Aug. 23, 2021

The company in the process of acquiring Raven Industries aims to double or triple the workforce in Sioux Falls dedicated to developing agriculture-related technology, Raven CEO Dan Rykhus said today.

In what might have been his first public comments since the deal was announced in late June, Rykhus spoke at today’s meeting of the Rotary Club of Downtown Sioux Falls, sharing information about CNH Industrial and the deal’s potential impacts on Raven and the communities where it does business.

Through its various businesses, CNH Industrial designs, produces, and sells agricultural equipment and construction equipment including Case IH and New Holland brand families, trucks, commercial vehicles, buses, and special vehicles, in addition to powertrains for industrial and marine applications.

Case IH New Holland is the largest customer of Raven’s applied technology division, which has focused in recent years on developing technology for autonomous farming equipment.

“They have great tractors and combines from a mechanical standpoint, but from a technology standpoint they’re behind,” Rykhus said. “Just like every other business you’re in, technology is what drives these decisions – moreso than ever on the farm.”

Raven began investing substantially in its autonomous ag approach in late 2019. By early this year, other companies, including CNH, were eyeing it for acquisition, Rykhus said.

“We got to a point where we’d grown our ag technology business nicely, we invested in the autonomous platforms, we made two big acquisitions, we advanced our R&D investment on it, and we believe there’s great growth there,” he said.

That required both additional capital and pursuing the channels required to bring the products to market, and Raven felt confident in its ability to make more happen, he said. But after repeatedly turning down interested potential acquirers, “you have to stop and say we should at least listen to what they have to say and so we did,” he said of the deal with CNH, adding that the goal was to balance shareholder value with impact on customers, employees and communities.

“We went through that process and at the end we felt like the best value for our shareholders as well as the best impact for those other stakeholders was to go the route that we did,” he said.

While CNH Industrial is a London-based multinational company, CEO Scott Wine is based in Minneapolis and formerly led Polaris Inc.

“As I got to know him through this process, I’m super impressed with his leadership and his passion for restoring the competitiveness of Case,” Rykhus said.

“He’s great. He’s going to be wonderful.”

The plan is to continue the Raven name in some form going forward, he added, “referencing their technology at a minimum.”

As for the people in Sioux Falls who design, build, market and otherwise advance the applied technology division – about 600 members of Raven’s team – they likely will be part of a growing operation here, Rykhus said.

“The vision is for Case to use the Raven technology as the nucleus that they build out from to solve their technology challenges across their entire platform,” he said. “They told me they expect to double or triple their employment in Sioux Falls over the next three years. I said good luck finding people … but they intend to double or triple their staffing here.”

The fate of Raven’s engineered films and Aerospace divisions are less certain, but Rykhus sounded hopeful both would continue to maintain a presence in Sioux Falls.

“Those are likely to be eventually owned by somebody else, but they’re rooted here,” he said, adding that the infrastructure and team to support the operations are located in and around Sioux Falls.

“They’re not going to move an engineered films division out of here.”

With Aerostar, which has strong ties to Raven’s aerospace roots, “we’ll do everything we can to have that stay here,” Rykhus said.

Raven continues to develop and bring its autonomous ag products to market, he said.

That includes a system where a person is in the cab of a combine and autonomous technology brings the tractor alongside the combine “and allows automated offloading of that material, grain, over to the semi. We designed all the sensors and the different software and solution to make that happen.”

Another product line, known as OMNiPOWER, further leverages robots in the field. For instance, a farmer could use the system controlled by a laptop to send multiple machines into the field while controlling them remotely.

It’s all part of what Rykhus called level four autonomy. Level five is when “you hit ‘go’ from your office and out come the machines and they do all the work,” he said. “We are a long, long way from that … it’s a huge leap from level four to level five autonomy.”

In the meantime, going from a $400 million division in Raven to part of a $26 billion company in CNH allows a lot of work to accelerate, he added.

“For us, that’s super exciting. It’s such a shorter path to changing agriculture for the positive.”

A shareholder vote on the acquisition is scheduled for Sept. 15. Assuming it’s approved, and subsequently cleared by regulators, the deal is expected to close in the fourth quarter.

Rykhus said his own future with the company is “to be determined” but said he anticipates multiple opportunities for his team in leadership locally and in the larger company.

“They have a tremendous respect for how we operate as a company,” he said. “They’re really insistent they don’t screw up the Raven formula.”

That includes a commitment to the community and relationships with higher education, he continued.

“Community is very, very important to our Raven formula. It’s how we succeed and they understand that, and I believe they are intending to uphold that.”

His role will be determined over the next couple months, “but I’m good with it,” he said of his 31-year career at Raven..

“We intended to run the company forever. It’s going to be a different outcome than that. But there will be opportunities for me to help them realize their vision.”