by kublikhan » Mon 17 Aug 2009, 17:50:02
$this->bbcode_second_pass_quote('the48thronin', 'S')o I talked to my agribusiness friend who laughed when I sent him your linked article. So if you can give me a location to look up some of those "opt out" new combines the article ONLY SUGGESTED MIGHT HAPPEN, (it was clearly if you read the whole article not discussing real events). I know someone who has TODAY customers waiting impatiently for machines the manufacturer cannot make and deliver fast enough.
Does the guy you talked to only sell domestically? The article mentioned domestic sales remained strong. But there was some weakening coming from Europe, Russia and parts of South America. Also, check out this link:
$this->bbcode_second_pass_quote('', 'A')ccording to the Association of Equipment Manufacturers, West Allis, Wis., total U.S. farm tractor sales were down only 22.6 percent year to date through May, compared with the same period a year earlier. Sales of four-wheel drive tractors actually increased 7.7 percent, while sales of self-propelled combines were up 32.7 percent in the same comparison.
Adding to the weakness in steel demand is a buildup of finished equipment inventories. Rubin McDougal says he believes it is necessary for both farm and construction equipment makers to reduce their, and their dealers’, inventories before increasing production in the current economic environment. In the first quarter, his company had a 4.3-month supply of tractors in inventory worldwide, up from 3.8 months during the first quarter of 2008. Combine inventories were 4.2 months, compared with 3.5 months a year earlier.
But there are signs farm sentiment is moderating. “2009 is a correction year with the market getting back down to a more normal level of activity,” says Agco’s Stucke. “Farmers are conservative by nature, so with all the negative news out there, they are slow to make additional purchases even though most of the farm fundamentals are still strong.”
Farm equipment sales still seem to be doing better than the general economy. But this still doesn't change my original opinion on this subject. IE, farm equipment demand was hit by a large surge in demand driven by rising world commodity prices and competition from biofuels. Equipment manufacturers cannot simply flip a switch and ramp up supply to match demand. With such a mismatch between supply and demand, you are going to see rising premiums, long waiting lists, and shortages. However I don't agree with you conclusion that this is just another sign of the beginning of the end of JIT distribution. Rather, it is a classic supply-demand problem caused by a large surge in demand. If there really was a breakdown in JIT distribution as you suggest, we should be seeing less product being moved. Instead, we see headlines like this:
