Claas CEO Jan-Hendrik Mohr was on site here at the Farm Progress Show this week and says the German manufacturer is committed long-term to the North American market, as can be seen by the launch of its new Jaguar 1000 series forage harvester in the U.S. Mohr says the U.S. is the largest forage harvester market.
This week Claas also announced the groundbreaking on a new 44,800 square foot Research and Development Center in Omaha. At the Farm Progress Show, Mohr stressed the new R&D center has nothing to do with tariffs and said Claas is here in the U.S. “for the long-term.’
I caught up with Eric Raby, Claas Senior Vice President for the Americas Region, during the show. He says while the R&D center wasn’t in response to tariffs, Claas is feeling some tariff related pressures.
Eric Raby: Our fiscal year, it ends actually at the end of September, but our quarter one is everybody else's quarter three or four, whatever. But if I look at it, certainly pressure on the commodity side of things. Inputs have stabilized a little bit from what we saw back in the COVID days or whatever. But I think the other thing is some of the unknowns are still out there. And as an example, interest rates. I think there's still this, I would say, collective thinking that the Fed is going to make a move. It might be a small one, but I think it at least gives us signal to people that things are starting to improve. However, having said that, I still think that we're going to stay in a, I would say, a pressured market for at least another couple of quarters before we start to see a large amount of resurgence.
Kim Schmidt: Even so if we get... It sounds like everyone's pretty confident September we're getting a cut.
Eric Raby: Yeah, 25 basis points.
Kim Schmidt: And then maybe there's potential for another in December. Do you think it's still not enough to make a huge impact?
Eric Raby: I think it'll make some difference, but I think the other thing that's going to need to happen too is we're going to need to see some movement in commodity prices, and usually that's going to happen after we get on the way through harvest. The USDA comes out, it's good or bad, and they temporarily drop, oh, it's the best corn crop we've ever had. Well, darn, that just drives them rise down. But when you have a good yield, irrespective of pricing, it still is better than having a bad yield. But we'll have to see what does the long-term or the midterm look like for corn? What does it look like for beans? Those are the two most important crops that we're dealing with in this. And I think the other one is what is the impact, especially in the equipment business with the tariffs? We kind of got through with some of the major markets.
We have an agreement with the EU, we have an agreement with Canada, some of those major markets that we deal with, so that's good. But now we have another steel and aluminum tariff that is quite significant and it not only affects... Regardless of where you're from, it affects everyone in the industry. I think everyone's trying to come to terms with how does that look? How do we work on that? Because that's a significant thing that I don't think we've fully overcome yet, and that could actually have somewhat of a negative effect, I hate to say. It depends on how it actually ends up. We'll see in the next couple of weeks if there's any changes.
Watch the full version of this episode of On The Record
