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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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 harvesting machinery (combines, balers); commercial turf/grounds care equipment (mowers); planting, seeding, and fertilizing machinery (sprayers, soil prep machinery); related attachments; and parts.

Highly Seasonal Sales

Because farm machinery sales are tied to the agricultural calendar, sales are highly seasonal.

Sales Channel Dependent On Credit

Floor plan financing is a critical element for farm machinery sales.

Industry size & Structure

The average farm machinery manufacturer operates out of a single location, employs 59-60 workers, and generates $30 million annually.

    • The farm machinery manufacturing industry consists of over 1,000 companies that employ about 60,800 workers and generate $30 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
                            Source: Vertical IQ and Inforum

                            Coronavirus Update

                            May 14, 2022 - Farmers Reluctant to Invest
                            • US farmers in April remained reluctant to make large capital investments in their operations, according to the latest Ag Economy Barometer update from Purdue University. The percentage of growers planning to reduce their farm machinery purchases, a demand indicator for farm machinery manufacturers, in 2022 versus 2021 was 57%. April’s investment index reading of 36 left the index at its all-time low, one point below the previous low reading observed in May 2019, according to Farm Equipment Manufacturer News. Supply chain issues, low machinery inventories, and high input costs for machinery, buildings, and grain bins, are among the factors causing producers to refrain from making large investments.
                            • The US manufacturing sector added 55,000 jobs in April 2022, a one-month net job change second only to leisure and hospitality. Government economists said the majority of manufacturers’ gains came from hiring at durable goods plants. Wood product producers added 3,600 positions, machinery makers tacked on 7,400 and businesses that craft transportation equipment — including motor vehicle parts — added 13,700 jobs. The latest figures show manufacturers pumping the breaks on wage increases. After increasing by 15 cents an hour between February and March, the average hourly wage in manufacturing rose only half that—7 cents—between March and April. It is now $24.78 an hour.
                            • Driverless tractors are coming to the farm with the first autonomous machines set to roll off an Iowa assembly line beginning in fall 2022. John Deere plans to operate the autonomous tractors on 10 to 50 farms before significantly increasing the number in following years. To use the autonomous tractor, farmers only need to transport it to a field and configure the tractor for autonomous operation. Farmers can monitor its status using their mobile phone. Deere hasn’t released the price but the new technology will be added onto tractors that sell for about $500,000.
                            • The invasion of Russia into Ukraine has resulted in sanctions on Russia that raise the costs of some raw materials, potential US bans on Russian imports, operating restrictions for US firms manufacturing in Russia, and worsened supply chains and shipping issues. US firms that sell to Russia or have production operations in Russia are prohibited from engaging in transactions with most Russian financial institutions. Material shipments from Ukraine are likely to dry up as fighting continues.
                            • Net farm income, a broad measure of profits and an indicator of demand for farm machinery, is forecast to decrease 7.9% year over year in 2022 when adjusted for inflation, according to the federal Economic Research Service. Farm cash receipts are forecast to increase 6.8% in nominal dollars during 2022 but direct government farm payments are forecast to decrease 57%.
                            • The industry is charging more for its products. Farm machinery prices rose 4.2% in 2021 and were up 29% year over year in April 2022. During the past decade, farm machinery prices increased less than 2% annually.
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