CNH Unveils Three-Prong Expansion Plan

A joint-venture remanufacturing firm, new parts depot, and inclusion of Fiat Powertrain gear announced.

CNH Global is working with Springfield Remanufacturing Corp. (SCR) on a joint-venture which will someday be a wholly-owned CNH property named CNH Reman to produce major engine, transmission and subassemblies for CNH ag and construction equipment.

The announcement came today during the CNH Parts & Service meeting in Branson, Mo., about 30 miles from the proposed -- but not yet selected -- site of the new CNH Reman facility.

Eric Bippus, vice president of sales and marketing for CNH, says "remanufacturing will continue to grow in importance in North America so CNH is expanding is long-term relationship with SRC." Bippus says business plans call for a tripling of remanufacturing activity and sales for the CNH group over the next five years.

Jack Stack, president of SCR, says the move is a wise one for CNH at a time when used equipment in the ag and construction sectors is in high demand, and customers are wanting lower price alternatives to new parts and equipment. "It's also a good way to keep tons of material out of the land fill," he noted. Stack says his firm and CNH are actively pursuing several sites in the Springfield, Mo., area for the new facility that will remanufacture engines, transmissions, hydraulics, rotating electrical parts, electronics, and engine accessories.

Bippus says the move is part of CNH's commitment to lower the "total cost of ownership" of CNH equipment to its customers.

To better serve a 3,000 dealer network with reman parts, CNH is also adding a Portland, Ore., parts depot to replace on now located in Reno, Nev. The new facility, to be operational in early 2010, along with the other nine parts depots in the company's system will handle all CNH ag and construction parts, as well as Fiat Powertrain (FTP) parts and subassemblies.

Ultimately the CNH Reman service will deliver parts on a "second day, by 8 a.m." basis for all of its business divisions, Bippus explains.

The FPT connection -- which manufactures engines already found in CNH products and others in the U.S., Canada and Mexico -- also gives CNH a sixth brand (along with Case IH, Case Construction, New Holland Agriculture, New Holland Construction and Kobelco) to expand business potential for dealers in North America. Currently 300 dealers are on the list to begin handling FTP parts and supplies, and CNH officials are hopeful to expand that number rapidly in the near future.

FPT builds diesel engines from 1 to 20.1 L displacement for equipment ranging from loaders to maritime powerplants, along with over-the-road trucks and off-road ag and construction equipment. In all, FPT built 2.9 million engines and 2.4 million transmission assemblies in 2008.

The move comes as CNH's Thomas McLaughlin, communications manager for Case Construction Equipment, NA, says the company is cautiously optimistic about internal research on a reversal in the decline of residential and non-residential construction, as well as a Bloomberg Report's recent nod toward the end of the current recession.

McLaughlin notes the reman expansion within CNH's family will help the bottom line of dealers as well as owner/operators who want an economic alternative to new parts, OEM warranties on repairs and the economics of scale that assembly-line remanufacturing can offer.

Currently CNH remanufacturing sells about 80% of its product to agriculture and the remaining 20% to construction interests.

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