what tractors will be left

I have talked to some high ups in the industry and they feel Kubota and agco will be the only ones---case and ford are treading water now and I was told in the quad cities that ind is all that is keeping deere afloat due to too many leases and non payment

case dissapered with tenneco buyout in the seventies and Ford in the ninties interntional in the 80s when tenneco bought combined them fiat owns that whole mess including case ih and new Holland it is now fiat industrial

Nothing lasts forever. Maybe someday Deere will be an industrial-lawn & garden dealer only. Ya, I know, that's too far fetched but you never know. As I understand Deere has been a family run business until this present administration. The old saying goes "the grandfather builds the business, the son enjoys it and the grandson loses it". I know Deere has survived through more than three generations, but that saying is the general idea.

Here's something I was thinking about this morning. We are all brand loyal, though some of us might admit otherwise. But all we look at is the iron, the machinery. "This color is generally a little better" is what I hear the most. So I tell that person, if you think your company is so good, buy stock in your wonderful company. "Your wonderful company is so good you're bound to make money head over heels from buying into it". I usually get a blank stare. LOL You might lose in stocks, you might win but you as a machinery owner and user WILL lose money. You have to make that money back from somewhere else, selling corn, beans, wheat, livestock, whatever. If you don't make a profit on those things the tractor is dragging you down as is the case on many farms today. Yes, I'm feeling testy today.

I don't think anyone has a crystal ball with clear vision into the future. Kubota makes a great tractor, and they are gradually increasing in power to meet the demands of larger operations. The AGCO of today is a completely different company, by comparison to 10, 20, and 30 years ago, and I think they produce a desirable product, too.

As a young kid, I didn't think IH would reach the demise it did, either, but as a young kid, I didn't quite realize how difficult the conditions were for IH back then. Who would have thought General Motors, Ford, and Chrysler might become "shells of their former existence," and that Toyota and Volkswagen would become the global leaders they are today in the automotive industry? On our farm, going back to my earliest recollections in the very early 1970's, IH was the main brand we had back then for farm equipment. It was the leading manufacturer, but was in decline then, thinking back. My grandfather bought a brand new 3010 Deere in 1962, with this being the only Deere tractor on our farm at the time. The 1970's and into the early 1980's, we saw a migration of our choice going from IH to Deere. The Deere products tended to stand the test of time and long hours in the field, as well as lot of hours on the tachometer. The newest Deere product on the farm today is over 10 years old. When I read comments about the issues on the most modern equipment, with electronics failures, pollution control equipment, super high capacity hydraulic systems, and others, I don't know if I would want the potential and probable headaches. I don't see these machines providing the longevity of their predecessors or the level of uptime. I will add, that I do not feel Deere, as a company providing customer support, is the company it was just 10 years ago, and especially in comparison to 20 and 30 years ago. I also did a financial analysis of the company for a graduate school course I was in just 5 or 6 years ago. The debt load of the company is quite high, on account of its financing operations. Will the Deere and Company of today be around tomorrow? I suspect it probably will be. I have read from time to time, Deere is a prime target for being bought out by Berkshire Hathaway, too. Warren Buffett and his company don't tend to buy out other companies, or the just stock in other companies, unless they see a value or a bargain.

Case/New Holland is a "wildcard" I cannot put my finger on simply because it is owned by Fiat Industrial. They offer a very good product lineup, too. In terms of market share, I don't think they are holding their own, but not on the scale of what Case, IH, Ford, and New Holland had they all were mostly independent of one another either. There are a number of small companies putting out "economy" priced products. They are Mahindra, Belarus, Yanmar, LS, Kioti, TYM, TAFE, and others. Buhler/Versatile makes a number of sizes, as does McCormick. I don't know who is necessarily behind these names, but these are just some I was able to pull up rather quickly.

The one constant/sure thing in life is change, along with death and taxes. I don't know what sort of change I will still see as I am just over 50. I have not cared for all the changes I have seen, especially in agriculture. I hope that I am afforded enough time and life so that I can still be involved in farming and live a farming lifestyle on our family farm for at least another couple decades. I have no male heir apparent, but I do have two daughters who enjoy their time spent on our rural acreage, as well as the family farm where my parents reside. There are times when I feel cheated, in that I wasn't able to make my living off the land like the 4 generations before me did. I also recognize the number of opportunities I was able to take advantage of, and the life experiences I have had by NOT being able to make my living off the farm. When I balance this all out at present, I simply have to have faith and trust that all things have happened, to me and my family, as they were intended.

