In the latest episode we discuss the completion of Kubota’s acquisition of Great Plains, examine the types of precision tools strip-tillers are using most, talk with CNH Industrial’s new vice president of parts and service for North America, review Art’s Way’s second quarter earnings and examine a increasingly crowded ag tire market.
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Dealership of the Year 2016: Van Wall Equipment
In Little League, coaches tell young players to “keep your eye on the ball.” The advice applies to both fielding and batting, but it is just as applicable to running a successful farm equipment dealership. That’s just what Don Van Houweling, owner of the 2016 Dealership of the Year, has done at Van Wall Equipment.
I’m managing editor Kim Schmidt, welcome to On The Record. Here’s a look at what’s currently impacting the ag equipment industry.
Kubota Completes Great Plains Acquisition
As of July 1, Kubota’s acquisition of Great Plains was complete. The Kansas based manufacturer is now a 100% subsidiary of Kubota, Great Plains president Linda Salem said last week during the company’s national dealer meeting in Kansas City.
AFN: $39.88 +2.44
Closing Stocks as of 07/21/16 (Compared to Close on 07/07/16)
Leaders from both organizations told dealers that it’s “business as usual” and all 5 Great Plains divisions will operate as they have been with their infrastructure intact.
We caught up with Kubota Tractor Corp.’s president and CEO Masato Yoshikawa at the dealer meeting. He shared his short- and long-term vision for the new partnership as well as how they will work with dealers.
"We would like to offer more cooperation and deepen the partnership. That provides very good value for both companies in the short-term. In the long-term, Great Plains division is an implement division and business. Our position is on how to support it. We acquired another implement company in Europe named Kverneland and they're strong in Western Europe and Great Plains is strong in North America. By having those two here coordinated, I think we can have a good implement business. That's our long-term strategy and objectives. As for short-term, we would like to support and help the Great Plains business and keep providing good support to dealers. I think that their relationship with dealers and their products are very strong so we will help them keep developing new products and provide the good support to dealers."
Yoshikawa also discussed Kubota’s strategy for high horsepower tractors. The company just introduced the M7 Series, which has models that range from 130 to 170 horsepower. He says they will study the tractors to make sure their solution can be better than others. If they can’t, he says then they are just moving up in horsepower without providing any additional benefits.
Dealers on the Move
Dealers on the Move this week include Mobile Ag & Industrial Supply and MirTech.
Mobile Ag & Industrial Supply in Bakersfield, Calif., has joined the JCB dealer network as Mobile JCB. The shortline dealership also carries Versatile, McCormick, LS, Zetor, Landini and other lines.
MirTech has signed a letter of intent with Claas to become a distribution partner for the Western Delta region, which was previously covered by Holt Cat
Deere Tops GPS Use List Among Strip-Tillers
The benefits of precision farming translate to multiple farming practices, but strip-till is often cited as a system in which technology is essential. Banding nutrients beneath the soil surface and accurately planting into a fertile seed bed are cornerstones of strip-till, enhanced by a reliable guidance technology.
Results of the No-Till Farmer’s 3rd Annual Strip-Till Operational Benchmark Study, which analyzed the 2015 cropping season, revealed an ongoing investment in RTK-level GPS correction services, variable-rate technology and implement guidance.
According to the survey of more than 400 strip-tillers throughout the U.S. and Canada more than 80% said they used RTK, up 10% from 2 years ago. Looking at the breakdown of GPS brand preference among respondents, John Deere topped the list for the third year in a row, with 43% using the system, up 5 points from 2014.
Second most popular was Trimble with about 23%, followed by Ag Leader at about 20%. The biggest year-over-year decline came in the number of strip-tillers using Case IH GPS from 15.5% in 2014 to 7.9% last year.
Another decline came in the percentage of strip-tillers who utilized implement guidance from 20% in 2013 to 17% last year. However, adoption of variable-rate fertilizing practices continued to increase among strip-tillers. Use increased in 2015 to about 43%, up from 36% in 2014 and 31% in 2013.
A further breakdown of survey respondents analyzed the top 10% of strip-tillers ranked by corn and soybean yields, and their usage of precision farming practices.
Adoption was higher among this group, with 97% utilizing RTK-level GPS correction on their operation, 46% using variable-rate fertilizing and 21% using implement guidance.
Consistent with the overall group, John Deere was the most commonly used brand of GPS, although by a wider margin with 61% of the top strip-tillers using the system.
CNHI Focused on Supporting Dealer Parts & Service
This week, CNH Industrial announced Kurt Coffey has taken over as the new vice president of parts and service for North America. He is responsible for overall sales growth and profitability of the company’s aftersales products, services and parts operations in North America for Case IH, Case Construction, New Holland Agriculture and New Holland Construction.
We sat down with Coffey last week and discussed his vision for the parts and service division of CNH Industrial and how and why it’s important for them to be supporting their dealers.
Art’s Way 2Q Sales Down 26.4%
Art’s Way Manufacturing released its second quarter earnings on July 15, citing overall sales of $5.7 million, a 26.4% drop from the 2015 totals.
Among the top corporate initiatives mentioned by CEO Carrie Majeski was a reduction in inventory by 10% over the course of the fiscal year, with a specific focus on ag equipment, the company’s largest business segment. So far, efforts have been successful, with an inventory drop of $993,000 in the ag sector alone, along with a $1.2 million reduction in inventory across the company.
During a call with investors, Majeski cited continued struggles in the agricultural products sector, which as a whole suffered a 44% drop for the recent quarter and 34% dip overall on the year. Forage line boxes in particular have suffered losses of 75%. Other product lines taking big hits are silage blowers, which are down 55%, manure spreaders, which are down 36%, as well as a 22% reduction in parts sales.
Majeski made note of the company’s strong first half of sales in 2015 followed by a significant drop off in the second half, so year-over-year sales marks were expected to be down for the first half of 2016 as a result. The lighter second half 2015, however, should result in more comparable year-over-year sales for the rest of 2016.
Ag Tire Market Getting Crowded
Despite the downturn in ag machinery sales, some new players in the ag tire market are vying for market share, while a couple of established tire makers that had gotten out of the business are making plans to get back in.
It looked like it was getting down to 4 companies a few years ago: Michelin, Titan International, Trelleborg and Mitas. Now, Mitas has been sold to Trelleborg and set off a bit of a chain reaction.
Continental and Pirelli are getting back into the market after selling off the ag and off-road products a few years ago.
Other competitors also vying for market share include a resurgent Bridgestone/Firestone, a successful BKT of India, and Israel’s Alliance, which is spearheading Yokohama Rubber’s entry into the market.
Implement & Tractor Archives
In the early 1940s, International Harvester created a program dubbed the “Combine Caravan” where a team of engineers were sent out with a fleet of experimental combines to be field-tested around the country. The team had a trailer full of tools to test experimental parts and work with the customers who allowed the company to test their equipment on farms across the country. The program began in Texas and moved north throughout the harvest season.
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