Is there room for more competition in the North American market?
Obviously, Kubota thinks there is. They’ve made no secret about their plans to go head-to-head with the current industry leaders. By acquisition or by developing their own high horsepower equipment, the company that almost single handedly created the market for compact tractors has started flexing its muscles as it continues to make moves into the production ag equipment market.
Kubota’s story sounds similar to that of Japanese automaker Honda. This once little company first introduced its brand to the North American market via its motorcycles. Starting on the West Coast, they moved eastward. After getting its name firmly established, it then introduced its automobiles. Today, it holds the fifth spot when it comes to U.S. market share.
Kubota is already the fourth largest farm machinery maker worldwide. With about $8.5 billion in ag equipment sales this past year, it’s about a billion or so behind #3 AGCO and about $4 billion ahead of #5 Claas. And they’ve done it without producing much in the way of big farm machinery.
If you saw the Sept. 29 edition of our E-Watch newsletter, we reported how Kubota has taken another big step toward its goal of becoming a player in the mainstream ag market by opening its first European factory. The plant in Dunkirk, France, will soon be producing 130-170 horsepower tractors for the European and North American markets.
Apparently, another overseas equipment manufacturer believes there’s room for another player, as well. Foton Lovol International Heavy Industry Co. is the largest manufacturer of agricultural equipment in China. Construction machinery and light utility vehicles also contributed to sales last year of about $3.4 billion. It claims a 70% combine market share in China as well as a majority share of large and medium size tractors over the past decade.
The company has already established an R&D center near Bologna, Italy, to design a new range of tractors. And it recently signed a deal to purchase Tier 4 compliant engines up to 134 horsepower from Kohler with a clear focus on Western markets.
And, of course, there’s India’s Mahindra, which also has clear designs on moving into the production ag equipment space.
I haven’t come across many companies (though a few come to mind) that enjoy competition. But I know one thing for sure, most successful businesses wouldn’t be where they are today without it.
As much as the major farm equipment manufacturers hate their shortline competition, I believe many of the most significant innovations in this industry have come from the specialty equipment makers. The shortliners have kept the big guys on their toes and given them something to copy.
Back in the 1970s and ‘80s, General Motors claimed a nearly 50% market share of U.S. automobile unit sales. Together with Ford and Chrysler, they dominated the American market.
Today, the Big 3 have less than one-half of the U.S. market share for autos and three of the top six carmakers are Japanese companies that own just about one-third of the U.S. market. And don’t look now, but Korean automakers Hyundai and Kia are moving up fast, with a combined 8% U.S. market share.
A word to the wise, from the oldest player to ever debut in the major leagues, Satchel Paige, at age 42: “Don’t look back. Something might be gaining on you.”
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