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Robert W. Lane |
(Remarks
as Delivered)
John Deere and Iowa: Prospering in a Global Economy
3rd Annual Hoover-Wallace Dinner
Park Place Event Centre, Cedar Falls, Iowa
Remarks by Robert W. Lane
Chairman & Chief Executive Officer
Deere & Company
April 8, 2006 |
Thank you, Ambassador Quinn, for that kind introduction. Let me
also thank you Governor Vilsack, Senators Grassley and Harkin and Representatives Nussle
and Boswell, along with the many state officials here tonight, for your
commitment to public service. Governor Ray, I'd also like to recognize
your many years of public service and the role you played in making the
state of Iowa "a place to grow." It's an honor to join you in celebrating Iowa's rich
legacy in feeding the world.
Detrimental Practice of Gerrymandering
Before I get started, I'd like to take this opportunity to congratulate
Iowa on hosting such a bi-partisan event, where we all can celebrate together. This ability is in sharp contrast to a practice that I feel is tearing at the roots of United States democracy.
And that's the detrimental practice of modern-day gerrymandering....something
Iowa does not engage in.
From the perspective of someone who is privileged to travel to different
countries around the world and work with senior government officials,
I observe political systems that are much more involved in business than
is optimal. And it makes me realize that although we have many challenges
in the United States, we are most fortunate to have inherited fundamentally
sound political concepts - for example the idea that open, transparent
competition is valuable, and contributes to human flourishing....and
that government checks and balances are in order when running a democratic
society. Not just democracy, but democracy under the rule of law.
Sadly, today in the U.S., less than 10 percent of the congressional races
are even competitive, often because of gerrymandering. In contrast, Iowa
sets an exemplary standard, by keeping partisanship out of the process
of drawing district lines.
Congratulations to all of you! I commend you for your actions and I'm
hopeful the rest of the country will, where needed, someday follow Iowa's
example.
Now to tonight's business: On behalf of our 47-thousand John Deere
employees around the world, and the thousands of retirees who built our
company, I humbly thank you for this very special recognition. It is a
great privilege to accept the Hoover-Wallace award honoring John Deere,
the man, and the company he founded 169 years ago.
John Deere and Iowa have enjoyed a mutually-beneficial relationship for
more than 150 years, and today we operate 11 major facilities in the state.
You've heard of our tractors and cotton harvesters in Waterloo and
Des Moines, but you may not realize that in Urbandale, our Ag Management
Solutions venture utilizes advanced technologies to assist farmers around
the world achieve higher productivity.
And Johnston is home to the worldwide headquarters of John Deere Credit.
Ten years ago, John Deere Credit operated in just the U.S. and Canada.
Today, as a vital and growing part of our global business, John Deere
Credit has operations in 15 countries outside the U.S.
In all, John Deere is Iowa's largest manufacturer and its fourth
largest employer, with more than 11,000 Iowans on our rolls.
The Challenge to Iowa and John Deere
As you can see, we have a lot at stake in Iowa! BUT, to assure our relationship
continues well into the future, we must face a daunting challenge. And
that's what I'd like to focus on tonight.
How can Iowa and John Deere prosper in a sustainable way, in
an increasingly competitive global economy?
Since many signs indicate we're on the verge of a global prosperity
explosion, both Iowa and John Deere stand to benefit greatly if -
- first - we continue to be open to the realities of this rapidly-changing
global marketplace;
- second - we continue to be willing to make strategic investments
that support global growth and
- finally - if we can continue to act quickly to capture opportunities.
Open to Realities of Global Marketplace
Let's first examine some of these realities impacting our world
today:
- It's no secret that our global population is increasing. Perhaps
less known is the premise that the 2 billion people living on less than
$2/day in our world today now have real hope for improving their lives.
If their standard of living continues to improve, as economists predict,
the demand will grow for the very crops, food, fiber and energy that
Iowa farmers and other worldwide producers raise and capture.
In addition, our world's population is projected to jump by about
two billion by the year 2030. The developing countries of China, Indonesia
and India, which today make up about half of the global population,
will represent the biggest growth area.
- Another reality of the global marketplace is the increasing popularity
around the world of renewable fuels such as biodiesel, ethanol and wind
- which enable farmers to become producers of energy as well as
food. The emerging field of bio-composites also makes us hopeful for
the future.
- One more reality....that of increasing mobile automation, offers
obvious opportunities for Deere as a manufacturer, and for commercial
and family farmers seeking to improve productivity. For example, advanced
precision-guidance products direct our new 8000-series row-crop tractors
with sub-inch accuracy so that farmers' input costs can be minimized.
Parallel to these trends, however, are the significant challenges of
competing in a global trading environment - an environment that
we at John Deere - and many of our suppliers here tonight -
are dealing with on a daily basis. These challenges impact the entire
world. Global competition is intensifying by the minute and will continue
to do so.
Put as directly as I know how to say it: John Deere must and John Deere will be globally competitive everywhere we do business,
including Iowa.
