100 Years of Better Harvests the Company and Its History

PRESS RELEASE

"100 years of better harvests" – the company and its history

From Harsewinkel to the fields of the world

Harsewinkel, January 2013. "CLAAS looks after its customers and never lets them down" This princi- ple which guided August Claas still holds true today. But the small trade business he set up 100 years ago has since become a multinational company with locations and sales companies in over 100 countries. As has always been the case, CLAAS is a business with family participation, and with Helmut Claas as chairperson of the shareholders' committee, his daughter Cathrina Claas-Mühlhäuser as chairperson of the Supervisory Board and representatives from the two other owner families, Reinhold Claas and Günther Claas, it is also remains family-run.

Thanks to the "knotter" and other pioneering developments such as the PICK UP pick-up and loading baler, the first European MDB combine harvester, or the JAGUAR forage harvester, CLAAS has con- quered the world of harvesting technology. The question as to "In the future, what will be harvested, how and where?" is one that is continually driving forwards the development of agricultural machinery. Today, the company employs a 9000-strong workforce and, in 2012, it had sales of 3.4 billion euros.

"Then we will just have to do it on our own." In 1913, August Claas founded a company to manufacture straw binders and registered it in the regis- ter of the administration authority in Herzebrock. When his brothers, Bernhard and Franz Jnr joined the company in 1914 with Theo Claas, the youngest of the four brothers, joining at a later stage, the company adopted the name of "Gebrüder Claas". In 1919, at the end of the First World War, they bought a former quarry in Harsewinkel where they manufactured straw binders as they had done in the past. The "knotter", which was further developed and patented in 1921 and is a mechanical knotting device for perfect knots, became a fixed part of the machinery and facilitated the transition from a small trade business to industrial series production which went from success to success. In the 1920s, the brothers expanded the manufacturing operation to include fertiliser spreaders and, later, straw balers. Prof. Vormfelde, who was seen as a campaigner for combine harvesters for Euro- pean conditions, persuaded the Claas brothers to look into developing a combine harvester that would be suitable for European conditions. As far back as 1932, the Bonn agricultural scientist and his assis- tant, Dr. Walter Brenner, were developing a first combine harvester prototype with a leading-edge knifebar that was built around a tractor. However, their attempt to bring the prototypes to full market readiness in collaboration with other manufacturers failed. That was when August Claas decided: "Then we will just have to do it on our own." After the first trials with the leading edge knifebar, work on

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the development of a trailed, hitched combine harvester started in Harsewinkel. In 1936, the first mow- ing-threshing-binder (MDB) towed by a tractor was driven across the fields in Zschernitz (Saxony) and one year later it went into series production. Since then, this combine harvester has been inseparably linked to the name of CLAAS and it is to this machine in particular that the company owes its international size and importance.

Reparation payments lead to the first export business As far back as the First World War, August Claas had supplied an agricultural agency in the Dutch town of Zytphen with straw binders and this business relationship with CLAAS was resumed in 1920. Germany's reparation payments to neighbouring countries formed the basis for future export business with straw binders, particularly with France and Belgium. There was also increasing foreign demand for the straw baler manufactured from 1931 and the PICK-UP hay gathering and loading baler manufactured from 1933/34 – both from Europe as well as Canada and New Zealand.

As an authorised signatory, the wife of August Claas, Paula, looked after the foreign business of "Ge- brüder Claas" from 1930 when she formally joined the company. The qualified business and administration teacher had met her future husband at the Leipzig Agricultural Fair where she was employed as an interpreter while still a student. It was also thanks to her excellent knowledge of foreign lan- guages that Paula Claas played an important role in the increasingly internationalised business. She was responsible for maintaining contact with the foreign representatives and always accompanied her husband to all the important international exhibitions.

An excellent reputation – throughout the world The Second World War put a stop to the export business but not to the spirit of innovation. Even though the government decreed in 1943 that only armaments could be produced, meaning that production of combine harvesters had to be halted, development work continued at the CLAAS premises. The SUPER combine harvester was given its initial trial runs around farms in Saxony and Westphalia as far back as 1943. Thanks to an order that was placed by the British military command for a rapid- action harvester in the devastated West Rhine region in the summer of 1946, the new machine was able to enter series production. A SUPER combine harvester confiscated by the British in the same year convinced the British Department of Agriculture and this led to the export of a larger number of units in the following year. Several hundred combine harvesters followed in 1948/1949 meaning that the company became firmly established in Britain.

Further shipments were made to France, Belgium and the Netherlands. Attendance at many of the international agricultural fairs in Paris, Brussels or Great Britain was a matter of corporate routine for CLAAS. Initially, the machines were sold through so-called factory representatives who sought out and dealt with suitable dealers in the various countries. At a later stage, general importers were appointed and a number of subsidiaries were also established. At the beginning of the 1950s, CLAAS enjoyed an excellent reputation throughout the world. In 1952, the company and its products were represented in 2

around 30 countries including all the major markets in Europe, South America, parts of Africa and the Middle East.

