Trickle down economics 101
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It's not good, I'm going to have to cut my wife and kids off payroll also if things don't get better
she probably knows your credit card number, good luck
deere decided to slow down production to clean the dealers yard (was told this by our sales rep)
can't even buy a new machine or they would just price it outrageous
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As long as I don't find Victoria Secret on the invoice list I'll be happy. Not like she would take them off for a poor farmer like me anyways.
The trickle down effect has cost me some pusssy for sure!
The trickle down effect has cost me some pusssy for sure!
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1,408 Posts
Wonder how many of those jobs were ones they added when things first started to pick up in grain prices a few years back? Seems to me those would have been the first ones they would cut but that's quite a few people out of work now.
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6,087 Posts
The equiptment market could get ugly in Canada. With the amount of new equiptment in farm yards a lot of farmers could go without buying much for several years. With the Canadian dollar loosing value a new combine or tractor is going to cost a additional $50-100,000 on exchange rate alone.
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Was going to say the exact same thing, we updated a fair bit through the peak and could go years ignoring the salesman's calls.
Many have cut back before the big guys. Sales are down across the board for most commodity products. If one commodity is still hot, chances are thats what is subsidizing the rest of the farm.
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98 Posts
The parts and service department are the only ones that will be busy at current prices. Feed wheat does not buy much.
The manufactures building less new combines and 4x4 tractors will help add value to our used ones. The next to new machines all lost way to much value in the last year because of low prices and to many machines bing built.
The manufactures building less new combines and 4x4 tractors will help add value to our used ones. The next to new machines all lost way to much value in the last year because of low prices and to many machines bing built.
You mean they might have to start calling people!
Last few years around here they just kicked back and waited for the farmer to ask what they had to sell them before dec 31.
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98 Posts
You want to talk economics just think about all the money we have all lost in the Oil producing regions because of -$1 basis. My farm alone I figure it's over $200,000 if the basis was at zero. Everyone talks about all the oil revenue but no one wants to give the real world numbers of revenue farmers have lost. I bet my implement dealer would love me if I had that money.
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8,228 Posts
Taking a bunch of high priced trades and having the currency go back the other way is a great way for a dealer to go broke...
Dealers will continue to be careful on trades, farmers will not pay the current difference prices that are becoming more common, so......I see this equipment market getting really slow!
What needs to happen is for the price of new to stop increasing or even come down a bit to reflect what the price of used is doing. Lower grain prices should limit the volume buying of new paint that we have seen in recent years. But to do this the equipment mfr's will need to keep their costs down and keep the equipment less complex. Since that is somewhat unlikely things could get very ugly.
At least farmers can get some productive return out of a piece of equipment on their yard, dealers...not so much. I do not envy the equipment dealers at this juncture.
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I won't bank on new equipment getting cheaper. Say JD reduces combine output, now there are fewer to be had so those in the market for new ones will still pay top dollar if they want that new iron. JD will need to keep the price up to pay for lost revenue due to less machines built. For example, a manufacturing division carries a lot of fixed costs such as the facility, engineering, management, r&d, utilities, etc that all need to be paid whether 10 or 100 units are built in the same period of time. When fewer are built then the margin goes higher because cost of producing that one unit has gone up yet the company still needs to make a lump sum of profit rather than thinking as a % of each machine rolled out the door. True, a guy can argue that cutting labour in all departments will reduce cost per machine but I don't think that is as big a cost per unit as all the other fixed costs.
I would think a likely scenario that could come about in a few years is like SWMan says, the manufactures may try getting less complex/expensive units to market by taking off a lot features and offering a basic and a deluxe model like you see with the JD row crop tractors.
If a company can't sell enough product to generate their needed revenue then selling that product for less is not going to help them unless their margins are presently at obscenely high levels. They need to figure out new ways that will get the product to sell.
I would think a likely scenario that could come about in a few years is like SWMan says, the manufactures may try getting less complex/expensive units to market by taking off a lot features and offering a basic and a deluxe model like you see with the JD row crop tractors.
If a company can't sell enough product to generate their needed revenue then selling that product for less is not going to help them unless their margins are presently at obscenely high levels. They need to figure out new ways that will get the product to sell.
You can see in their quarterly reports they are working on dropping fixed over head because of the same reasons you list.
They may focus on over seas sales. I did see a picture of a JD dealer in china a fews months back from a guy I knew. Brand new 7700 design with a few modern twists. Very very basic machine, I bet the cost per acre to operate is low.
I am very close to Summers Mfg. their workers are only working 13 hrs. a week just to keep benefits.Hoping for a turnaround or some over Seas orders real soon.
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