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JOHN DEEREIN INDIA

WELCOME TIMBERJACK

AG ROLLS OUT NEW PRODUCTSO N B O T H S I D E S O F T H E A T L A N T I C

FEEDBACK

TIMBERJACK MAKES DEERE A FORESTRY LEADER

AG ROLLS OUT NEW LINES

ETCETERA

GOING WITH THE FLOW

BUSINESS BUZZ

COVER: A John Deere 5310 tractor manufactured in India pauses on the northern

bank of theYamuna Riveracross fromthe Taj Mahalnear Agra,India. Thisstriking scenewas filmed fora 60-second

television commercial that features JohnDeere equipment in use around theworld. In a touch of movie magic, theanimals, huts, melons, and localvillagers transformed the previously barrenriverbank into a colorful, bustling scene.

One of the commercial’s purposes is tocommunicate John Deere’s growing pres-ence on farmsites, worksites, and homesitesaround the world. In India, that growthcenters on a new 5000-series tractor factorynear Pune. Our coverage of the impact that factory is having on this part of theworld begins on page 14.

Deere’s role as a global supplier of agri-cultural equipment is getting an enthusiasticboost from this fall’s introduction of 63 new models of farm machinery in Europe.

Starting on page 8, see how dealersfrom 54 countries, speaking 49 differentlanguages, learned about taking commandof their markets during four days inSeville, Spain.

Cover photo by Dale Paschke, manager,advertising and marketing communications,Worldwide Commercial & ConsumerEquipment Division.

Published for John Deere Employees, Retirees,Dealers, and Friends Worldwide

Address Correspondence to: Editor, JD Journal, Corporate Communications Department,Deere & Company, One John Deere Place,Moline, IL 61265-8098 Phone: (309) 765-4170; E-mail: jdj@deere.comView JD Journal on the Web at: www.johndeere.com

Editor — Andy MarkwartArt Direction and Design — Wayne Burkart

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JOHN DEERE IN INDIA

WHAT’S SO DARN FUNNY?18

Thanks to the quick action of employees, dealers, and suppliers, John Deere was able toprovide Gator® utility vehicles and skid-steerloaders to help in the rescue and recoveryefforts following the World Trade Center attackon September 11.

Employees throughout the company wantedto do more, so the “John Deere Special Fundfor America” has been created to supportrecovery and relief efforts. The John Deere

Foundation will lead the donations to this fundwith a $250,000 contribution.

Employees, dealers, retirees, and friendscan contribute to this fund by sending theirdonation directly to the John Deere SpecialFund For America c/o the John DeereFoundation at One John Deere Place, Moline, IL61265. Employees can also contribute throughtheir unit HR department. The Foundation’sboard of directors will administer the fund.

SPECIAL FUND FOR AMERICASPECIAL FUND FOR AMERICA

3 JD Journal

FEEDBACK

I was looking through the JDJournal, and I really like the battery-powered kids’ version of the Gator utility vehicle. I wastrying to find this product onthe Internet but could notfind one. Can you please tell me how I can purchase one of these Gators?/Robin Culp,Bloomfield, Iowa

(The battery-operated Gator can be purchased at participatingJohn Deere dealerships. To locate the dealer closest to you, visitwww.johndeere.com on the Internetand click on the "Dealer Locater" at the top of the page.)

I have enjoyed the articles in JDJournal recently about variousequipment companies thatDeere has purchased, such asCameco in the Summer 2001issue.

As an accountant, I don'twork with equipment directly,but understanding what wemake, the markets, and how thebusinesses are integrated withour traditional products helps me get a handle on the businessas a whole.

I also really enjoy the articlesby Gene Ritzinger, especially the one on how language is used

in the corporate setting.I have chosen my words

more carefully since then!/Judi Berkley, financial analyst,Deere & Company

My family would like to thank thestaff of Goodridge Farm Supply in Oakfield, New York, for theirdedication and commitment tocustomer satisfaction and service.They went the extra mile in help-ing us get our 420 lawn tractorback up and running. Wordscan't express the happiness I felttoday when I finished my fiveacres of lawn with it after gettingit back from the shop./Ron Smith,Shelby, New York

My five-year-old son, Brad, is thebiggest John Deere fan I know. Forevery special occasion—birth-days, nursery-school graduation,Christmas—he receives a JohnDeere toy tractor. He has a spe-cial place for all his equipment in his bedroom next to his bed,

along with all his other JohnDeere paraphernalia. When hiscousins visit, he makes surehe lays out the ground rules forplaying with his tractors.

A perfect example of hisobsession is when we went awayfor vacation recently. Before we could leave, my son made hisgrandfather promise that hewould check on his John Deeretractors daily. When we returned,the first thing my son wanted toknow when his grandfathergreeted him was the status of hisequipment!

We celebrated his fifth birth-day with a party recently, and I'msure you could guess the theme.We hung John Deere streamers,green and yellow balloons, andused custom plates given to usby the local John Deere dealer-ship, H.C. Osterhout & Son inRavena, New York. My wife andI made bookmarks and cus-tomized cups as favors for theparty, both with John Deere

LEARNING HOW WE RATE WITH CUSTOMERS

IN DEFENSE OFGROWING OLDER

WHAT THE LATESTSURVEY SHOWS

V O L U M E 3 0 , N U M B E R 2 S U M M E R 2 0 0 1

MERCHANDISINGJOHN DEERE’S GOOD NAME

symbols. The cupcakes each had the John Deere logo embed-ded in the frosting. Each kid decorated a tractor-shaped cookiewith John Deere colors.

The farmer down the roadwas generous enough to drop offhis 4450 tractor with a huge plowright in the middle of the frontyard. You should have seen thekids' faces as their eyes grewwider with each closing step!

It was a great day, and weall had a wonderful time.

Thank you for making suchquality products./Allan C.Jourdin, Coxsackie, New York.

We invite your feedback and welcome news tips and story ideas as well. Write Feedback, JD Journal, One John Deere Place, Moline, IL 61265-8098, call (309) 765-4170, or e-mail jdj@deere.com.

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TOP LEFT: This prototype Walking Machine harvester isdesigned to step over obstacles while treading lightly on the for-est floor, minimizing soil erosion and damage to tree roots.

CENTER LEFT: This Deere 753GL harvester will also be marketed as the Timberjack 608L through Timberjack dealerships.

TOP RIGHT: Deere added forwarders to its product line through the Timberjack acquisition. Forwarders, such as the 1158 model pictured, collect cut-to-length logs from the forest interior and transport them to roadside-collection areas.

CENTER RIGHT: This Timberjack-designed 535 knuckleboom loader uses multiple hydraulic cylinders to mimic the movement of a human arm.

Timberjack has been a pioneer in developing equipment for harvesting and collectingbiomass—wood that is normally wasted in the logging process. Forest biomass is

burned to produce electricity and heat at power plants in countries such as Finland. Timberjackmakes a complete line of machines for collecting branches, treetops, and small trees for energy

production. The equipment includes: — Harvesters that cut and gather small trees. — Bundlers that collect and pack logging residue into bundles 2-1/2 feet in diameter by 9 feet in length. The bundles are crushed before being burned at a biomass energy plant. Each bundle contains the same energy as about 24 gallons of oil.— Forwarders that gather and transport bundles from the forest interior to the roadside.