We all have to face the reality that well-educated people outside the
U.S. are often willing to work smart, hard, and for less money....and
they are capable of doing quality work.
While I believe Iowa workers can compete with the rest of the
global workforce, you can see, we're operating in an environment
with some enormous pressures. These pressures are connected to great opportunities
- if we are poised to take advantage of them.
Willing to Make Strategic Investments
So, how can Iowa continue to take advantage of this global environment?
To begin with, we must continually resist the temptation to pretend these
changes aren't real or aren't accelerating. Protectionist
thinking will dim our future hopes greatly.
Certainly, many Iowans are already well aware of their vital, yet delicate
relationship with the rest of the world. This state exports more than
$3.6 billion in agricultural goods each year. A farmer in Farragut is
more dependent on the global economy than a dentist in Manhattan!
I encourage you to continue to think globally. Actively look for ways
that Iowa products and resources can be applied to meeting the needs of
the global prosperity explosion. I commend Governor Vilsack's recent
trip to India, where he was seeking to establish critical relationships
that will help build Iowa's future, and where he toured our new
Technology Center in the city of Pune.
John Deere today competes on a worldwide basis for product inputs, technology
and the best employees. And in these areas, we must compete successfully
in all corners of the world - including Iowa - in
a manner that is sustainable, if we are to prosper.
If we do not continue to be challenged daily by this new reality,
we will be passed by. If we do not find ways to prosper in the global
environment, we will not survive.
In our efforts to build a great John Deere business, we've made
something very clear to our workforce and the communities in which we
operate. We've told them that an indispensable requirement to being
globally competitive is relentlessly improving productivity. This means
big jumps in productivity, not just incremental ones....although those
are important too, as they all add up.
To illustrate this stretch requirement, John Deere aims to perform, on
average, better than our previous best. Since our previous best was pretty
good, that's a tall order, indeed! We are planning to be profitable
throughout the business cycle, and even under the weakest conditions,
earn the cost of capital.
In parts of the world where we pay high wages and benefits, those facilities
must offset these costs in other ways such as greater output, faster turnaround,
quicker delivery, increased flexibility, and higher quality. The workforce
must be equally or better-educated and resourceful, capable of performing
the most sophisticated and complex work, and more rapidly able to adapt
quickly to change.
For example, our recent $127 million dollar investment at Waterloo Works
illustrates a strategic investment we've made to improve productivity.
When the redevelopment project is completed later this year, the drive
train manufacturing cycle times will be reduced 86 percent, inventory
turns will be improved by 300 percent, and the time it takes to build
a tractor will be reduced from 45 days to 7 days.
I noted a minute ago the urgent need for better-educated and resourceful
employees. It may surprise you to learn that more than 50 percent of John Deere's
Iowa workforce is relatively new -- with five years of service
or less. It's essential we be able to find a steady stream of qualified
new employees in the skilled trades, such as welders. Therefore, we strongly
encourage the state's community colleges to continue to give priority
to job-training programs.
On a broader scale, I challenge the state to continue investing in its
public schools and universities while examining whether it is doing enough
to prepare students for employment in a global economy.
In talking about the U.S. educational system, Bill Gates has said he's
"terrified for our workforce of tomorrow." He notes our country's
fourth graders are among the top students in the world in math and science.
Congratulations to the elementary school teachers! But by eighth grade,
unfortunately, these students are in the middle of the pack, and by 12th
grade, U.S. students are scoring near the bottom of all industrialized
nations.
Gates is concerned - as all Iowans should be: This steady erosion
of the country's scientific and engineering base means the U.S.
will soon lose its innovative and technological edge on the rest of the
world. Without innovation and technology, there can be no long-term, sustained
success in the global market.
To help meet this challenge, the John Deere Foundation supports education
as one of its four priority funding areas each year. We put a premium
on education grants, as a way to help prepare tomorrow's workforce
and global citizens.
In the past six years, the John Deere Foundation has granted some $5.1
million to Iowa's schools and universities....or almost 12 percent
of all Foundation grants all over the world during that period.
In the area of economic development, we encourage the continuation of
programs like Vision Iowa and the Iowa Values Fund. These efforts have
revitalized many Iowa communities, creating a renewed excitement among
citizens and helping Deere recruit and retain highly qualified employees
to the state.
Act Quickly to Capture Opportunities
In closing, let me reiterate we are truly grateful for the recognition
the Hoover-Wallace award bestows on John Deere tonight.
Tonight, you've heard me explain why John Deere is challenging itself
to perform at unprecedented heights. In the same way, I encourage you
as public servants, business and civic leaders to keep your aspirations
high.
Act quickly to capture the opportunities that globalization offers Iowa
and employers like John Deere. By doing so, we can all reap the benefits
and celebrate many more successful years of helping to feed, clothe and
provide energy to the world, while providing great jobs for employees
throughout Iowa. A bright future is available to us. Let's seize
it.
Thank you for listening.
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