In the latest episode we look at the U.S. Supreme Court's rejection to Deere's request to hold the New Hampshire Dealer Bill of Rights law, the increasing trend of cover crop use and conservation, Trimble’s new dealer network, U.S. exports of farm equipment and Alamo's 2015 year-end results.
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I’m managing editor Kim Schmidt, welcome to On The Record. Here’s a look at what’s currently impacting the ag equipment industry.
SCOTUS Rejects Deere’s Request for Hold on NH Dealer Bill of Rights Law
On March 4, the U.S. Supreme Court denied an application filed by John Deere and other manufacturers to put New Hampshire’s Auto Dealers Bill of Right’s law on hold.
We spoke with Pete McNamara, president of the New Hampshire Automobile Dealers Assn. to find out what the court’s ruling means.
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“The key thing is this, it’s got to be a unique issue that they’re [the Supreme Court] dealing with or trying to resolve a conflict between two different federal lower courts and neither of those are present here. They’ve dealt with franchise laws in the past and said, no they are perfectly constitutional … The kicker is this, yesterday the court rejected the Alliance of Auto Manufacturer’s request to appeal a Connecticut franchise law. So they’re, clearly the court is not willing to look at franchise laws any more.”
McNamara says Deere and the other manufacturers involved in the appeal were trying to argue that their relationship with their dealers and their business model is different from the auto and truck makers.
“If you were to put car and truck dealers and motorcycle and snowmobile and equipment dealers all in the same room and say talk about your relationship that you have with your manufacturer and how you are treated, but don’t tell us what you sell, you wouldn’t be able to pick them out who was which. It’s all identical.”
The law was passed in 2013 but until now had been held up on appeal.
Dealers on the Move
Dealers on the Move this week include Ag Systems Inc., Agri-Service, Delta Power Equipment, Six and Mango Equipment and Deer Country Equipment.
Agri-Service, headquartered in Twin Falls, Idaho, has acquired Agri-Service Northwest in Eltopia, Wash., giving the dealer a total of 14 locations throughout Washington, Idaho, Utah and Oregon.
Delta Power Equipment has acquired Great Lakes New Holland’s 4 locations, bringing the company total to 10 stores in southwestern Ontario.
Kubota dealer Six and Mango Equipment headquartered in Grand Prairie, Texas, has acquired Grayson County Equipment of Sherman Texas, bringing the combined total locations to 4.
John Deere dealer Deer Country Equipment has merged with Wright Implement, bringing Wright Implement’s total locations to 7.
Trimble Establishes New Retailer Channel
Seeking to more fully blend its hardware and agronomic-based solutions, Trimble Agriculture recently announced a new distribution channel to deliver the company’s diverse line of precision products.
Known as Vantage, the new dealer network will be purely a distribution model, while Trimble will remain the primary brand for products and services.
According to Thomas Utzmeier, director of distribution development for Trimble Agriculture, the vision for the new network is to convert interested existing Trimble dealers into the Vantage channel and establish what he hopes will be regional precision ag equivalent of Best Buy’s Geek Squad.
While some dealers have already broadened their service offerings on their own, Utzmeier says that others interested in becoming a part of the Vantage network will likely have to make additional investments in training and resources to provide full-farm technology solutions.
However, he adds that transition into the Vantage network won’t be mandatory and Trimble is working with its existing retailers to scale and customize their involvement in the new distribution channel.
“Our dealers have different starting points. Their sizes are different, their revenue levels are different and their skillsets are different. So we would adapt the requirement in terms of the type of plan to the reality of the dealer organization today. Eventually, we would want them to develop the same skillsets, but some dealers might just take longer. A dealer who has an organization of 5 people, probably will take them longer to develop the expertise, let’s say in the irrigation or agronomic service than a dealer who has 15 people.”
So far, Trimble has established four Vantage distribution partners in the U.S. and overseas. Utzmeier says the goal is to grow that network to 120 dealers worldwide during the next 36 months.
An Untapped Market?
We had the chance to catch up with Joe Bassett, president of Dawn Equipment, during the National Farm Machinery Show last month to learn more about the trends he’s seeing in cover crop use and how they led to the creation of Dawn Biologic, their new brand focused on conservation.
During a visit with a customer out in Pennsylvania, Bassett came to the realization that customers on the East Coast were different that those in the Midwest. For one, there’s a growing and more intense interest in the use of cover crops. Other trends he noticed include concerns over the increase in herbicide resistant weeds, water quality and soil health.
Simply put, he says there’s more to the American farming market than he, and many others, realized. The result was the creation of Dawn Biologic.
Bassett says he thinks this movement to cover crops and conservation will “export” itself around the country.
U.S. Farm Equipment Exports Drop 13.5% in 2015
Last week, the Assn. of Equipment Manufacturers reported exports of U.S.-made farm equipment dropped 13.5% in 2015 compared to 2014. Exports increased to Asia and Central America, while all other regions recorded double-digit declines. Leading the group in export declines was South America with a 35% drop year-over-year.
The top 5 countries buying the most U.S.-made farm equipment during 2015 were Canada at $2.2 billion, Mexico at $1 billion, Australia at $625 million, China at $471 million and Germany at $255 million. Of these countries, China saw the biggest increase of imported U.S. farm equipment at up 47.5% year-over-year, while Canada saw the largest decline at down 17% from 2014.
Alamo 4Q Ag Sales Down 6.1%
Alamo Group, manufacturer of mowing, snow removal and other equipment, released it’s 2015 fourth quarter results on March 3. While net sales for the quarter came in at $224.4 million, up slightly from the prior year, sales for the ag division were down 6.1%.
Sales for the quarter were negatively impacted by $7.3 million in currency translation effects due to the strong U.S. dollar.
For the full year, net sales were up 5%. The Ag Division recorded net sales of $208.3 million, down 3% from 2014’s net sales.
Alamo CEO and president Ronald Robinson says despite continued market challenges in the ag division, they are optimistic about 2016. He says, “While we remain concerned that the market challenges we have faced are not going away anytime soon, we do feel good about the prospects for improved results in 2016 for Alamo. We feel demand for our type of products and most of our markets will remain steady.”
Implement & Tractor Archives
In 1980, Vicon introduced the HP35 high-density baler at the RAI farm show in Amsterdam. Its plunger could turn out 1,300-pound bales measuring 28 by 47 by 63 inches at a rate of up to 60 bales per hour. The bales had to be wrapped with wire because there wasn’t yet a twine strong enough to handle the pressure.
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