nasdaqCNH Is Outsourcing Its Seeding Equipment to a Canadian Rival

Case IH and New Holland have long sold their own seeding equipment. Going forward, another company will build it.

CNH said on August 31 that it has struck a supply agreement with Bourgault Industries, a maker of large-scale seeding equipment. Bourgault is based in Saskatchewan, according to trade publication RealAgriculture — the same province as CNH's Saskatoon manufacturing plant. Under the deal, Bourgault will build precision air drills and high-capacity air carts carrying Case IH and New Holland branding, and CNH will sell them through its dealer networks in North America, Australia, and what the company calls "other high-potential seeding markets."

For a farmer buying Case IH or New Holland seeding equipment in those regions, the brand on the machine stays the same. The factory behind it does not. That matters because it resets which company's engineering decisions, parts inventory, and production choices determine what ends up in a customer's field.

CNH's Saskatoon plant will shift its focus to planters and headers for combine harvesters, the company said. It will continue to support its existing seeding products through a transition period, without saying how long that period will last or what support will look like once it ends.

Shares closed 9.20% higher at $13.65 on September 3, after the August 31 announcement, on dollar volume of about $734 million.

"By combining complementary strengths, this alliance enhances our ability to compete, creates new opportunities for our dealers, and enables us to invest more in the technologies shaping the future of agriculture," chief executive Gerrit Marx said in the announcement. Bill Glanville, group president of Bourgault Industries, said the deal would make "Bourgault seeding technology available to more farmers in more markets."

The release frames the deal as an expansion of CNH's portfolio. The seeding work leaves Saskatoon, and Bourgault fills the gap.