In Finland alone, it’s estimated that 10 to 15 million metric tons of logging waste go unused each year. TheFinnish Ministry of Trade and Industry is calling for 27 percent of the country’s total energy consumption to comefrom renewable energy sources, such as forest residue, by 2010 and 35 percent by 2025.

BIOMASS HARVESTING:TURNING WASTE INTO WATTS

It was a union of strength with strength. When Deere & Company acquired the Timberjack ForestryGroup from the Metso Corporation of Finland in early 2000 for $600 million, two world leaders inforestry equipment joined forces.

For years, John Deere has been a leading supplier of forestry equipment in North America and hadmarketed products in a few European countriesincluding Spain and France. Deere has offered a full line of log skidders and aline of wheeled and tracked feller-bunchers. (A feller-buncher collects smallgroups of trees as it quickly cuts each one at the stump.) Some Deere construc-tion equipment, such as excavators, crawler dozers, and wheel loaders, alsohave been used in various forestry applications.

“In order to expand our forestry business, it was clear to John Deere forsome time that we needed to do two things,” says Doug Anderson, managingdirector, international operations for the newly named Worldwide Construction& Forestry Division (C&F). “One, we had to either develop or acquire a broaderline of forestry equipment, including the cut-to-length harvesters and forwardersthat are mostly used in Europe but are growing in popularity in North America.(A cut-to-length harvester can remove a tree’s limbs and cut the log to a

specific length in the forest. A forwarder is a combination tractor/boom loader/wagon thatcollects and moves logsfrom the forest interior to a roadside.) Secondly,we had to expand ourpresence into Europe,Latin America, SoutheastAsia, and other regionswhere timber is harvested.

“Beginning in 1993,we had serious discussions with a number of the lead-ing producers of cut-to-length harvesting systems about the potential for some sort of strategic alliance,”Anderson adds. “Given that Deere and Timberjack hadbeen such fierce competitors in the North Americanforestry markets, we had no idea that we would havean opportunity to develop an alliance with, or acquire,Timberjack. When we learned that Timberjack was forsale, we immediately suspended all other discussionsand focused on acquiring the world’s leading supplierof mechanized timber-harvesting equipment.

“When making our bid for Timberjack, Deere made it clear to the owners thatwe were not interested in acquiring Timberjack if we could not retain its key management,”Anderson says. Those retained include Mikko Rysä, thecompany’s long-time president. Rysä now serves as vice president, internationaland new business, for C&F.

The fit is excellent for both companies. “Deere and Timberjack have verylittle overlap in forestry-related operations, and our product lines and geographiccoverage of the marketplace are mostly complementary,” Rysä says. Productoverlap was primarily limited to log skidders, and to a lesser extent, trackedfeller-bunchers. Deere inherited some distribution overlap in the U.S. andCanada, and to a much lesser degree, overseas.

Anderson says Deere acquired Timberjack for its advanced technology andproducts, worldwide distribution, forestry-focused employees, and worldwide

customer base. “Specifically, we acquired a world-class line of harvesters and forwarders used for the emerging cut-to-length harvesting method, a broader line of tracked feller-bunchers, and a line of knuckleboom loaders used primarily inlogging in the southeastern U.S.,” he explains. (Knuckleboomloaders are hydraulically operated loading booms whosemechanical action imitates the human arm.)

Deere also acquired a line of highly sophisticated harvest-ing heads, which are marketed as attachments for Deere and Timberjackfeller-bunchers and harvesters and also sold under the Waratah tradename to other original-equipment manufacturers (OEMs), dealers, and cus-tomers. “And perhaps more importantly,”Anderson adds, “there is no othergroup of people in the world who know the global forestry business better, whounderstand the needs of forestry customers worldwide better, than theTimberjack employees who are now part of the Deere family.”

Timberjack will benefit from the purchase by using Deere’s advancedbusiness processes. Both companies will benefit from more-efficient supplymanagement, manufacturing, and distribution. Deere’s distribution channel andcustomers will benefit from the expanded world-class product line, while theTimberjack distribution channel and customers will gain from Deere’s advanced

parts-distribution infrastructure and customer-support programs.

Anderson says the Timberjack brand willcontinue and grow under Deere ownership. Thedivision is dual-branding most forestry productsfor distribution by both Timberjack and Deere dealers in North America. With dual-branding, the designated products are sold under bothDeere and Timberjack brand names.

“Since we inherited dual distribution in NorthAmerica, we have decided to dual-brand our products in order to provide the level playing fieldnecessary for both dealer organizations to fairly

compete at the retail level on their own merits,”Anderson says. “Outside ofNorth America, we will distribute nearly every product exclusively under the Timberjack brand. The exceptions are skidders in a few countries.”

Consolidation of log skidder production has begun at Deere’s factory inDavenport, Iowa, using the Deere machine platforms. Skidders are now dualbranded for distribution by both dealer networks in North America. Furtherconsolidations in skidders and tracked feller-bunchers will accompany futureproduct updates.

Plans are under way to dual-brand harvesters and forwarders for NorthAmerican markets. “With the introduction of dual-branded harvesters and forwarders this summer, we met our goal to have all major productsdual-branded within 12 to 18 months of closing the deal,”Anderson says.

C&F now builds forestry equipment at Davenport, Iowa; Paragould,Arkansas; Woodstock, Ontario; Penticton, British Columbia; Filipstad,Sweden; Joensuu, Finland; and Tokoroa, New Zealand.

C&F’s global-distribution network is a combination of Timberjack retailcompanies in 13 countries, independent Timberjack dealers with more than 300outlets in 40 other countries, as well as C&F’s independent network of Deeredealers. “C&F is now the preeminent global supplier of mechanized timber-harvesting equipment with the acquisition of Timberjack,”Anderson says.

According to Rysä, the union of Timberjack and Deere will most likelytouch off other restructuring moves within the industry. “It is, however, veryhard to foresee any mergers or acquisitions that would result in a combination asstrong as Deere-Timberjack,” Rysä says./Dan Brown

5 JD Journal

TIMBERJACKMAKES DEEREA GLOBALFORESTRYLEADER

This is the second in a series of articles spotlightingbusiness operations recently acquired by Deere &Company. In the series, you’ll learn how these newbusinesses are helping the enterprise achieve its goalof doubling value twice in this decade.

J O H N D E E R E ’ S

NEW BUSINESSES

ohn Deere introduced an unprece-dented 54 machines and a host of tractor attachments at its new-

product introductions held July and Augustin Albuquerque, New Mexico. In September,63 products were unveiled in Seville, Spain.

Six waves of North American dealer per-sonnel, 5,000 in all, attended four-day “TakeCommand” sessions in Albuquerque. Eachsession began at the city’s convention centerwith a welcome celebrating sales successesand engineering achievements of the past year.

