New Lely CEO on Covid and automation is farming

Automation is everywhere and on farm it brings benefits such as improved profitability and better animal health and welfare. It also allows a more sustainable approach. CEO André van Troost gives us an inside view at the company that is a market leader in producing milking robots and has had a hand in the evolution of dairy automation.

You took over as CEO on 1 January – with this new role, what were the top priorities that you wanted to tackle?

One of the first things I had to tackle was how to get through the pandemic. But when I initially started I had already been with Lely for 6 years prior to the CEO position. So when I got the job it wasn’t that I wanted to do it in a totally different way. The first factor I wanted to continue to build on was innovation. We want to continue to innovate for our farmers in terms of enjoyability, profitability and sustainability. This is by far priority number one. Also we want to increase our customer-centricity, so we work with dedicated Lely franchises. We are growing very rapidly. We aspire to keeping our customers satisfied: building and placing products is only one part; making great strides in the service channel is also very important to us.

Another focus is to find good people who are happy to work. It’s part of our Route 25 strategy which we as a board have created and implemented. It sounds like a cliché but I believe that without good people we will not get anywhere, so this is really important for us to maintain. Of course then when the pandemic hit, it became about the day-to-day management of the business – how to keep the company going in tough times.

Photo: Lely

How did Covid-19 impact the business?

We are a machinery business – so our operations department stayed open. Our factories stayed open and they had to work in a healthy and safe way. We had to quickly adapt and make some big changes there. Communication became a lot more transparent. Our aim during this time was that everyone had the sense that they were on the same page and same journey. Communication was key. Another challenge was working with customers and keeping our robots serviced. This service experience was different in every country – in one country it was carried out as if nothing had changed and in another the rules became much stricter; there certainly was no one-size-fits-all policy. I’m really proud of the way we have done it. In terms of business, there is a slight decline but we will manage. It could be a lot worse.

2019 was a great year for the Lely Astronaut A5 – which factors do you think played an important role in this exceptional year?

Yes, we had a great year! Adoption of automation is going very quickly now. We see that most new purchases on dairy farms now are related to automation. But we also launched a great machine – and we launched the new hybrid arm which is quieter and faster, and attachment is easier and quicker than the A4. The A5 reduces energy consumption by about 20%. The interface is a lot easier to use – it really is the next step in making automation even simpler to understand. In the past only a small group of farmers were open to innovation. Now we have got to a stage where the A5 is much easier to use and understand, which in turn creates a wider group of farmers who want to make use of it. Now you have the situation where those who never thought about automation are thinking that it is the logical next step. This simplicity has created more possibilities for farmers who struggle to find employees and those who want more time to do other things, and also to ensure free cow traffic.

How many projects are in the R&D phase currently, and how much of the turnover is spent on R&D?

We spend about 5–6% of turnover on research; it’s a significant number. But we are innovators and R&D is in our DNA. We work on many different areas – I can’t tell you exactly which areas. In October 2020 we organise the Lely Future Farm days where we will launch a number of new innovations to the market. We are really excited about that. One innovation that we will reveal more about is related to manure. And the other 2 I can’t tell you about at all – until October. At the core of it all we want to better the lives of our farmers. We live to innovate for farmers – I know it sounds like a cliché but this is truly our mission.

The Lely Astronaut A5, which was launched in 2018. Photo: Lely

What are your thoughts on automation, and what is Lely focusing on now?

I think adoption of automation will reach 90 to 100% – I am absolutely convinced. What I think is that there may be a lot of focus on automation on Dutch farms with 100–150 cows on average. We are looking at automation for these smaller farms but also for XL farms like those in the US and China – of course they need different support and this is something that we are looking at extensively.

The very first installation of the Astronaut A5 in China was done remotely due to Covid-19 and was very successful; can you tell me about this experience?

We were forced to do it remotely, but of course working in person would have been much better. We are learning what every company is learning – you don’t always have to be somewhere to make things happen and it’s important to find that balance now in terms of how much can be done in person vs how much can be done remotely. The big learning is that we are all moving towards a more hybrid existence – we are very proud that the outcome was a successful one. Making installation as simple as possible is a process that we are working towards. If the way forward is to do it remotely in a few years – then why not?

Do you foresee major growth in the China market?

The potential in China is enormous. But I find it really hard to predict the growth as there are so many factors to consider. It’s not simply about how good a product is but also how willing are the Chinese to welcome a Western company? How much freedom is there to explore the market? There are lots of factors involved. The potential is big and it is certainly a focus as we have a dedicated team there now and that says a lot, but I find it hard to predict.

What’s your expectation for turnover – will 2020 be another great year for Lely?

I don’t see us excelling above 2019, and this is the same stance even before Covid-19 because last year we launched the A5 which created a lot of sales opportunities. Our worst-case scenario does seem a lot better now – meaning three months ago we were worried about the market, especially during the first 2 months of Covid-19 which impacted our orders and we could see a decline. However, now we are seeing a turnaround and it’s coming back up; there is a possibility that it may even exceed our expectations. During Covid-19, people were just waiting a few months to purchase. In terms of where we will end up, we could very well reach the intended budget. That would be an amazing result. We have to wait and see.

What is Lely’s sustainability vision?

Sustainability is hugely important for us. It’s part of our vision of a sustainable future. Coming from working at Danone, I understand that at the end of the day it’s the dairy consumer who decides what products to purchase, and I know that the customer is becoming more and more critical. Dairy consumers want their products to come from a sustainable operation where there is a high standard of animal welfare, where there is free cow traffic. I like to believe that they are willing to pay a fair price when it comes to the farmer. Sustainability is such a huge topic in the dairy sector – with our manure solution that we will launch, which will reduce nitrogen output, our aim is to give more value to manure, to replace artificial manure and make own manure more valuable. With all our products we keep sustainability in mind and top of the agenda.

What’s your view on automation in terms of animal welfare?

I see automation contributing in a big way to welfare. For example with the free cow traffic principle we know for a fact that those cows are happier, feel less stress, give more milk and tend to be healthier. The consumer will become much more discerning in terms of animal welfare. Also traceability is a major point: consumers ask where does my milk come from? Which farm does it come from, and is that a sustainable operation? Are animal health and welfare standards a top priority there? Therefore, every product that we develop at Lely has the cow’s welfare in mind.

For more information: www.lely.com