On The Record: August 8, 2014
Could 3-D Printing Be
Coming to a Dealership Near You?
In today’s newscast we look at the possibility of equipment dealers using 3-D printers to make replacement parts, the latest earnings from AGCO, CNHI, Kubota and Trimble, Claas’ long awaited entrance into the North American tractor market, and what dealers think could prevent further declines in high horsepower tractor sales.
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I’m managing editor Kim Schmidt, welcome to On The Record. Here’s a look at what’s currently impacting the ag equipment industry.
Could 3-D printing revolutionize the parts and service department in the dealership of tomorrow?
Robert Saik, author of The Agriculture Manifesto and founder and CEO of The Agri-Trend Group, thinks 3-D printing is one of the drivers that will shape agriculture in the next decade.
Jon Cobb, executive vice president of corporate affairs with Stratasys, says for dealerships to start using the technology to print parts, the OEM needs to feel comfortable that their original designs would be safe guarded and only printed out by their dealers.
Cathy Lewis, CMO of 3D Systems, agrees.
"It all depends upon having the digital file, making sure it’s been designed for this purpose and that it matches the manufacturers’ intent. You would need a partnership between the manufacturer and the dealer. Then they could begin the concept of printing on demand and storage would become digital files. Turnaround time would improve."
Depending on the machine, the material being used and the object’s size, this process can take a few hours or a few days. 3-D printers can print a variety of materials including wax, various plastics, metal and ceramics. Resins can also be used by some 3-D printers.
3-D printer manufacturer 3D Systems recently added direct metal 3-D printing to its portfolio. But, direct metal 3-D printing comes with a higher price tag, Lewis says. The company offers three printer sizes ranging in cost from $250,000 to $800,000.
Lewis says some of the plastics that 3-D printers use have the same longevity and mechanical properties as some metals and are much lighter weight. Plastic printers can cost as little as $5,000, but most that are used in end-use manufacturing range from $300,000-$700,000.
While there are hurdles to overcome, both Cobb and Lewis agree we could see 3-D printers in dealerships as soon as 5 years from now.
AGCO, CNHI, Kubota Report Latest Earnings
On July 29, AGCO reported net sales of about $2.8 billion, a 9.8% decrease vs. the second quarter of 2013. For the first six months of 2014, net sales were $5.1 billion, down 6.7% vs. the same period last year.
In response to weakening order trends during the quarter, AGCO chairman and CEO Martin Richenhagen says the company took aggressive actions to cut production, manage inventory levels reduce operating expenses and generate cashflow. AGCO will maintain these priorities during the second half of the year.
CNH Industrial reported on July 30 its second quarter revenues totaled $8.9 billion, up 0.9% vs. the second quarter of 2013. Net income came in at $358 million for the quarter, a 2.8% increase vs. the same period last year. However, for the first half of 2014, net income was down 8% vs. 2013.
For the agricultural equipment segment, revenues for the quarter were down 2.3% and down 4% for the half.
On August 5, Kubota reported that revenues for the 3-months ended June 30 were up 0.3% to $3.5 billion vs. the same period of 2013.
Revenues in the Farm & Industrial Machinery segment were $2.9 billion, almost the same level as in the corresponding period in the prior year. In North America, sales of tractors expanded sharply mainly due to the effects of launching a new line of products.
The company’s outlook for the full year ended March 31, 2015 remains unchanged from its previous forecast calling for overall revenues to increase by 2.7%.
Claas Enters North American Tractor Market
Claas’ long talked about entry into the North American tractor market is upon us.
The company gave North American editors a sneak peak at its new Xerion tractor that’s designed specifically for the North American market during its Lexion Adventures in the Field event July 16-17 in Omaha, Neb.
Claas will officially introduce the tractor to the rest of the industry later this month during the Farm Progress Show in Boone, Iowa, and later at Husker Harvest Days in Grand Island, Nebraska.
With 435-530 horsepower from MTU Mercedes-Benz engines, it would compete with U.S. favorites on tracks and tires but with a rigid 4WD drive chassis, multi-mode 4-wheel steering and stepless CVT drive.
Claas also recently opened a new company owned and operated dealership in Regina, Saskatchewan, near its newly opened Parts & Logistics Center and regional training academy. Tingley’s Harvest Center also recently opened in North Battleford, Saskatchewan, and carries Claas’ full line of equipment.
Trimble to Reduce Reliance on Ag
Trimble, a manufacturer of position technologies and software, released its latest earnings report on August 5 and saw second quarter revenues grow 11% year-over-year. However, its Field Solutions sector saw a 1% drop in revenues due to weakness in sales of agriculture products.
Trimble CEO Steven Berglund said, “It is becoming clear that the effects of lower commodity prices are now impacting us more than we had originally anticipated."
As a result, the company aims to reduce its reliance on agriculture and shift its focus to its other business sectors to be more balanced.
For the third quarter, Trimble is expecting a 7% sequential decline.
Preventing Further High Horsepower Tractor Sales Declines
Through the first six months of the year, the Assn. of Equipment Manufacturers reported high horsepower tractor sales in the U.S. were down 10.3% and in Canada they’re up less than 1% vs. the first half of last year.
In the 34th UBS Agricultural Dealer Survey, released July 25, dealers were asked, “What factors are preventing high horsepower sales from declining even further?”
Of the respondents, about half indicated that healthy balance sheet and farm income/cash receipts are preventing further high-hp sales decline, with 27% and 25%, respectively. The third highest response was equipment purchase incentives at 21%.
While demand for high horsepower tractors has been on the decline, sales for small equipment have remained strong. The survey asked dealers “Do you anticipate demand for small equipment will remain healthy for the rest of the year?”
79% of dealers indicated they expect a healthy demand level for small equipment through the remainder of the year.
Rocky Mountain Dealerships’ Revenues Increase in 2nd Quarter
Rocky Mountain Dealerships reported its second quarter results for 2014 August 5. Total revenues increased by 1.8% to $242.4 million from the same period last year, gross profit increased 5.2% and inventory decreased by $13.3 million to $522.2 million.
Second quarter new equipment sales increased 1.2 % compared to last year while used equipment sales decreased 1.7%.
Rocky Mountain’s CEO, Matt Campbell, said, “As agriculture industry demand cycles to lower levels of wholegood unit sales, a strong product support business helps to maintain stable cashflows. Sales in these departments increased for the second consecutive quarter compared to the same period last year. This drove an improvement in our gross profit.”
Campbell announced August 5 that he and Derek Stimson, Rocky Mountain’s president, will be retiring effective December 31, 2014. Both will remain as directors of Rocky Mountain, with Campbell remaining chairman of the Board of Directors. Campbell and Stimson founded Rocky Mountain Dealerships together in 2007.
And now from the Ag Equipment Archives…
John Deere Introduces Model D Tractor
In 1923, John Deere built the first Model D prototype, despite the severe farm economy depression at the time. The first model D rode on steel wheels with a 6.5 x 7 inch two-cylinder hand-cranked engine rated at 15-27 horsepower.
By 1925, the company realized the standard Model D did not meet customers’ needs for industrial applications. Steel wheels were not suitable for hard surfaces, and the gearing was too slow for safe road speeds. Solid rubber tires were added, and engineers fitted a 28-tooth sprocket to the final drive, giving a road speed of 4 mph.
The Model D was produced from March 1, 1923 to July 3, 1953 — the longest production span of all two-cylinder John Deere tractors. During that period over 160,000 were made.
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