Doug DeVries, senior vice president,worldwide marketing, began the session bychallenging dealers to take command of theirmarketplace. Later, Gary Frazier, vice president,North American sales, urged them to takeadvantage of volatile change by running harder,smarter, and leaner than their competitors. Inbetween, the machines did the talking.

Video clips, white floor-to-ceiling drapes, and300 computer-controlled robotic lights delivered

a theatrical punch as the new machines roaredacross the stage. Thundering Japanese drumsand rock music built anticipation.

The extensive lineup of new equipmentimpressed Regina Herzlinger, a HarvardBusiness School professor and member of theJohn Deere board of directors. “The machinesare awesome and beautiful,” she said as she stood between massive 8520T and 8520tractors on the crowded convention centerfloor following the opening-night perfor-mance. “I’m an economist, and all I can thinkabout is the great productivity, time savings,and the great buy for the dollar thesemachines represent and bring to agriculture.”

“Wow!” said salesman Randy Harlin,Heath’s Inc., Monticello, Illinois. “I had noidea the company would be able to come outwith this much at one time. The next threedays should be very busy.”

Divide and conquer. The next day, indoorclasses covered business strategies, JohnDeere Credit, sickle windrowers, and pull-

type forage harvesters. The first three sessionsalso included a 9986 cotton picker walk-around, concentrating on new electronicheader-height-sensing controls.

About 15 miles west of Albuquerque, dealersgot hands-on experience at two demonstrationsites. At one end of the first site, a concretetrack and a tractor-pull weight sled were usedto test “power hop,” or loss of traction, in the 8020-series tractor.

There was a buzz over the new IndependentLink Suspension™ and ActiveSeat™ optionsthat improve power transfer and operatorcomfort. “This new suspension and theActiveSeat will help us go after new business,”said Paul Neuhaus, vice president, Barbee-Neuhaus, Inc., Weslaco, Texas, as he steppedfrom the clean air of an 8520 cab onto thedusty ride-and-drive course.

Next door, dealers put the new 5220 trac-tor’s fender-mounted controls to the test.Demonstrations of new backhoe and scraperattachments showed the versatility of the

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ABOVE: Dealers from across North America watch a wheeled8520 tractor and its tracked brother, the 8520T, light up thestage on opening night. RIGHT: Dealers were asked to “TakeCommand” of their marketplace with the wide range of newequipment. FAR RIGHT: Dealers inspect the 1760 NT planterwhich folds for easy transport over rural roads and throughnarrow field gates. The planter can also change seeding rateson-the-go using John Deere’s new Map-Based Seeding.

PHOTOS BY STEVE DOLAN EVENTS IN ALBUQUERQUE, NEW MEXICO, AND SEVILLE , SPAIN, SHOWCASE

AG ROLLSAG ROLLS

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STORY BY LARRY R INEY

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entire line of 40- to 79-horsepower 5000TWENTY-series tractors.

One-source shopping. Grayson English,manager of Rappahannock Tractor Co.,Tappahannock, Virginia, was impressed withthe new CX-20 and HX-20 rotary cutters.“We’ve sold a lot of the competition’s prod-ucts simply because the company didn’t haveanything in that size. Warranties, ordering,freight, and parts availability are a lot easierand less expensive when we can deal withone supplier, John Deere.”

After his walk-around of the 1760 NTplanter, Edward Coufal saw a clear fit for hisarea. “We’ve been into satellite mapping forfive years,” said the owner of CoufalEquipment Co., Temple, Texas. “That planterwill work right into the precision farming inour area with its variable rates as well as giveus true no-till and minimum-till capabilities.”

After pulling a scraper with a 9020-seriestractor, Gayle Gustafson, owner of ProsperTractor, Ltd., Estevan, Saskatchewan, said the

tractor was well suited for the large farms in her area. “The advanced transmission andmore horsepower means we can pull 70- to80-foot tillage equipment. And the new scrap-ers let us go after mine reclamation work.”

The new 6403, 6603, and high-end 6020-series tractors were kicking up a lot of excite-ment. Added to the affordable Advantage-series models, the new machines cover theutility-tractor market from top to bottom inboth cost and features. “Rental customers,weekend farmers, and government agenciesespecially will like the low-end 6003s,” saidKen Wagner, owner of Heritage Tractor,Baldwin City, Kansas, after his test drive.

The 4010-series tractors offer an extensivelist of improvements. “The under-40-horse-power market is heating up,” said salesmanDerek Hill, Northeast Equipment, Wayne,Nebraska. “We’re seeing a lot of weekendfarmers with less than 50 acres. The 4010sand the Frontier attachments will fit right in.”

The all-new, telescopic-loading 3200 and

3400 telehandlers with a host of hooks,clamps, and forks for just about any job fromhaying to material-handling, new Frontier™

attachments for the smaller tractors, and newfixed-blade ejector scrapers rounded out theinformation-packed classes.

“A lot of big dairies are going up west ofus,” explained Kerry Hurst, a salesman atHurst Farm Supply, Lubbock, Texas. “With allof the feedlots, cotton gins, and commercialbuilding, the telehandlers should get us into agreat market.”

fter finishing his jam-packed,four-day session, Donnie

Meadows, GoldmanEquipment’s manager in

Tallulah, Louisiana, was surprised by thenumber of new products. “I’m proud to bepart of John Deere, and I’m impressed by thisshow,” he concluded. “I was worried we’d see alot of decal changes. We saw legitimate,important changes that will make sellingeasier. I’d hate to be the competition.”

THE MOST AGRICULTURAL MACHINES JOHN DEERE HAS EVER INTRODUCED ON E ITHER S IDE OF THE ATLANTIC

ABOVE: Site demonstrations and informational “walk-arounds” ofequipment, such as this 49 backhoe, provide dealers a quick andeasy way to learn about all of the new products. FAR LEFT: Usingdifferent attachments, Deere’s new telehandlers can transport awide range of materials including pallets, silage, and hay bales,shown here. LEFT: The ride-and-drive courses just outsideAlbuquerque gave dealers an opportunity to personally test theextensive line of new tractors and other ag equipment.

OUT NEW LINESOUT NEW LINES

AA

Magnifico! Gigantisch! Incroyable! Fantastic!Praise was lavished in 49 languages on the“Take Command” product introduction at theCongress Palace Convention Center in Seville,Spain. Beginning on September 2, almost3,200 dealers and dealership staff from 54countries attended six consecutive four-daysessions packed with presentations and fielddemonstrations. Each session was conductedprimarily in Spanish, German, French,English, or Italian, and additional languageswere available through translation.

The most stunning statistic was the 63 new equipment models presented during aspectacular light and sound show. Europeandealers welcomed 6020-, 8020-, and 9020-seriestractors, as well as new combines, balers, mower conditioners, telehandlers, cropsprayers, and more. Dave Everitt, president,Agricultural Division - Europe, Africa,

South America, and Global HarvestingEquipment Sourcing, described the introduc-tion as “the most significant launch in any John Deere region ever.”

