Farm Machinery Manufacturers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 1,000 farm machinery manufacturers in the US sell agricultural and farm machinery and equipment through dealers and distributors. Product categories include tractors, harvesting machinery (combines, balers), commercial turf/grounds care equipment (mowers), planting, seeding, and fertilizing machinery (sprayers, soil prep machinery), related attachments, and parts.
Sales Channel Dependent On Credit
Floor plan financing is a critical element for farm machinery sales.
Highly Seasonal Sales
Because farm machinery sales are tied to the agricultural calendar, sales are highly seasonal.
Industry size & Structure
The average farm machinery manufacturer operates out of a single location, employs 61-62 workers, and generates $37 million annually.
- The farm machinery manufacturing industry consists of over 1,000 companies, employs about 61,900 workers, and generates $37 billion annually.
- The industry is highly concentrated; the top 20 companies account for 71% of total industry revenue.
- Large US-based companies include John Deere, AGCO, and Alamo Group. Most large companies have global operations with significant sales from foreign countries.
Industry Forecast
Farm Machinery Manufacturers Industry Growth
Recent Developments
Sep 23, 2024 - Employment Shrinking Amid Layoffs
- Producer prices for farm machinery manufacturers stayed flat in July compared to a year ago after rising 4.7% in the previous July-versus-July annual comparison, according to the latest US Bureau of Labor Statistics data. Shipments of farm machinery and equipment dipped 1% year over year in June and were down 2.1% versus May, per the Census Bureau. Employment by farm machinery manufacturers shrank 2.1% year over year in July amid industry layoffs, while average industry wages climbed 8.6% over the same period to a new high of $31.53 per hour, BLS data show. Low commodity prices and high interest rates have pinched farm income and caused farmers to purchase fewer tractors and other agricultural equipment. In turn, rising wages at farm machinery companies amid falling sales are squeezing manufacturer margins.
- Updated projections for 2024 farm income don’t look quite as gloomy as they did earlier this year, AgWeb’s Farm Journal reports, citing new data from the USDA’s Economic Research Service (ERS). New ERS numbers show that net cash farm income for 2024 will fall by about $12 billion, down about 7% from 2023, and net farm income will fall by $6.5 billion or 4.4%. That’s compared to ERS projections released in February that suggested net farm income would fall 26%. The primary cause for 2024’s decline in farm income is lower commodity prices. Cash receipts or sales are expected to fall by $27.7 billion. Farm businesses in most regions can expect to see lower average net cash income, with farmers in the heartland states being the hardest with a 23% decline. Demand for tractors, crop harvesters, and other farm equipment has plunged amid the low commodity prices and the slowing farm economy, The Wall Street Journal reported in August.
- Farm machinery giant John Deere is among those companies backing away from diversity, equity, and inclusion (DEI) efforts amid a backlash from conservatives, CNN reports. In July, the company announced it would no longer sponsor “social or cultural awareness” events, becoming the latest major US company to distance itself from DEI measures after being targeted by conservative activists. The company also posted a statement on “X” (formerly Twitter) saying it would audit all training materials “to ensure the absence of socially-motivated messages” in compliance with federal and local laws. In response, the president of the National Black Farmers Association, John Boyd, Jr., called for the resignation of Deere’s CEO and a boycott of the company. Deere’s DEI retreat followed retailer Tractor Supply’s announcement in June that it would withdraw its carbon emission reduction goals and eliminate jobs and goals focused on DEI.
- Farm equipment is piling up on dealers' lots as boom times fade for machinery manufacturers, Reuters reports. Declining farm income, stubbornly high interest rates, and low corn and soybean prices have led to a surplus of tractors and combines. As a result, farm equipment dealers are discounting machines, suspending new orders, and auctioning off equipment at reduced prices, according to Reuters. The current oversupply of farm machinery is quite a change from 2022 when industry giants Deere and CNH struggled to meet surging demand amid record-high farm income and pandemic assistance payments that gave farmers extra money to upgrade their fleets. The inventory glut has prompted some dealers to halt new orders from companies, including CNH, AGCO, and Polaris, to try to balance supply and demand. Moreover, used agriculture machinery inventory, the bulk of machinery sold in the US, is steadily increasing, dampening demand for new machinery.
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