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Equipment Moves Forward

December 16, 2010
By: Margy Eckelkamp, Director of Content Development, Machinery Pete
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Signaling strong machinery sales overall, combine sales in the U.S. were 5.7% higher in the first 10 months of 2010 than in the same period in 2009.  
 
 

While most market sectors around the world are still recovering from the lows of the global recession, ag machinery is a bright spot.

No doubt, companies are engineering, manufacturing and distributing equipment under new parameters, including stringent emission standards. But new opportunities, coupled with strong fundamentals, are propelling the ag machinery market forward.

“Our business has become no longer business as usual,” says Theo Freye, speaker of the executive board for Claas. “Based on a great international farm economy, we’ve tripled revenues in 10 years.”

The ag machinery industry has not been entirely immune to the effects of the global recession, though.

“The equipment markets in North America, South America and Asia are all doing well. However, Europe and Russia aren’t,” Freye says.

In the U.S., another effect of the economic woes has been more stringent requirements for credit.

“Manufacturers were affected by this, and so were the equipment dealerships seeking financial credit for wholesale orders,” explains Charlie O’Brien, vice president of agricultural services for the Association of Equipment Manufacturers (AEM).

In the past few years, there has been a shift in the balance of production and revenues for major manufacturers that make machines for both the ag and construction markets.

According to Rich Tobin, chief finan-cial officer for CNH, 65% of revenues in 2007 were from the ag market, and in 2010, 78% of revenues were from ag. In 2010, the company’s ag equipment net sales were up 12.8% in the third quarter and up 6.3% for the first nine months, which is better than the company’s early forecasts.

Optimistic projections. As ag markets rebounded in 2010, machinery makers adjusted their forecasts to be more positive.

“At the end of the third quarter, we forecast the North American market to be flat to up 5% in 2010,” says Andy Beck, AGCO senior vice president and chief financial officer. “That is an increase from where we thought we’d be at the beginning of the year.”

Industrywide year-to-date numbers for the first 10 months of 2010 show growth compared with 2009. Tractor sales increased 4.1%, and combine sales increased 5.7%. Industry leaders report that even more positive numbers are on the horizon.

“Worldwide, the order board for large tractors and combines is up 13% year-to-date,” explains Harold Boyanovsky, president and CEO of CNH. “In North America, 100-plus-hp tractors have an order board up 63%; combines, worldwide and year-to-year are up 30% and in North America are up 80%.”

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FEATURED IN: Farm Journal - Machinery Guide 2011
RELATED TOPICS: Machinery, Machinery Guide

 
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