Paul Enz, vice president, marketing,Agricultural Division - Europe, Africa, SouthAmerica, said the products were beinglaunched into a marketplace that holds greatpotential for John Deere. “In the UnitedStates, John Deere dealers receive nearly half of the total spend on farm machinery,while in Europe we get just over 15 percent(the percentage for tractors and combines is higher). This is important because theEuropean market is larger than all of NorthAmerica, including Mexico.”

Such major dealer gatherings are rare inEurope, and dealers were delighted with theevent. “What has impressed me is JohnDeere’s unequivocal determination to gain

market leadership in Europe,” said ClausWiedenroth, a dealer from Moelln, Germany.

Full Agenda. Long days saw dealers on themove from early morning until evening.Attendees visited educational stations at theconvention center and on a 2,500-acre farmnear Carmona, 20 miles away. There were sta-tions for each new line of equipment and forJohn Deere Credit, Agricultural ManagementSolutions, and sales.

Occasional touches of humor lightened the presentations. Dealers at the 8020-seriestractor station were invited to hold glasses ofwater while sitting on the new ActiveSeat™

suspension during a simulated bumpy ride.Colleagues tried to steady their glasses whileseated in a conventional seat. “That really gotthe message across,” said Jose Maria ResecoCasado of Spain.

After hearing about the features of each

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LEFT: Spanish dealers see and hear the new fea-tures of this 9780 CTS combine described in theirnative language during the sound and light show.RIGHT: The driving course was designed to mimicthe narrow passages and small turning areas foundon many European farms. FAR RIGHT: Dealersenjoy traditional Spanish flamenco dancing at theCongress Palace Convention Center. BELOW RIGHT:Attendees were treated to Seville’s magnificentarchitecture, including the Plaza de Espana. BELOWCENTER: Joaquin Hervas Bonafe of Alcudia Carlet,Spain, and 3,200 others tested the new equipmentnear Carmona. BELOW FAR RIGHT: Luis FernandoZara, Patricia Mozo, and Miguel Angel DuqueGarcia will share their hands-on experience withothers at their dealership in Valladolid, Spain.Photo by Mark Moore.

SHOW TIME DEALERS FROM 54 COUNTRIES POURINTO SPAIN TO WITNESS DEERE’S MASSIVE AG EQUIPMENT ROLLOUT SHOW TIME

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new model, dealers could envision how theproducts would fit into their local markets.“The 6920S (tractor) with Autopowr (steplesstransmission) is going to be a real hot item for us,” said Patrick van Mellick, a Dutchmanwho has built a dealership in Stara Dabrowain northern Poland. “It will precisely fill agap we had just below the 7810 tractor. I cansee it adding 10 to 12 additional tractor sales at our dealership each year.”

“Autopowr has generated a lot of excite-ment,” said Paul Smith, manager for a 6020/7010-series tractor station. “We’venoticed that as soon as the presentation isover, dealers are immediately on their mobilephones to tell the world about it.”

“I’m delighted to see the introduction of anew 8020-series tractor with over 300 horse-power,” said Claus Heller, branch manager ofthe Scharpitz, Germany, outlet for the Drees

Company, a major German dealership.“Farms in eastern Germany are very largeand need greater productivity.”

Many dealers echoed Heller’s point aboutcustomers’ hunger for greater productivity.They were pleasantly surprised to learn howJohn Deere engineers have delivered productsto boost operator output. “I have a customerwho is desperate to get his hands on a combinewith higher capacity to handle the four-tonne-per-acre wheat crops we get in Kent(United Kingdom),” said Nick Booth, sales-man for Palmers Agricultural Ltd. “There is aclear trend to fewer, larger farms and contrac-tors. Both groups are desperate for morecapacity. The 465-hp STS combine, with itsrotary threshing system and 11,000-liter tank(only available in Europe), is a world leaderand is exactly what these farms need.”

Delegates experienced some of the rich

culture of Seville, from where Columbus setsail to find the Americas. They enjoyed a visiton the program’s final evening to a farm famousfor breeding beef animals destined for thebullring and high-quality thoroughbred horses.

Dealers said that the event generatedexcitement they’ll carry home. “We expectedthe event to be inspiring and that has provedan underestimation,” said Heller. “We see theexpense involved in bringing 19 of our staffhere as a good investment, because theenthusiasm ignited in our people will spread topotential customers and generate new business.”

“The significance of Seville was twofold,”says Everitt. “Not only did we introduce 63fabulous new models equipped with market-beating technology, but we have also givendealers new business tools with which to reachour ambitious business goal of doubling mar-ket share by 2005.”

PHOTOS BY ULR ICH BÜKERIN SEVILLE STORY BY MARK MOOREIN SEVILLE

THEY JUST KEEP GOINGThat’s not a custom cut-

ting crew from the 1970s—it’s the Norris family ofWellington, Kansas, whohave been harvesting theirfarm’s wheat with JohnDeere 95 combines for threegenerations.

Larry Norris says thewhole family gets involvedwhen it’s time to roll outtheir fleet of six model 95combines to harvest 700acres of hard red winterwheat. Larry, his sons,brothers, nephews, brothers-in-law, and family friends can’t wait to operate the combines built between 1959 and 1969. A band of nephews

shovel grain and help with morning maintenance. Larry’s wife, Debbie, transports loads of wheat from the field to on-farm storage or the local grainelevator in a vintage grain truck. Other family members keep everyone fed. Larry says these reliable, familiar combines

have found a special place in his family’s farming operation since his father bought the first 95 in the mid-1970s. “I grew up with these combines—I know them,” he explains. “They do a really good

job threshing, they’re easy to work on, and I can still get parts from my local dealer.”

WORK INSPIRES ART Les Reu’s boyhood memories, career, andartistic talent converged recently in his drawing Going Green. Reuis a credit administrator at the Ag Marketing Center in Lenexa,Kansas. His colored-pencil drawing of a dealer shaking hands with a farmer after delivering a new Deere combine was a scene Reurecalled from dozens of childhood trips with his father, Dave, a JohnDeere dealer in Donnellson, Iowa. “The scene is a composite of thosememories,” Reu says. “I just updated the combines.” He adds thatit’s a common scene today. “I've traveled to 28 states for this compa-ny, and I've seen this picture in about every area of the country.”

The drawing took Reu about 75 hours to complete. It is one of hisfirst works after making a “new millennium resolution” on Jan. 1,2000, to start drawing again. He had drawn and painted throughouthigh school and began college as an art major. After his firstsemester, Reu switched to business school and packed away his artsupplies for 14 years. Then his work inspired his art.

