In its most recent earnings release, Kubota reiterated its medium-to-long-term plan to grow profits by moving into the row-crop and large tractor segment of North American and European markets. It’s an intriguing thought that at some point, the company best known for its smaller tractors intends to go head to head with the giants of ag equipment that a lot of us refer to as the “majors.” 

For the record, Kubota Corp.’s total revenues for its most recent fiscal year were about $13.2 billion with sales of farm equipment and engines making up about 65%, or roughly $8.6 billion, of its total annual revenues. 

In its earnings release for the year ended March 31, 2015, Kubota management once again laid out its plans for growing its ag equipment business quite plainly. “The company will develop its business activities by expanding its presence in the farm machinery market for upland farming as the core of its growth strategy. In the European and North American markets, the company has thus far pursued a number of measures to reach this objective. These have included the development of large?scale products that can take their place along with the products of the world’s leading manufacturers of farm equipment, expansion of its sales and service network, and acquisition of an upland farming implement manufacturer. 

“The company is launching large-scale, 170 horsepower tractors and will make a full?scale entry into the farm machinery market for upland farming. With this as a beginning, the company is further expanding its product lineup and taking initiatives to ensure product quality, cost and delivery that will surpass other companies in the field and thereby position it as one of the major players in the farm equipment business. 

“Also, in the emerging markets, the company is focusing its resources on farm machinery for upland farming, which is expected to be a growth business. The company will launch a series of new products that have been developed with its approach of being an integral part of the markets it supplies. The company will also work to attain growth in the overall farm equipment business, through collaboration with farm equipment for rice paddy cultivation, where continued market expansion is expected.”

This is a continuation of the late Yasuo Masumoto, chairman and CEO until his sudden death in June of last year, that started this ball rolling. He recognised that with Kubota having already achieved strong positions in compact tractor markets and the paddy rice farming sector in Asia, the only source of significant growth would come from the grain and livestock sectors across Europe, North America and Australasia. The company then really set the project in motion by securing Norway’s Kverneland Group, the world’s second-largest manufacturer of field implements.

There’s been nothing covert about what they’re planning. I don’t think you can make it any clearer than what Kubota has done. But the speculation remains about what other “upland farming implement manufacturer” they might acquire and how exactly will they manufacture the higher horsepower tractors that it will take to compete with the likes of John Deere.

But what I find even more interesting is how their dealer network will evolve. Our best estimate is Kubota has a little over 1,000 dealer locations in North America, many of whom they share with other major equipment manufacturers, most notably Case IH. In fact, early last year, Kubota was one of the brands that Case IH was pushing its dealers to remove from the their lots.

As we wrote in Ag Equipment Intelligence last October, “As dealers anticipate discussions with major suppliers who have ‘tolerated’ outlets handling Kubota’s compact and lower horsepower ag tractors, the message is clear: Kubota is about to become a full-line manufacturer with competitive tractors and one of the most comprehensive equipment lines of any full-liner. Who’s coming on board?”

It will be fascinating watching it all unfold. As Yogi Berra once said, “You can observe a lot just by watching.”