Speaker 1: This is Bloomberg Business Week with Carol Masser from Bloomberg Radio.
Speaker 1: Listening to Bloomberg Business Week. So, one of the areas
Speaker 1: that we've talked a lot that we're impacted by that
Speaker 1: was excuse me, impacted by COVID nineteen is one that
Speaker 1: we deemed essential during the health pandemic. We're talking about
Speaker 1: the global agricultural industry. A major player in that industry
Speaker 1: is Mahindra, the global conglomerate based in India. Joining us
Speaker 1: to talk about the agg industry specifically UH and tractors
Speaker 1: is Veran Poperly, President CEO at Mahindra Agriculture in North America,
Speaker 1: joining us on the phone from Houston. Veren So nice
Speaker 1: to have you here with us. How are you very well?
Speaker 1: Thank you? Cole's pleasure being here. And uh, it's a
Speaker 1: great weather down here, so yes, it's always good. Well, well,
Speaker 1: tell me a little bit. I want to get into
Speaker 1: your business, but tell me a little bit about Houston
Speaker 1: right now. Um, and in terms of dealing with the pandemic,
Speaker 1: the impact that you're seeing, Um, how's it going. Yeah,
Speaker 1: we are seeing a pretty large number of cases and
Speaker 1: so everyone's you know, it's pretty much like the rest
Speaker 1: of the country, everyone's kind of bearing masks and kind
Speaker 1: of isolating themselves and living further and further out from
Speaker 1: everyone each other. And so at some level, somehow it
Speaker 1: seems to be working well for the tractor business. Well,
Speaker 1: let's talk about this. I mean, first of all, if
Speaker 1: you could take me back to the spring, what was
Speaker 1: going on for you and your team at the company,
Speaker 1: and I'm curious, then kind of take us forward how
Speaker 1: things have evolved. But what was it like back in
Speaker 1: the spring. Well, back in the spring, I think in
Speaker 1: March when this thing started. I think, like everyone else,
Speaker 1: we were completely panicked, and you know, we really pulled back,
Speaker 1: you know, went down the roads of shutting down the
Speaker 1: plants and manufacturing and the supply chain kind of froze.
Speaker 1: We had our own versions of layoffs and furloughs, but
Speaker 1: you know, you know, we tried to focus on then.
Speaker 1: But what we found was the retail industry suddenly took
Speaker 1: off somewhere towards the end of April. And I guess
Speaker 1: as people were spending more and more time in their
Speaker 1: farms and back in their homes, they were wanting to
Speaker 1: do more home improvement moving out so we saw the
Speaker 1: tractor industry started to pick up pretty quickly, and uh
Speaker 1: so we had to figure a way to come back.
Speaker 1: And you know, we started the same thing, which is
Speaker 1: temperature checks, you know, split shift, slowly bringing people back,
Speaker 1: putting in all the plastic barriers and separate and redesigning
Speaker 1: the production line and production flow through. So Ever since
Speaker 1: that happened has just been momentum has been gaining and
Speaker 1: so far the industryes you know, just the year today,
Speaker 1: I think industries up twenty. That's pretty remarkable. We'll talk
Speaker 1: to me a little bit um. You're about the demographics
Speaker 1: of who was buying because my understanding, my producer Paul
Speaker 1: Brenna was filling me in a little bit earlier that
Speaker 1: I think seven percent of your sales were customers that
Speaker 1: actually never had owned a tractor before. Actually that's the
Speaker 1: people buy tractors. Wow, okay, we we left out of zero.
Speaker 1: That's trumendous. I mean, first of all, what kind of
Speaker 1: tractor are they buying? So basically we generally operate in
Speaker 1: the you know, the small track, the midden compact tractors
Speaker 1: between twenty two horseper and those are largely driven by
Speaker 1: you know, rural lifestyle, small farms in the second tractor,
Speaker 1: a third tractor, and a big farm. So they're not
Speaker 1: the really big road cropping tractors. They're smaller in size
Speaker 1: and they operate more in the whole large homeowners and
Speaker 1: rural lifestylers. A bit of a surprise for you to
Speaker 1: see that market come alive. Yeah, it was, you know,
Speaker 1: I think pretty much the whole industry has been caught
Speaker 1: by surprise. Uh we've seen you know, the industry inventory
Speaker 1: and the dealerships are down significantly obviously because of the
Speaker 1: huge demand, and you know, the supply chain being challenged,
Speaker 1: and you know, our ability to ramp up globally and
Speaker 1: get parts in has been a bit of a challenge.
Speaker 1: But now we're we're back on track and you know,
Speaker 1: being able to supply back in. But it was a
Speaker 1: big surprise. No, no, no, forgive me you have forty
Speaker 1: seconds and then we'll take a break and then we'll
Speaker 1: talk some more. But the supply chain was it problematic
Speaker 1: a little bit in the beginning. Oh yes, it was,
Speaker 1: I think, you know, with shipping shut down, ports, shut
Speaker 1: down factories all over the world, also going through their
Speaker 1: own world. You know, the pandemic is global, so it's
Speaker 1: not just one country that's impacted. Right, So everything was
Speaker 1: shut down, so we had a tough time getting parts made,
Speaker 1: getting them moved, bringing them in. Then you know, the
Speaker 1: whole challenges of the local market of getting the workers in,
Speaker 1: getting them, you know, protecting them and keeping them safe.