ETC

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THE HORSE LISTENER Suekay Bedis uses listening and coaching techniques shelearned at John Deere to train barrel-racing horses. As a Voice-of-the-Customermanager at Horicon Works, she observes customers in focus groups and at theirhomes to understand what they want in lawn-care products. Drawing on the

Foundations diversity training she received at Deere, Bedis tries to be laser-focused on one conversation at a time rather than accommodating distracting

interruptions. She calls it “being in the moment.” That disciplined listening also works in horse training. “When I start

training horses, I just watch them, notice their actions, and try to seethings from their perspective,” she says. Then, rather than using force toget results as some trainers do, she works slowly and gently to win thehorse’s confidence. She reads the horse’s body language and listens for tell-tale sounds that confirm the horse has overcome its natural fear and is

comfortable enough with Bedis to allow her to lead. She says horses havesome of the same communication needs as people. “I’ve learned to be very

specific with horses,” she explains. “They don’t want you to be wishy-washy.I stay in the conversation until we’re both clear about what is expected.” Bedis also uses the listening and coaching concepts with young horse riders.

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ike most companies, John Deere traditionally has made products by “pushing”them through the production process.Manufacturing has been done in batches, on a schedule, based on sales forecasts, anddesigned to maximize stability and predictabilityof work and product flow.

Now the company is striving tochange all that and become moreresponsive to customer needs byimplementing flow-manufacturingprinciples.

Under flow manufacturing, facili-ties are designed to be flexible andresponsive to customer demand.Manufacturing processes are honedto achieve the highest-quality prod-uct in the shortest amount of timeand at the lowest-possible cost. As aresult, products flow through theproduction process more efficiently.

Firm orders for equipment “pull”products through the process so cus-tomers receive what they want whenthey want it. Flow manufacturing also reduces excess inventory (of bothraw materials and finished goods),cycle times, and capital investment.Ideally, work on a product won’t commence—including the ordering orstocking of raw materials or parts—until an order exists.

In contrast, when forecasts exceed customerorders, the traditional forecasts-based strategyoften results in the buildup of inventories.While this approach makes planning and pro-duction more predictable, it leads to longercycle times and excess inventory throughoutthe process. The rigid process also doesn’tallow for quick, unexpected changes in cus-tomer purchase patterns.

“Flow manufacturing gives us the capabilityto build to demand, to build to retail order,”says Gerald Russman, manager of processengineering for John Deere.

“Before, we were either sending dealerswhat they didn’t need, or not at the time theyneeded them,” says Doug Cheever, order ful-fillment process pro, Worldwide Construction& Forestry Division. “So the new process

is better for the customer, and it’s better for the dealer.”

Building-to-order, however, requires adjustments in the whole supply chain, fromproduction-line design to raw-materials man-agement and supplier relationships to workers’responsibilities—and more.

“The shift of thinking from building-to-

schedule to building-to-demand is a prettysignificant change,” Russman says. “This isn’t at all easy. You have to think differently aboutyour business and the best way to respond tocustomer orders.” That shift also applies to suppliers, who must provide parts and rawmaterials on more of a just-in-time basis.

Different John Deere divisions and plants are at varying stages in moving toward theorder-based model, says Bill Dumolien, processowner, flow manufacturing for Deere &Company. Some plants are using a combinationof the traditional and new approach. But all arelooking at ways to streamline the process ofbuilding high-quality products while reducingcycle time and excess inventories.

“In the assembly process, we’re looking to dowork more in parallel to reduce the time it takes

to build any given product,” says Dumolien.“Assembly lines are getting shorter and fatter,rather than thin and long.”

John Deere’s Augusta, Georgia, plant, which produces 5000-series tractors, used flow-manu-facturing principles in designing expandedfacilities over the past few years, says DonCorbitt, plant manager. Automated, guided

vehicles move product through theline from station to station, wherespecial “smart tools” help workersdo their jobs as efficiently andaccurately as possible. The line isdesigned so that if work needs tostop at one station, the whole line doesn’t shut down; instead,work can continue in other areas.Also, feeder lines are better integrated into the main line.

A critical component of flowmanufacturing is quality control,particularly in “getting it right thefirst time,” says Ron Scheitzach,production supervisor, backhoeassembly, John Deere DubuqueWorks. A product is continuouslyevaluated for quality as it proceedsthrough production, so it does not leave a particular zone or station until the work meetsappropriate standards and specifi-cations. This eliminates rework

and delays at the end of the line.Meeting high quality standards and quick

production schedules requires higher levels oftraining for workers so they feel empowered to make decisions on the spot. In Dubuque,workers in each production zone can triggermaterial replenishment from storage or directlyfrom suppliers. Some workers also discuss quality-evaluation reports directly with dealers.

The move to flow manufacturing is part of abigger thrust to make all of Deere’s businessesleaner and more effective. The challenge is tobring together individual unit and divisionphilosophies and merge them into commonprocesses, language, education, and training.

Says Russman: “The ultimate hope is thatthis will enable Deere to make manufacturing a competitive weapon.” /Lori Hill

FLOW MANUFACTURING IS MAKING IT EASIER FOR JOHN DEERE TO PRODUCE THE HIGHEST-QUALITY PRODUCTS IN LESS TIME AND AT LOWER COST

GOING WITH THE FLOW

Quality facilitator Bob Saylor helped design a first-in, first-out inventory system for the backhoe assembly area in Dubuque. The system limits inventory and uses components in the order they were delivered.

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BUZZBUSI

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PRO-AMS BUILD BUSINESS

Company executives used three days of pro-am and charity events prior tothe John Deere Classic to build businessrelationships with key customers.

One of Deere’s reasons for sponsoringa PGA event is to promote its line of professional turf-care equipment.Monday’s pro-am tournament providedgolf course superintendents and otherturf-care professionals the opportunity toplay the immaculately groomed TPC at Deere Run course, which is maintainedexclusively with Deere equipment.Superintendents are the main decisionmakers for golf course maintenance

equipment purchases. Tuesday’s Charity Scramble raised

$13,000 for youth golf in the Quad Cities while Deere executives hostedcustomers, dealers, and suppliers.

Among the many Deere guestsplaying in the Wednesday pro-am wereexecutives from Peter Kiewit Sons, Inc.of Omaha, Nebraska. The eighth

largest construction company in the world,in terms of volume, Kiewit owns a fleet of17,000 pieces of equipment, valued at $1.7billion. A small amount of the fleet is JohnDeere equipment that was purchased twoand a half years ago.

Like John Deere, Kiewit is looking toreduce their number of suppliers and alignthemselves with just a few strategic partners.Roger Mohr, director, corporate business

GOSSETT WINS JOHN DEERE CLASSIC

n his first-ever PGA TOUR victory, David Gossett won the 2001 John DeereClassic, held July 26-29, with a one-strokeadvantage over Briny Baird. The formerUniversity of Texas star and 1999 U.S.Amateur champion used a sponsor’sexemption to get into the field. His 19-under265 at the Tournament Players Club atDeere Run course in Silvis, Illinois, earnedGossett a $504,000 first-place check and aJohn Deere Spin-Steer Technology™ lawn

tractor. Gossett was the first player sinceTiger Woods in 1996 to win a PGA TOURevent on a sponsor’s exemption.

The win graduates Gossett from theBuy.com Tour to the big-league PGA TOURand allows him to play on the tour through2003. Gossett didn’t receive the largest checkfrom the tournament; 300 charities within 100 miles of the Quad Cities split nearly$1.3 million raised through "Birdies forCharity”and other fundraising programs.