John Deere just bought the Wirtgen Group, a would leader in manufacturing construction equipment for 5.2 billion dollars.

Renting/ leasing and insurance put farming all to hell.

I don't know who can own the new complicated stuff, it has to be leased and gotten rid of in 3-5 years. There is no running those machines for 30-60 years.

Paul

You can't keep squeezing farms into fewer and larger operations and expect all the brands to survive.

In the heyday of the 1950's, let's say there were 10 small farms on a road. Each farm had at least 2 tractors. So there's 25-ish tractors and ten full sets of implements on this one road.

Now, there's one BTO working all 10 farms, and the 10 farms on the next road over. They run 6 tractors and maybe have 2 of each implement.

We went from 50-ish tractors and 20 sets of implements to 6 tractors and 2 sets of implements.

Among the 20 different farmers, some would run IH, some Massey, some Ford, some Deere, some Oliver, and some Allis. A good salesman could get a farmer to jump colors, so there was always some "churn" as different brands competed. In contrast, the one BTO generally runs one color of tractor, and they are fiercely loyal to that color, not that there's much choice left these days...

I suspect we will see further consolidation of brands unless we see a massive collapse of the BTO business model, and these farms being broken up and run by smaller operators. The only way to have competition is to have a wide clientele to market to, and right now in farming there isn't much of that going on.

Mahindra, They are a Sleeper, and an Up and Coming Company.. Larry in N. East

The world is a big place, and someone somewhere will be building tractors and equipment as long as there is a market. I have really never been able to predict were agriculture is going, but one thing I am quite sure of. Greed is a major driver, in farm operations, as well as in the equipment building/selling business. And in all business, share holder profits are the most important measure of success. I really don?t care what name or colour is on the tractor, just so long as I can afford to buy it and it works while I own it, and retains some resale value for when I am done with it. I personally have no financial interests in any tractor company, other than buying the tractor it?s self.

(quoted from post at 12:08:58 03/30/18) You can't keep squeezing farms into fewer and larger operations and expect all the brands to survive.

In the heyday of the 1950's, let's say there were 10 small farms on a road. Each farm had at least 2 tractors. So there's 25-ish tractors and ten full sets of implements on this one road.

Now, there's one BTO working all 10 farms, and the 10 farms on the next road over. They run 6 tractors and maybe have 2 of each implement.

We went from 50-ish tractors and 20 sets of implements to 6 tractors and 2 sets of implements.

Among the 20 different farmers, some would run IH, some Massey, some Ford, some Deere, some Oliver, and some Allis. A good salesman could get a farmer to jump colors, so there was always some "churn" as different brands competed. In contrast, the one BTO generally runs one color of tractor, and they are fiercely loyal to that color, not that there's much choice left these days...

I suspect we will see further consolidation of brands unless we see a massive collapse of the BTO business model, and these farms being broken up and run by smaller operators. The only way to have competition is to have a wide clientele to market to, and right now in farming there isn't much of that going on.

Click to expand...

Whats the economic case for smaller farms? I don't see that at all?

Bill Hewitt was the last family member to be CEO of Deere & Co, and he retired in 1982. Deere has
changed a Boat load since then. They seem to aggressively pursue off shore sources for parts for assembly
and have a Huge amount of quality problems because of it.
My tractor show buddy retired from Deere with 30 years service. His last Boss retired shortly before
him and farmed on a rather large scale. He bought two brand new Gold Key tractors, walked down the lines
at Waterloo, B-S'd with the assemblers. Had his wife who works for Deere also, drive them off the line.
Within six months they Both had electrical problems, tractor would go into a limp home mode, shut it off,
restart and it would run right for a while.

Far far fewer tractors and combines needed to farm today. Average farm in 1950 was right around 200
acres, figure 3 farms per square mile. Today average full time farmer farms 443 acres but BTO's can farm
ten times that amount. In 1950 every farmer had two Farmall M's and an H. Today they have a Quad-Trac
and a couple Big FWA tractors, 200-300 hp, Huge combine and sprayer, and two semi's to haul corn & beans
to the grain terminals.

They also own Dodge Chrysler and Jeep along with who knows what else.

