets and
the productivity of its people, producers of food, fiber and fuel in this
competitive global environment must build, and indeed grow, renewable
energy businesses as great as the resources and people. Will we, as stewards
of our vast lands, be judged as just "good enough" or will
we be "great?" I challenge us to be truly great!
That goal becomes realistic because capital finally is being directed
toward the commercialization of renewables from ethanol production, to
bio-refinery development, to bio-mass/cellulosic conversion and to harnessing
the power of the wind. At John Deere for instance, we are at work providing
project development, debt financing and other services to those interested
in harvesting wind power, both as a debt and equity partner.
We also play a role in biomass development. I think of our 1490D Energy
Wood Harvester that I have operated in the Scandinavian forests. The "Bundler"
itself aggregates forest residues from harvesting operations for transport
and use in a biomass power generation plant. Think about this: each of
these bundles, or "slash logs," provides about one megawatt
hour of energy, which equals the power produced by 25 gallons of oil.
Deere and others produce machines like rakes, balers and forage harvesters
that currently harvest crop biomass. These machines can support the biomass
industry as it becomes established, after which the market can identify
the need for specialized new machines. Deere is supporting research at
three universities to understand the requirements of machinery systems
for the future.
Researchers continue to uncover new candidate plants for energy production,
such as tropical plants that produce well in temperate latitudes. They
also are learning how to manage new and existing plant species for their
maximum net energy production. The techniques of genetic engineering allow
plant breeders to understand why plants perform the way they do, and move
traits between species to maximize food and energy value.
John Deere has been a beneficiary of this work. Our engineers actually
employ grain- and oilseed-based composites (plastics) for applications
in our equipment. Two-percent biodiesel fuel, B2, is now the preferred
factory-fill in all diesel-propelled John Deere machines made in the U.S.
These efforts demonstrate crop uses of significant promise.
In these ways and others, businesses are partnering with farmers, landowners
and developers to evaluate potential projects, and provide capital and
business know-how to bring viable projects on line. In doing this, we
aim to offer our shareholders a great business.
Renewable energy businesses must, over time, prove themselves sustainable,
with a government partner while needed, promoting research and infrastructure
needs, for example. But the business itself must prove itself viable over
the long term without subsidization. Certainly questions exist:
- Which segments will prove most profitable?
- Do government investments make sense in their current form?
- Where best to invest our public monies to meet the promises of renewable
energy production?
It is this evolution towards profitability that provides the basis for
the policy debates before us on many issues, such as standards and specifications
or the distribution of bio-fuels.
To take full advantage of these opportunities will require entrepreneurial
development, innovation, capital and private sector leadership with governments
as partners. Certainly sound public policies are necessary to the evolution
of economic, political and social environments that allow good businesses
to become truly great businesses. Renewable energy is no exception. In
these environs we will build businesses as great as our resources, as
great as our people, to foster an industry promoting world economic growth.
And now for the role of the 25X25 effort: Any new industry develops over
time through the work of many and thus the "partnering" theme
of this segment of today's Forum and the basis for my remarks. Partnering
is well-underway among many agricultural interests, community interests
in rural areas, and the foresters and governments around the world. In
a larger sense, it is the role of the 25X'25 consortium to facilitate
productive interplay of these various groups.
The current interest and momentum must be matched by action. And action
. . . now! For if not now, when? Shall we look back years from now at
this "perfect storm" and see missed opportunities to improve
human life or shall we look upon this day as one in which we all "partnered"
to lead?
These initiatives require education and advocacy. Partners like the Farm
Foundation can play a key "teaching" role; while partners
in agri-businesses, bio-based and timberland industries can play an advisory
role to government.
Education and advocacy, as important as they are, must support the implementation
of sound business practices, the development and use of innovative technologies,
and the financial and human capital outlays necessary, the latter with
an eye toward entrepreneurial development which was recently explored
in USDA's AgOutlook Forum.
Author Jeffrey Garten pointed out in his 2002 work, The Politics of Fortune,
that business leaders are, by and large, optimists who are comfortable
with big ideas and challenges to be overcome. "Being realists also,"
he notes, "they understand that rhetorical goals must be matched
by specific targets, measurable results, and personal accountability.
Were they to bring these qualities to the awesome challenge in the developing
world, that alone would be an invaluable contribution."
To close, and with these words in mind, your friends at John Deere stand
ready to move forward with you, helping to foster the craftsmanship necessary
to succeed. For in the end all the debate must give way to getting the
right thing done. John Deere, our founder, built plows in a blacksmith
shop in 1837. His sights may have been on an earlier "perfect storm"
(the unfolding of the fruited plain), but he focused on getting something
done: the development of a plow which would allow the black soils of the
prairie to roll from the polished steel blades formed by his hands. John Deere was a craftsman, although much more. In this light, we must all
follow in the steps of the early pioneers of agriculture to get the right
thing done. Doing so, we will, through sound business practices, build
sustainable enterprises in a new global industry worthy of the admiration
of subsequent generations.
Thank you for listening.
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