Pierre Leroy, president, Worldwide Construction & ForestryDivision, celebrates a team birdie with Ryuichi Seguchi, president of Hitachi Construction Machinery Co., during theJohn Deere Classic Charity Scramble.

division, John Deere Worldwide Construction& Forestry Division, says the pro-am isan opportunity for Kiewit to learn moreabout Deere’s strategies and philosophies, andhow Deere matches up with the contractor’sbusiness plans. “To have them take three days off from their busy schedules is a realcommitment,” Mohr said. “It shows their interest in wanting to build a stronger relationship with Deere.”

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MOLINE TRACTOR & PLOW OPENS

The Moline Tractor & Plow Co. officiallyopened its doors to the public Aug. 10and 11. As part of the John Deere CollectorsCenter, the 1950’s-style dealership is the newest addition to the John DeereCommons in downtown Moline, Illinois.

An estimated 10,000 people attendedthe grand opening and dedication of therestored 116-year-old building. Tractor-restoration fans basked in nostalgia asthey munched on complimentary porkchop sandwiches and drank Coca-Colaout of original six-ounce bottles whilestrolling through the refurbished building.Among the attractions were a blacksmithfrom Grand Detour and a 1950s vintageJohn Deere Day film.

More than 100 restored John Deeretractors were sold during the grand open-ing’s main event—the second annual “AllGreen” antique auction. A 1938 Model BWide High 40 drew the highest bid of theday—$73,000—from Darold Sindt, a John Deere dealer from Keystone, Iowa.

NAME CHANGE REFLECTSFORESTRY IMPACT

The Construction Equipment Divisionhas a new name—the WorldwideConstruction & Forestry Division (C&F).With the company’s acquisition ofTimberjack last year, Deere was catapultedinto a worldwide leadership position inthe production of forestry harvestingequipment, as well as remaining a leadingsupplier of construction equipment. Thenew name more accurately reflects thedivision’s standing as a leading supplierof both construction and forestry harvest-ing equipment.

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RICHTON BRINGS IRRIGATION EQUIPMENT TO JOHN DEERE LANDSCAPESDeere & Company has acquired Richton International Corporation,a diversified service company with two business lines, including irrigation and computer-related services and products, for approximately $125 million. Century Supply Corp. is a wholesaledistributor of irrigation products and systems, while CBETechnologies, Inc. and Creative Business Concepts, Inc. supply technology-related products and services.

Century will be combined with the recently purchased McGinnisFarms, Incorporated to form John Deere Landscapes, which will offer a full line of services and products to landscape and irrigationprofessionals.

Irrigation equipment sales comprised about 80 percent ofRichton’s total revenues. Forbes magazine named Richton as one of the 200 Best Small Companies in the U.S. for three consecutive years.

DEERE ACQUIRES EQUIPMENT SAVERS, INC.Privately held Equipment Savers, Inc. of Denver, Colorado, hasbeen acquired by Deere & Company. Equipment Savers provideson-site fueling and maintenance of all brands of heavy equipment,a service sought by owners of large equipment fleets.

The business now operates in Denver and Phoenix, but has the potential to become a national business according to Pierre Leroy,president, Worldwide Construction & Forestry Division. “Thepurchase of Equipment Savers helps Deere extend beyond our traditional businesses of product manufacturing into value-adding services,” Leroy says. “We plan to be first in the national arena to offer these services.”

Equipment Savers will be managed as an independent businessreporting through the construction & forestry division. The service will continue serving all brands of heavy equipmentand will retain its name.

JOHN DEERE, YANMAR, KANZAKI PARTNER TO BUILD TRANSAXLESDeere & Company, Yanmar Diesel Engine Co., and KanzakiKokyukoki Manufacturing Co. have formed TransaxleManufacturing of America Corporation, a joint venture that will manufacture transaxles for tractors and utility vehicles.

The newly formed company has selected a 40-acre site in Rock Hill, South Carolina, as the location for its new headquarters and manufacturing plant. Ground was broken for the $35 millionfacility in September 2001, with production scheduled to begin inearly 2003. The plant will employ about 150 people when it reaches full production.

A transaxle is a unit that consists of a combination transmissionand axles used in small tractors and utility vehicles. The new plantwill manufacture transaxles initially for John Deere Gator™ utili-ty vehicles and compact utility tractors. Yanmar/Kanzaki currentlysupplies transaxles to John Deere from its plants in Japan.

WELCOME TO THE FAMILY

SSTTM LAWN TRACTOR SCORES DESIGN WIN

The John Deere Spin-Steer Technology™

lawn tractor received a Gold Award inthe 2001 Industrial Design ExcellenceAwards (IDEA) sponsored by theIndustrial Designers Society of America(IDSA) and Business Week magazine.

The award was one of 44 Gold Awardsamong 1,260 total entries in the 22ndannual competition. “Deere created a newcategory of lawn tractor by making atractor that incorporates zero-turn-radiuscapability while hiding the mysteries ofthe technology from the operator,” noted Clyde Foles, IDSA Center forCreative Studies.

MARINES RECOGNIZE TRAM TEAM

Brigadier General Jim Feigley, commanderof the U.S. Marine Corps SystemsCommand in Quantico, Virginia, visitedDavenport Works in July to present cer-tificates to members of the original TRAM(Tractor, Rubber-tired, Articulated steering,Multipurpose) team, which was awardedthe Department of Defense’s prestigiousValue Engineering Achievement Award.John Deere recently received a four-yearcontract to “relife” TRAM 644ER loaders.

“It may only look like a fork truck toyou, but it may be unloading medicalsupplies or ammunition—things criticalto our survival,” Feigley said of theTRAMs. “We need to have faith thatthose machines will work the first time,every time. The things you’re doing forus are extremely important. I hope wehave an extended relationship for manyyears to come.”

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STORY AND PHOTOS BY MARK MOORE

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When executives from Deere & Company andLarsen & Toubro Limited (L&T) cut the ribbonto a 37- to 55-hp 5000-series tractor plant nearPune, India, on October 6, 2000, the ceremonymarked an important step toward expandingJohn Deere’s global presence in ag equipment.

The L&T-John Deere Limited joint venture ispart of a manufacturing network—includingfacilities in Georgia and Mexico—that will pro-duce 5000-series tractors for major marketsaround the globe.

INDIA IS KEY. About as large as Alaska, thecountry produces over 200 million tons of grainto feed its billion-strong population. The effort it takes to produce that grain translates intoimpressive machinery sales. More than 254,000tractors were sold last year—compared with150,000 in the United States—though averagehorsepower is far lower in India.

A share of the Indian market is virtually all-new business for John Deere, because hightariffs keep imports of foreign-manufacturedequipment to a trickle.

“India is an important growth market for the ag division,” says Dave Everitt, president,Agriculture Division – Europe, Africa, SouthAmerica, and Global Harvesting EquipmentSourcing. “It’s a cost-competitive manufacturingenvironment. It’s also a supply base for partsand components, which offer us a competitiveadvantage when we introduce them into ourworldwide network.”