My thoughts in no particular order. I think that Deere will be the last to be jeopardized due to in part its financial arm. That took the company through the tough 1980's and for this area the tough 1990's. They all are faced with too much production capacity and may be wishing for the days of smaller farms where larger volumes of equipment were sold to more customers. I think that there is a critical mass in terms of hours of production to keep factories profitable and shrinking volumes of equipment no matter how valuable per piece will jeopardize a company's ability to run it. CNH has a serious obstacle ahead as the heady times now behind raises the question of dealer reduction or consolidation as the NH and Case IH product lines overlap heavily. Farmers have gotten used to the changing dealer environment but a 40-50 reduction in dealer locations might result in a backlash. From where I am sitting I don't see AGCO as positioned to grow and through dealer closings is facing a major challenge in getting representation on a local level. Do they take a chance on selling on the internet and have contractor type service providers such as it was 80-100 years ago where one person would sell and another company services? Kubota? I think that they caught the big manufacturer wave too late and I can see through area dealers that the volume appears heading down. For many people a CUT or Gator-type vehicle is a once in a 20 year type investment as opposed to a car or truck. Deere is better positioned in the consumer product market as it has lower priced merchandise to reach a wider segment of the North American market.


The day that Deere is sold or turns to the government for money is a day we should all dread as it will speak more to the condition of the rural economy and small town consumer rather than being its own victim of big pants syndrome.

(quoted from post at 12:55:15 03/30/18) Mahindra, They are a Sleeper, and an Up and Coming Company.. Larry in N. East

Click to expand...

I suppose that Mahindra could be called a "sleeper" here in the US but they are a huge major global factor in a over dozen industries. They are already the worlds largest tractor manufacturer in units sold, so I can't imagine that they won't, like Kubota soon go big. Perhaps they will be building for JD before long.

I don't know. I think if push came to shove,they'd be "too big to fail" the way that Government Motors was.

They might end up being Government Deere or something. Or New America instead of New Holland.

(quoted from post at 09:51:20 03/30/18) I have talked to some high ups in the industry and they feel Kubota and agco will be the only ones---case and ford are treading water now and I was told in the quad cities that ind is all that is keeping deere afloat due to too many leases and non payment

Click to expand...

I think yer off base here. AGCO dealers network is pretty poor in some areas.

CaseIH is owned by FIAT. FIAT owns a lot of stuff. Chrysler, Maserati, Alfa Romeo plus they have the CaseIH financial arm.

JD has a line of construction equipment plus it's own finance group.

Somehow I just don't see AGCO jumping to the forefront any time soon. And that's not saying they make a bad product. Just if you don't have the service and support you can't sell. That would take some major money to expand the network that banks are not going to finance right now nor is AGCO in the shape to force an expansion either. Not until either CASEIH or Deere folds.

If I had to take a guess I'd say if any tractor company is going to fail it would be AGCO with Kubota stepping up to replace them.

Rick

Some one is blowing smoke up your butt. While I do not like many of the current JD policies they are one of the best managed companies in the world. Fiat and AGCO would be the most likely to have financial issues. Fiat because of it massive loses in it car production. AGCO because of it lower profit margins and higher support costs. They are running about 7-8% while JD is at around 12-13% on equipment sold. IH folded because they tried running with a single digit profit margin and could not make it.

Kubota makes good equipment but even with it purchases of other companies it is no way close to being an industry leader in the market place. Will they be in the future??? I think they can be. You need to remember they are NOT a full line brand. They do not make combines or planting equipment. They have picked up tillage and hay tools but they still have a ways to go. I would bet on them over AGCO or CNH.

I think long terms someone will buy CNH. Fiat will eventually get in enough money trouble is its car division they will need to sell CNH for the cash. They have talked about it before.

Well I agree they are not an Industry leader,, But you are wrong. They do make a combine,, oh and by numbers they make the MOST combines in the world. Just not used in North America.. Think you are right about they could be a leader. In no time short the KUBOTA RTV took over the market share from John Deer Gator, In even a less time frame the Kubota track skid steer also surpassed John Deer. Give them time they won,t go after JD strength like the planters till the time is right but one thin is certain JD knows they are around and KUBOTA has the financial strength to flex their muscle. I also think you are right about Fiat being somewhat weak in the money area.

Somebody may buy CNH off of Fiat but the shakeout may leave it worse off than before. Parts prices and discontinuations leave a poor impression as to the future. I am not going to endlessly pat Deere on the back but they provide parts at reasonable prices for quite a bit of older equipment that if similar companies with similar products may have well discontinued or raised the price to make it "worth their while." I think Kubota's possession of Kverneland tillage will have minimal impact for them as the first spending that gets trimmed in hard times on the farm is tillage equipment barring some kind of technical or efficiency advancement.