Individual solutions for individual requirements CLAAS received its first order from Canada in 1952. The SUPER combine harvester had impressed farmers there, because not only could this machine cut, it could also bale straw. The SUPER was used in South Africa for the first time in 1954 and business relationships were also developed with Kenya, Zimbabwe and the Sudan. In North Africa, CLAAS exported to Algeria, Morocco, Tunisia and Libya. The most important sales countries in the Middle East were Iraq, Iran, Syria and Saudi Arabia. The Australians were also persuaded of the merits of the SUPER combine harvester at an exhibition of agricultural machinery in Perth in 1952. Helmut Claas, son of the company founder August Claas, had joined the technology division (development and production) of the company in 1958. Together with his father, with whom he shared a passion for technology, he travelled to South America in order to identify the application potential for CLAAS machinery in Uruguay, Argentina and Brazil and to initiate export business there.

An important additional foreign location was the baler plant which went into production in 1962 in the French town of Metz. Today – together with CLAAS in Bad Saulgau in Swabia – it caters for the green harvest machinery sector. Two companies, Bautz and Speiser, which were taken over by CLAAS in 1969, play a major role in the history of CLAAS in Saulgau. At the beginning of the 1960s, production in Harsewinkel was running at full capacity, but there were other markets, such as the United States, which needed to be established. CLAAS initially tried to get a foothold there by concluding an agreement with Ford: in 1965, CLAAS awarded the tractor division of the Ford Motor Company the sales rights for combine harvesters for the entire North American market, including Mexico. However, sales were sluggish so, in 1979, CLAAS established its own sales company, CLAAS of America (COA), in Columbus, Indiana. In 1997, CLAAS set up a joint venture with the US company Caterpillar (CAT) with a view to increasing combine harvester sales and secur- ing them in the longer term. In 1999, the foundation stone was laid for the first combine harvester plant in North America and it went into operation two years later. Under a development contract concluded with Cuba, CLAAS developed a sugar cane harvester specifically designed for tropical and sub- tropical countries. In 1972, it went into series production and just a few years later, the machines were being used throughout the world – in North, South and Central America, Africa, Asia and Australia.

The fall of the iron curtain Since the entire Eastern Bloc was isolated until 1990, CLAAS had very little opportunity to create business relationships there. While it attended exhibitions in Moscow and Kiev (and this did lead to orders for machinery for test purposes), there were no follow-up orders. In Hungary, CLAAS was the only western manufacturer in operation as far back as 1969. Up until the time when "Die Wende" came in 1989, around 5000 combine harvesters were sold. After the fall of the iron curtain, markets could be opened up in the East. In addition to Central European countries such 3

as Poland, Hungary or Bulgaria, countries that were formerly part of the Soviet Union also demon- strated an interest in CLAAS products. This led to the appointment of general importers or dealers in the various countries. A central spare parts warehouse was set up in Moscow and, in 1997, CLAAS opened a plant in the Hungarian town of Törökszentmiklós to the south-east of Budapest. In the 1990s, the Russian Federation markets became increasingly important – if only for the sake of a competitive edge in world grain production. In 2005, CLAAS opened its own combine harvester plant in Krasnodar in the middle of the corn belt in Russia, making it the first western agricultural technology manufacturer to have its own production plant in Russia.

The leap to South-East Asia At the end of the 1980s, CLAAS developed a small rice harvesting machine, the CROP TIGER, espe- cially for the Asian market. This machine is suitable for harvesting a number of crops. From 1992, this combine harvester was manufactured in Faridabad, close to the Indian capital New Delhi, and shipped to the south of India, Sri Lanka, South Korea and other South-East Asian countries. Today, these machines are also manufactured in the CLAAS factory that opened in the north Indian city of Chandigarh in 2008.

CLAAS international Today, CLAAS machinery can be found in fields all over the world. In the past 100 years, the small trade business that was set up in Harsewinkel has gone on to become a multinational company. CLAAS is represented in all the markets of the world and has its own production plants and sales company in many countries. The working relationship between the founding family and its partners, which is based on trust, is still a cornerstone of the corporate culture. Adopting a down-to-earth ap- proach and a constant willingness to forge new paths, continuity and internationality are the things that set CLAAS apart. As in the past, the Claas family is still closely involved in the company.

The generations to come CLAAS is particularly concerned with fostering the development of the next generation. Through the CLAAS foundation that was established in 1999, the company is offering encouragement to young scientists. The Helmut Claas Scholarship offers support to people studying in the field of engineering and business management. Based on the conviction that talent cannot be recognised early enough, the foundation furnishes primary schools and kindergartens with so-called discovery kits that can be used to perform simple technical and natural science experiments. Student research centres have also been established in Bad Saulgau and Osnabrück.

Partnerships have been created with numerous national and international universities because collaboration with science and research produces important findings in relation to the technical development of CLAAS products – in the area of alternative drives, for example, or in relation to the use of information technology for the cultivation of agricultural land. The role of research into the technologies of

the future is also becoming increasingly important. And in view of the rapid growth in the global popu- lation, progress in agriculture and agricultural engineering is simply vital for survival.

About CLAAS CLAAS (www.claas.com) is a family business founded in 1913 and is one of the world's leading manufacturers of agricultural engineering equipment. The company, with corporate headquarters in Harsew- inkel, Westphalia, is the European market leader in combine harvesters. CLAAS is the world leader in another large product group, self-propelled forage harvesters. CLAAS is also a top performer in worldwide agricultural engineering with tractors, agricultural balers and green harvesting machinery. The CLAAS product portfolio also includes state-of-the-art farming information technology. CLAAS employs around 9,000 workers worldwide and reported a record turnover of 3.4 billion euros in the finan- cial year of 2012.