The Pune factory will build 10,000 tractorsthis fiscal year. Klaus Ramsauer, CEO of thejoint venture, says the plant is on target to produce 30,000 tractors by 2004, representing 10 percent of tractor sales in India.

CHALLENGES. Westerners from Marco Poloonwards have discovered that India is a poten-tially rewarding but challenging country inwhich to do business. For example, the tractorfactory retains a qualified snake catcher. Theoutsourced service removes King cobras thatseek refuge in factory buildings when heavymonsoon rains arrive in June.

Ramsauer says cobra appearances are quite

rare and that power out-ages, difficulties withwater supply, and India’sfamously congested infras-tructure are more seriousproblems.

Marketing the tractorsalso has its challenges. Asmuch as 80 percent of landholdings are tiny—little more than a few acres. Some 5 million buffalo are used as draft animals to providepower on many small farms.

The demand for tractors is expected to grow,however, as a shrinking number of farms accumulate more land, and as draft animals are gradually replaced by tractors.

Hindi, the national language, and English are spoken widely, but customers prefer to buyin their local tongue. Fourteen main languagesand dozens of dialects are spoken in India.In addition, each of the country’s 22 federalstates has its own tax and commercial laws and a unique mix of religions, customs, and traditions.

PARTNERSHIP. Everitt says working with L&T greatly increases the chances of success inthis complex marketplace. L&T is a highlyrespected engineering company whose electri-cal, cement, and construction businesses havegained it a reputation for quality throughoutrural India.

During the 1990s, L&T identified a gap in the agricultural-equipment market. “Researchshowed that the Indian market was ready for a more sophisticated tractor and higher levels of reliability and customer support thanwas provided by the seven manufacturers inIndia,” says Ganesh Apte, deputy CEO of thejoint venture.

L&T sought John Deere as a partner thatcould bring both a proven tractor design andmarketing system to the joint venture.Engineering remains the responsibility of JohnDeere, which receives a royalty for each tractor ▼

JOHN DEERE IN INDIAManufacturing and marketing operations in the world’s second most populousnation illustrate how the company is expanding its worldwide customer base

Zora Singh, manager of product support, explains the workingsof a 5310 to a group of farmers in India’s Punjab state.

The Charminar monument in the city of Hyderabad towers above the 5310, the first modelmanufactured by the joint venture.

sold in addition to its share of the joint venture’s profits.The tractors are basic by Western standards. There are no plush cabs,

and transmissions are built to a basic collar-shift design. Nonetheless,with features such as power-assisted steering, they are at the top endof the market for Indian customers. Oil-immersed disc brakes and high-performance engines are regarded as key selling points.

The 55-hp 5310 was the first tractor produced at theplant and retails for about 390,000 rupees ($8,300).

It has already proven itself by gaining impressive market share in its horsepower segment. The 47-hp 5203 and the 37-hp 5103, launched this summer, are expected to see the same kind of success in their market segments, which typically have much higher sales volume.

MARKETING. “As output has gradually risen,we have begun marketing machines state-by-state,

beginning with those closest to the factory,” says Jyoti Banerjee, chief of marketing. “This approach

ensured we could support the product intensively from dayone, and the reputation of the 5000 series is now well established.”Territory managers and a handful of area offices support 75 indepen-dent dealerships. Banerjee says the target is 200 dealerships.

A rigorous selection process was used to identify qualified dealers,like K. Sudershan Reddy and his business partner, N. Ravindra, who own a dealership at Nizamabad, near Hyderabad.

“Indian farmers are concerned about the impact of globalization. Wefeel that our future and that of our customers is best served by offering ahigh-quality product,” says Reddy. “The 5310 has proven exceptionallywell-suited for use in rice paddy fields, a key application here.”

The dealership facilities and signage conform exactly to the stipulations of their contract. The dealership is connected via theInternet with Pune for parts and whole-goods ordering.

Dealerships currently offer tractors only. The joint venture is planning to add locally sourced tillage equipment, because Western-manufactured equipment is currently not competitive in the Indianmarket. Salesmen receive salary and commission. Competition istough and negotiations can last for weeks. Many customers plan purchases to coincide with one of about 20 days each year defined as auspicious by the Hindu calendar. Unless a tractor can be delivered on a particular day at a specified time, the deal may fall through.

MANUFACTURING. The Pune factory was built on a carefully chosen, green-field site within India’s industrial belt.

“This location means the majority of our suppliers are within 150 miles,” says Ramsauer. “Almost 95 percent of tractor content nowcomes from Indian sources.” Engine castings are bought from Indiansuppliers and machined at the factory. Transmissions are built at Pune to a Kanzaki design under an agreement with that company.

Indian suppliers are beginning to supply John Deere factories out-side India. “Units worldwide are already sourcing parts from Indiathrough our wholly-owned international purchasing office based inPune,” says Ramsauer.

EMPLOYEES. “The Pune area is home to nearly three million people,and education facilities are good, which means there is a pool of highlyqualified labor,” says Ramsauer. A total of 460 employees work in market-

ing and in the engine, transmission, and vehicle-assembly focus factories.Jobs at the factory are highly sought after. Working conditions are

comparable with those at other John Deere facilities. Wages of $1 to $2 an hour represent substantial buying power in India, where theaverage wage is 50 cents per hour.

“What sets L&T/John Deere apart from some local manufacturers isthe willingness of managers to listen and greater investment in employeetraining,” says Sukhdeep Singh, a marketing department employee.

India’s roads carry a chaotic mix of pedestrians, trucks, motorbikes,and vehicles of every type, making bus travel the safest transportationoption. Tractor-factory workers ride busses from their homes in Puneto the factory 20 miles away, six days a week—the typical workweek in India.

On arrival, the staff stream out of the buses in the light-blue shirts anddark-blue slacks worn by staff and management alike.

The uniform helps offset India’s traditional acknowledgement ofclass and hierarchy. Somewear turbans indicatingmembership of the Sikh religion, which is closelyrelated to Hinduism, thereligion of the majority. SinceHinduism discourages meatconsumption, the outsourcedfood service offers exclusivelyvegetarian meals.

The staff’s average age is25, and worker enthusiasmextends past the workplace.Cricket, the top sport inIndia, is passionately fol-lowed by most, and teamsfrom the focus factories play each other regularly.

The workforce is largely,but not exclusively, male.“Women engineers are well-represented in some fields inIndia, particularly software,but we’re still unusual inmanufacturing,” says GauriTavte, a 21-year-old mechan-ical engineer working in the transmission focus factory. “I like thechallenge. Even at a company like L&T/John Deere, as a woman, you’rea bit of a pioneer.”

GLOBALIZATION. Everitt sees the Pune facility as an importantpiece to a global tractor-marketing strategy. “These are true JohnDeere tractors that we’re producing in India,” he explains. “Theycontinue our heritage of product quality and design, which meansthey‘re not only suitable for India, but potentially other markets.