Speaker 1: And then even our dealers, you know, many of our
Speaker 1: dealers had to transition to this new environment, so helping
Speaker 1: them on the journey of digital marketing, helping them on
Speaker 1: the journey of safe delivery, cleaning equipment. So there was
Speaker 1: a it was a pretty interesting and a lot of
Speaker 1: work to be done in the last six eight months
Speaker 1: that we've had to go through. I hear and one
Speaker 1: thing I want to ask you, so Charlie Pallatta, our
Speaker 1: news broadcaster, bringing that headline US covered nineteen deaths to
Speaker 1: two thousand. That is according to Johns Hopkins, these are
Speaker 1: really troubling numbers. When you see these numbers, you know,
Speaker 1: and we're starting to see cities and certainly states cantinuing
Speaker 1: to do rollbacks and shutting down parts of their economy.
Speaker 1: What do you think about and how might that impact
Speaker 1: your business? I mean, you guys have seen kind of
Speaker 1: a benefit as more people have been home. Do you
Speaker 1: anticipate then, in an odd way, like we've seen with
Speaker 1: a lot of businesses, whether it was Netflix or some
Speaker 1: others or zoom Um or Peloton, that you will continue
Speaker 1: to benefit as a result. Well, you know it is
Speaker 1: it is a really sad situation and you know, every
Speaker 1: LifeLock is tough to deal with. Since the point is
Speaker 1: that the FED is announced, I think very a benign
Speaker 1: interest rate regime over the next twelve to eighteen months,
Speaker 1: so you know, money availability is there, and I'm hoping
Speaker 1: that you know, there will be one more stimulus announced
Speaker 1: fairly soon and when these two come in, and if
Speaker 1: this trend continues, I guess you know, people are going
Speaker 1: to be stuck at home and you know they need
Speaker 1: things to do. And yeah, I do think that the
Speaker 1: tractor industry will continue to do well, and you know,
Speaker 1: people will want to improve their homes or you know,
Speaker 1: you're also seeing a trend of people, you know, with
Speaker 1: this work from home, the concept of distance distance has vanished, right,
Speaker 1: More people can work from home, and so they're moving
Speaker 1: out of the cities into you know, buying larger plots,
Speaker 1: are moving further out into bigger into a semi rural
Speaker 1: and semi urban areas. So we think that the attractor
Speaker 1: industry should continue to see some momentum continue and over
Speaker 1: the next twelve months at least. Well, that's how it's
Speaker 1: curious about the visibility that you have at this point,
Speaker 1: yere and Um, you know, you do have to your
Speaker 1: running a company. You've got to make decisions. You've got
Speaker 1: to decide where you allocate capital. Are you comfortable to
Speaker 1: spend money at this time or do you feel like
Speaker 1: you've got to be a little bit more conservative. Well,
Speaker 1: we have to be more conservative. We've been very careful
Speaker 1: about you know, how much and where took place and
Speaker 1: what to do. But at the same time, we've got
Speaker 1: you know, I think at least for the next the
Speaker 1: season does slow down through the winter months, so we
Speaker 1: have some time to make big decisions. But come much,
Speaker 1: I guess, come fair, but I think we'll have to
Speaker 1: have placed up beds and start moving forward. Well, and
Speaker 1: it's interesting too, I think about leadership at this time.
Speaker 1: Talk to me about you know, I've had a lot
Speaker 1: of conversations with CEO about having to think about your employees,
Speaker 1: keeping them safe, having to think about your consumers. How
Speaker 1: do you continue to engage with them where they're also
Speaker 1: being stressed or having to engage in a different way.
Speaker 1: You talked about your dealers right, having to engage on
Speaker 1: a digital in a digital way. Yeah, that's it is.
Speaker 1: It's been it's been interesting. It's been a pretty challenging time.
Speaker 1: And I think every every day is a new day.