Interesting thought and probably worthy of its own thread. I think both Deere and CNH are probably too big to fail in the eyes of the government with the government perhaps more willing to allow CNH to be broken up by sale of assets to other companies versus Deere. I am not the first to say it but will reiterate that a country can not be a world power if it can not secure its own food supply and Deere going under could be an issue in terms of producing food inside US borders. Not so much lost production of new products but there are many critical parts for Deere machines that at present are not offered after market. In tough times farmers can not afford to trade up and many have older Deere machines they still heavily rely upon.

The one thing you all are missing on Fiat is the Italian Gov't is behind Fiat,they'll do about anything to keep Fiat going.

Again, I would mention that CUT's and RTV's don't get the same market turn as cars, pickup trucks, and garden tractors. I think the hayday of that market was 1995 to around 2015 when Baby Boomer's paid off the mortgage and had money to throw at those things. I look at any Deere, NH, or Kubota dealer today area wide and I don't see CUT or RTV product in the yard like there was several years ago and I seldom see trade-in's. Yes, you see a few on Craigslist but the number is tiny compared to the population of the region. Deere also has the leg up in terms of being Americana in a lot of people's eyes. Nothing wrong with Kubota but the timing is wrong in my eyes for them to make a big leap.

Don,t know what you are calling a CUT but RTV sales have never regressed since they were introduced. Truth is growth has slowed but still more sold last year than the year before. I think a lot of that is Kubota has increased their market share and you may be right that the growth for the industry has peaked. As far as Kubota being ready make a big shove, look back they have Never DONE THEY . They always take a cautious approach. Dealers were crying for a Rough terrain Vehicle to compete with the gator for years before we got them. Same thing with the track skid steer ,dealers wanted it way before we got them. The total big tractor market being weak could and may slow the development of larger tractor. Not out of the realm of possibility that they would buy their way in but ENGINE wise it will be Kubota in what ever we get when the time is right.

CUT = compact utility tractor.

John Deere is an American company with darned near 200 years of history, love them or hate them, why GLOAT about the perceived superiority of a company from a country that made a vicious sneak attack on our country, resulting in the HORRIBLE deaths of hundreds of Americans. I just don't "get it".

Higher interest rates combined with very few good job prospects in town will create conditions were the very large farms will be broken up
into smaller more efficient units. Happened in the later part of the 1980's and will again.

Things continue to change as they always have. I bought a new Kubota in 1983 when most people had not heard of or knew much about Kubota. One of best tractors I ever owned. Today as I drive around our area, the majority of the smaller tractors I see landscapers and others use are Kubotas. They are the tractor of choice and I see many of these same owners are buying the Kubota skid-steers. I know a couple of Kubota dealers and their complaint is the service department--once they sell a Kubota it rarely breaks down. Have you talked to a Massey dealer recently about their service situation?

In terms of production agriculture, costs will continue to rise. Interest rates are heading higher and will continue to do so. The BTO operators in many cases operate on credit. Lease rates will rise with interest rates. Have any of you priced any product recently made of steel? Have you priced the New John Deere Quad-Trac tractor, and compared it with the CaseIH?

I don't know how much profit there is in selling a new high horsepower tractor in a competitive market but I would guess it is less than you think. I would rather be selling a large number of smaller Kubota tractors and skidsteers in what looks like a growing market. What do you do with a 2-3 years old large tractor or combine coming back on lease or in trade? My guess is that both Deere and CaseIH have a lot of lease returns coming back they wish they didn't own.

If I were looking to own a tractor builder for the next 5 years, I would put my money in Kubota stock. Agco has a good contract with Cat and this gives them a good base to build on. What happens to Massey is a question. I see very few of the larger ones sold in our area and the smaller ones compete with Kubota.

If we get in a trade war and the Chinese reduce their purchases of pork and ethenol and expand it to other commodities I see farm prices going only one way and it is not up. At the same time production in much of the rest of the world is rising and China and others do not have to buy US grain.

I guess my conclusion is that Deere and CaseIH will continue to dominate the market for large machinery and tractors. What happens to the likes of Agco in the long run is a question. How profitable will this business be is a question, but with rising interest rates and potentially falling prices what does this mean for the future of farming. I think those who are highly leveraged will have a problem. US agriculture has faced problems in the past and has survived and prospered, but what does it mean when such a high percentage of our production is concentrated in the hands of fewer producers?








a

Only playing the devils advocate here since we're only dealing with what ifs,but if Deere went under,dealerships would be standing empty and these mega location owners would be looking for something to sell. They'd have to take on AGCO or Kubota or close. It happened with the White dealers in the 80s when White Motors went bankrupt. A lot of White dealers went to Ford.