“And because we have a common platform in the 5000 series,” headds, “the cost advantages of Indian parts, components, and even services, can be more easily leveraged into our worldwide networks.It’s a genuine win-win situation.”

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Above: Tractors fitted with cage wheels areused to prepare paddy fields for rice planting.

Below: Tractors are often used as the powersource for custom-built combines. The tractorsare removed and used for other tasks once harvest is completed.

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Left: Gauri Tavte, amechanical engineer,works in the transmissionfocus factory at Pune.

Far left: There are 75L&T/John Deere dealer-ships in India. JyotiBanerjee, chief of mar-keting, says the goal is about 200.

Left: The engine testinggroup at Pune usessome of the mostadvanced equipment of its kind in India.

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Left: Billboards arerarely available in India.Instead, advertisingmessages are paintedon dwellings or farmbuildings in one ofdozens of languagesor dialects.

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Quite a lot, actually, and there’s plenty of room for humor in the workplace.

DILBERT repr in ted wi th permiss ion of Uni ted Feature Syndicate , Inc .

WHAT’S SO DARN FUNNY?By Gene Ritzinger

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A sudden widening of the mouth, the baring of teeth (a cross between a grin and a snarl),and a generalized tremor sweeps the body.Inhalation and expiration become spasmodic,sending vocalized blasts of air out the mouth, at times evolving into a respiratory convulsion.The body starts pumping adrenaline; thebrain releases endorphins. The lungs pump

out carbon dioxide, and the eyes cleansethemselves with tears. Heart rate, bloodpressure, and muscular tension increase.You’re a mess at this point, but you feelterrific. You’re having a good laugh.

Laughter is a potent force. A realbreakup-type, major-hoot, belly-laugh sessionis not to be trifled with, undervalued, orengaged in during brain surgery or whileoperating a motor vehicle. During laughter,endorphins are released that are naturalpainkillers which also stimulate the body’simmune system to increase its disease-fightingability. After laughter subsides, heart rate,blood pressure, and muscular tension drop to below-normal levels for about 45 minutes,leaving one very relaxed. Laughter also pro-vides exercise for your diaphragm, thorax,abdomen, heart, and lungs, providing a miniaerobic workout.

C. W. Metcalf, author of Lighten Up, callslaughter “the cheapest medicine we can getunder or over the counter. It’s free, nonalco-holic, and singularly devoid of a downside.”And, adds humorist and motivational speakerKathleen Passanisi, any stress—from acne to a crabby boss—can be diminished with a good belly laugh.

Metcalf claims companies are findingthat office humor and playfulness not onlyhelp reduce stress, but also keep employeescreative under pressure and adaptable tochange. Humor also aids communication,helps overcome defensiveness and conflict,and increases morale and job satisfaction.And, as a result of these collective benefits,productivity increases.

Steve Allen, Jr., a physician, humor consultant, and son of the late comedian,points out that in experiments, people wholaugh at a half-hour comedy show before a test come up with more novel solutions toproblems than people who just sit doing nothing while they wait.

Humor can often help ease negotiationsand resolve a stalemate. For a time during

the Cuban missile crisis, when the UnitedStates and the Soviet Union were on thebrink of what could have been nuclear war,neither side could agree on a resolution. It issaid that the stalemate was broken, and a waraverted, by a Russian who came to the negotiating table with a sense of humor. Hisriddle, given credit for restarting the negotia-tions that maintained peace: “What is thedifference between capitalism and communism? The answer: In capitalism, man exploits man. Incommunism, it’s the other way around.”

If laughter is so good for us, why don’t we do more of it? Babies and young childrenlaugh more than adults, mostly out of plea-sure or joy. Apparently they have more funbecause they don’t have jobs, mortgages,receding hairlines, or worries about the stockmarket. But adults give kids that act-your-age-don’t-be-silly stuff early on, Allensays. Kids who are funny are often sent to the principal’s office.

e’ve been raised in a culturethat believes our problemscan be beaten only if we gettough enough, work a little

harder, and get really serious, according toAvner Ziv, author of Personality and Senseof Humor. “There’s an assumption thatif employees are having a good time andlaughing, then they’re goofing off,” hesays. “The key is being serious about your work and problems but not takingyourself so seriously.”

Passanisi says her goal is to dispel themyth that work and play are opposites. “If the powers-that-be can poke fun at them-selves, they become human in front of theirstaffs. Once they do that, there is instantbonding,” she explains. “If you don’t allowhumor on the job, people will still laugh—but behind your back and at your expense.”

Remember when you sat through a meet-ing with a piece of spinach stuck in yourteeth? Or when you e-mailed your child’ssoccer schedule instead of a memo? Or whenyou forgot where you parked your car? Orsome other situation like that? If you didn’tlaugh, you should consider why. These canbe funny situations, and while they madeyou look a bit foolish, they’re fairly harmless.Those who have the ability to laugh atthemselves are more flexible and have lessstress in their lives. And showing your sense

of humor can make you more likable. Abraham Lincoln set a good example

when he responded to an opponent’s accusa-tion that he was two-faced: “I leave it to you:If I had two faces, would I use this one?”

But there are risks to humor in the workplace. There’s a nastier side of humor—its use as a weapon. The first cave man whocracked another over the head with a rock andshouted, “Ha, Ha” was probably the firsthumorist. Civilized society has replaced brutalhostility with verbal insult. Thus wise-cracks, wit, satire, parody, and most jokes areall accepted forms of aggression. Instead of hitting each other over the head with a rock,we have put-downs like Churchill’s retort to Bessie Braddock, a political opponentwhom he stumbled into after imbibing a fewdrinks.“Sir Winston,” she roared. “You aredrunk, and what’s more you are disgustinglydrunk.” Churchill, surveying Bessie, replied, “Andmight I say, Mrs. Braddock, you are ugly andwhat’s more, disgustingly ugly. But tomorrow I shall be sober.”

Sarcastic humor, although clever andfunny if it’s aimed at someone else, absolutelydoes not belong in the workplace, as ClydeFahlman writes in Laughing Nine to Five.Neither do dirty, sexist, and ethnic jokes.Such humor hurts feelings, causes resentmentand anger, and closes doors to creativity,openness, and trust. The emphasis must beon “laughing with” versus “laughing at.”

And you have to know when humor isappropriate. The employee who constantlyrepeats the latest joke can be as tiresome as the multitude of jokes that clog e-mails. Youneed a clear, unequivocal signal that a laugh’s in order. If in doubt, don’t clown about.

What can you do to lighten up the atmo-sphere at your workplace? If your boss discourages humor, show him or her this article. Here are other tips from the humorexperts: Create humor bulletin boards for cartoons and jokes. Put a comic twist on theroutine things at work. One expert actuallyadvises setting up a humor room filled withpuzzles, comic books, games, and toys.

Fahlman says the greatest laughter inorganizations doesn’t come from contrivedhumor, but from situational humor thatcomes about spontaneously. What we reallyneed to do most is to learn to laugh a littlemore and take ourselves a bit less seriously.