Speaker 1: You know that these days when you could, you know,
Speaker 1: when you look for consistency and continuity, they look like,
Speaker 1: you sound almost like good old days now. So you're
Speaker 1: basically moving from challenge to challenge fairly quickly. I think
Speaker 1: the primary effort always is to keep people safe, right,
Speaker 1: I think that's the first effort. The second effort is
Speaker 1: to make sure that you know, you're able to keep
Speaker 1: the wheels turning and business profitable and moving forward. So
Speaker 1: it's uh, I don't think it's any more about fighting
Speaker 1: a big fire. It's fighting a series of small fires
Speaker 1: every day and putting them out like smoking the bear,
Speaker 1: right almost. But the challenges, so, you know, we've been
Speaker 1: trying things. We've been working with dealers, Like I said,
Speaker 1: for customers, you know, we've given in payment holidays, we've
Speaker 1: tried to extend you know, more beneficial financial terms to
Speaker 1: them to help them. Some of them have come back,
Speaker 1: A lot of them have come back to our finance
Speaker 1: company to you know, re redo their loans or you know,
Speaker 1: extend them. And so we've been working with some of
Speaker 1: that as well. Because at the end, see, I think
Speaker 1: that the important thing to keep in mind is that
Speaker 1: we're not here for the short term, right here here
Speaker 1: for the next twenty years. So uh, in a sense,
Speaker 1: this too shall pass, and you know, we'll have to
Speaker 1: work our way through this and look beyond, uh, this
Speaker 1: crisis into better times. Based on what you said, I
Speaker 1: thought that was kind of interesting, UM, and we've talked
Speaker 1: about this. I had a UM commercial real estate guest
Speaker 1: on yesterday and talked about how he is. He's a lawyer,
Speaker 1: but works within the commercial real estate space and renegotiating
Speaker 1: and working out deals between landlords and tenants. Because landlords, ultimately,
Speaker 1: especially in kind of New York City, you don't necessarily
Speaker 1: want to lose your you know, client, your restaurant or
Speaker 1: retail client. UM, you'd rather figure out a way to
Speaker 1: keep it going. It's beneficial to the landlord as well
Speaker 1: as beneficial obviously to the tenant. How many of your
Speaker 1: customers have been coming to you to say, listen, you
Speaker 1: know we can do this, but we just need easier terms.
Speaker 1: Has it been a large percentage, Well, it's been it's
Speaker 1: been a it's been a reasonable percentage. I would say
Speaker 1: about ten fift of our customers did come back and
Speaker 1: we've done something enough finance companies working with them on
Speaker 1: a case to case basis basis there you know, past perform,
Speaker 1: possibility to pay, a future, ability to play and you know, uh,
Speaker 1: you know what's the kind of bridging that they're looking for? Right?
Speaker 1: But I guess it's time we have to be flexible
Speaker 1: and you know, cry and see what we can do
Speaker 1: best together, because yes, you're right, at the end of
Speaker 1: the day, we have to you know, I have to
Speaker 1: work together. There's no magic bill that's coming out, hopefully
Speaker 1: the vaccine, but till then it just does I know, right,
Speaker 1: we just gotta figure out a way through. Just got
Speaker 1: a couple of minutes left here. Are you able at
Speaker 1: this point to kind of look beyond um a world
Speaker 1: where we are way down by COVID nineteen And if so,
Speaker 1: I am curious for our audience. I think we think tractors,
Speaker 1: we think of big farms and farming, and you've really
Speaker 1: kind of I think opened our eyes to that there
Speaker 1: are people who are you know, doing something at home
Speaker 1: and needs some kind of tractor. Um, what are the
Speaker 1: kind of the interesting, larger, broader trends that are happening
Speaker 1: in your industry that you'll be able to really kind
Speaker 1: of focus on more once we get on the other
Speaker 1: side of COVID nineteen. So kind of generally speaking, also
Speaker 1: in the US, you know, people who have spent their
Speaker 1: life making their careers in cities after a point in
Speaker 1: time want to go out of the city because you know,
Speaker 1: the city life is kind of makes unonymous. It's you know,
Speaker 1: your your self king out at machines and supermarkets and
Speaker 1: you know you're in a neighborhood where nobody knows you.
Speaker 1: And then you want to go to a place where
Speaker 1: the barbon knows how to cut your hair, or the
Speaker 1: coffee shop knows how to make your coffee and you
Speaker 1: know everyone on the street. So a lot of people
Speaker 1: generally speaking, as they come close to the time and
Speaker 1: tend to move out of the city into you know, uh,
Speaker 1: semi urban and rural America and buy large properties. And
Speaker 1: so you do need tractors at that point. We're also
Speaker 1: seeing you know a lot of people already had second
Speaker 1: homes in the country and now they're spending more time
Speaker 1: in those second homes than they were spending in the
Speaker 1: past because of the pandemic. And the next thing you're
Speaker 1: seeing is interesting, is a younger audience thanks to technology
Speaker 1: and you know, those who are working in the digital space,
Speaker 1: you know, being able to work from home, and so
Speaker 1: they're also moving out and you know, taking their kids
Speaker 1: out as well, into these smaller communities. So I see
Speaker 1: a broad trend that's starting to happen, and I think
Speaker 1: that trend is only going to accelerate. I think, you know,
Speaker 1: the amount of che injur we've made in the last
Speaker 1: six months on work from home and Zoom or you know,
Speaker 1: tour or teams or whatever. I think it changed the
Speaker 1: way you live, right, Yeah, it's yeah, it certainly feels
Speaker 1: that way. Vin, thank you so much. Really enjoyed this
Speaker 1: Vian properly presidency at Mahindra Agriculture North America. Joining us
Speaker 1: on the phone from Houston,