by kublikhan » Tue 11 Aug 2009, 01:02:17
$this->bbcode_second_pass_quote('the48thronin', 'I') have been on the phone today with several people all of whom brought this subject up themselves NONE of whom read this discussion. One is the GM of a major agricultural machinery outlet in the upper Midwest who was explaining to me the difficulty he is having acquiring the necessary parts load he predicts he will need for the coming harvest season.
His remarks were all about which parts were outsourced by the manufacturer and have been unavailable since last NOVEMBER when they ordered the parts load for this years harvest. His stark assessment was that in several brands of agribusiness machines, there will be critical parts not available because the manufacturer themselves cannot get the parts from their suppliers who also were running JIT based inventory. We made several conference calls to the people we each knew investigating further and he is right.. several major suppliers who all were JIT suppliers are not going to be able to meet the needs of even the manufacturers much less the parts for repairs at major distributors.
As far as I can tell, the shortages in farm machinery were caused by the sharp increase in demand for them, not by a breakdown in JIT distributation. The rising food prices last year caused increased demand for food and the machinery to grow/harvest/process it. Likewise, increased demand for biofuels had caused a further increase in demand for farm machinery. As the credit crunch and economic downturn continue to hit all businesses, demand is slacking in the farm machinery business as well. This is easing those record long waiting lists. Instead, orders are dropping off and profit margins are getting squeezed. With demand dropping off, I am just not seeing the epic shortage in the farm machinery business that you see.
$this->bbcode_second_pass_quote('', 'M')any analysts expect 2009 to continue the painful economic conditions that closed out '08. Now, these general macroeconomic woes are starting to extend into the farm machinery marketplace. It's coming in the form of lower demand, driven in part by cancelled machinery orders, say Agriculture Online Machinery Talk members and farmers who are starting to see a change in a market that, just months ago, had such high demand that waiting lists for some new pieces of machinery were a year long. Now, economic stress has that demand ebbing and the marketplace rapidly changing.
"I have a good friend that is in the equipment business. He says a lot of his customers are hinting they want out of some of the tractors and combines they ordered in the summer"
But thus far, the majority haven't sought this course of action, at least domestically, says Machinery Pete. But, looking beyond U.S. borders, it's easy to see that a trend may not be far off.