Machinery Industry Outlook

November 24, 2008 06:00 PM

The Association Equipment Manufacturers (AEM) has released its annual forecast for U.S. agricultural machinery sales, providing an overall snapshot of manufacturers' predictions for 2009 business. Tractor sales in the United States for 2009 are expected to be strongest for four-wheel-drive tractors with an increase of 4.4%. The 100-horsepower-and-over two-wheel drive tractors are predicted to gain 3.3%. Combines are forecasted to have a boost of 9.3%. Machinery component sales, except for engines, are anticipated to increase. Sales of two-wheel-drive tractors for the 40-100 hp range remain level (down 0.1%) while the 2-wheel-drive tractors under 40 hp is predicted to decline 11.2%.

According to the AEM Vice President of Agricultural Services Charlie O'Brien, "Growth in these product sectors had been fueled by increased energy demands (in part being met by ethanol production), increased commodity prices and increased net farm income. Net farm income is a driver of equipment sales, and producers' balance sheets overall are strong as a result of increases in net farm income, as well as increased asset accumulation and debt management. Farm debt-to-asset ratios are at an all-time low.”

Apart from tractors and combines, 2009 sales are predicted to be the strongest for planters, with a 9.3% increase, and for self-propelled sprayers, with a gain of 6.3%. Sales gains are also expected for windrowers/swathers, field cultivators, chisel plows, post hole diggers, forage harvesters and rotary cutters.

Regarding component sales in 2009, the electronic components segment is anticipated to increase 8.8%, hydraulic components are predicted to gain 7.8% and powertrains are predicted to increase 2.5%. Engine sales (air cooled/diesel) are predicted to be down 0.7%.

Industry Perspective
Tom Evans, Great Plains vice president of sales, discusses current machinery demand.

Factors Affecting Future Growth
The AEM ag equipment industry outlook asks farm equipment manufacturers to rate anticipated changes in more than 18 factors that have emerged as significant influences on machinery sales. For the U.S., more than 60% anticipate an increase in planted acreage and an increase in grain exports in 2009.

For U.S financial factors, slightly more than 50% of respondents anticipate credit availability to remain about the same, with another 32% expecting a modest decline. Some 52% expect interest rates to remain the same, with 35% saying they will increase modestly.

Some 47% predict U.S. farm cash receipts will be modestly up, and 30% say they'll stay about the same. Net U.S. farm income is anticipated to be modestly up by 55% of respondents, while 24% predict a modest decline.

Replacement demand for equipment in the U.S. is expected to remain the same (44% of respondents) or increase modestly (47%).

View Results

2009 Retail Sales Predictions
AEM graphed results from their manufacturers' "industry outlook” survey. The following graph reveals 2009 ag industry predictions for 2009 retail sales in the U.S. Most tractors are forecasted to have a strong increase as well as combines. Planters, self propelled sprayers, electronic and hydraulic components are also projected to increase in 2009. Significant declines are expected in two-wheel drive tractors under 40 hp. 

AEM Ag Industry Outlook – 2009 Retail Sales Predictions
                              (in units vs. 2008)
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     Type of  Equipment                              &nb​sp;             U.S. %
© Copyright Association of Equipment Manufacturers

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