If Deere went under I think that a lot of dealerships will sit empty at least when I look around here. Payroll and parts inventory will eat a dealer up while waiting for AGCO to bloom. Kubota has pretty well taken root in the form it currently exists in for dealers if not perfect. Not enough money in it at present to do the new building thing in terms of being closer to market such as the south end of Monroe County (Rochester). My impression is that the area NH dealer is not very strong financially and the mega Case IH dealer would have no issue pushing them out and sell both blue and red. If somebody inside either dealer organization knows different then they can set me straight here.

I did not read every word of the above but saw no mention of the largest producer of ag tractors in the world... MF. Yeah, I know MF is part of AGCO. But AGCO does not produce anything. They are just a BIG distributor.

(quoted from post at 14:10:44 03/30/18) Renting/ leasing and insurance put farming all to hell.

I don't know who can own the new complicated stuff, it has to be leased and gotten rid of in 3-5 years. There is no running those machines for 30-60 years.

Paul

Click to expand...

After three to five years the " good" has been used from the machine , it is paid for it's self and it time for a new machine. This is 1000+ acre corporate farming. Not a 200 acre family farm.

if you think your company is so good, buy stock in your wonderful company. "Your wonderful company is so good you're bound to make money head over heels from buying into it".

Click to expand...

Deere has been BY FAR the best single stock I have ever owned. I bought shares at $27 (yes, 2009) sold two-thirds of them at $90, so the remainder was a valuable as the original purchase. As of right now, it's $155/share, a 410% rise from the original purchase. Only regret is not having the guts to invest $100K originally.

(quoted from post at 04:03:27 03/31/18) John Deere is an American company with darned near 200 years of history, love them or hate them, why GLOAT about the perceived superiority of a company from a country that made a vicious sneak attack on our country, resulting in the HORRIBLE deaths of hundreds of Americans. I just don't "get it".

Click to expand...

The Japanese have been close allies for 70 plus years. Their industries are second to none in the world. Maybe it's about time to stop fighting the war that ended in our favor so long ago and move on?

what no one is considering is that if AGCO or CNH or John Deere "fail" there is always the potential for someone like Kubota or Mahirinda to step in and buy what's left and leverage themselves into the North American market in a big way. True farms are 10 times the size they were 50-60 years ago and logic follows that we need 10% of the equipment that we did years ago. One of the factors in a mature market is their will be 3-4 big players in the market and any more than that will be companies that have developed new technologies and innovations or efficiently exploit niche markets with technologies or products the big players aren't interested in. We reflect on the loss of many of our US companies to foreign competition but from where I see it some of that is our own fault when our tax laws don't support our companies being competitive in world markets as well as the conglomerate mentality of the 1960's where rather than getting bigger/better in the company's primary interest they divested into other fields. We also have to consider that we live in what in many industries is a one mistake environment and that one major mistake can cripple a company and they'll never recover. We also know that big companies have a lot of momentum and change and innovation can become a problem in the organization making them ripe to be picked off by smaller more nimble competitors. There are also strange things that happen, I hear that Tenneco is now basically an auto parts manufacturer OEM and aftermarket, but they started out as a gas pipeline company, they ended up owning J.I Case because controlling interest of J.I. Case were held by the Kern County Land Company and Tenneco bought Kern County Land Company with an eye towards gas and oil exploration and production on the land held by Kern County Land Company. The purchase of IH was more of an effort to build their agricultural equipment holding into something viable. But look at the results of Tenneco's IH purchase, immediately and almost overnight they became a full line agricultural implement company and picked up a dealer and distribution network that was capable of supporting many times their former production capability. On the other side of the CNH family tree we have Ford and Fiat, both large and respected industrial concerns. Ford's forte through the mid 30's was production technology, they were very good at making an awful lot of product at a cost good as or cheaper than their competitors. They were well on their way to becoming the largest until IH hit their stride and came up with innovations (row crop tractors, PTO). When International Harvester hit the market with these innovations Ford wasn't able or willing to devote the the and resources to tractors and agricultural equipment, first the development of the new car (model A) sucked up a lot of their time and money and of course the best talent they had was on that project, the great depression was causing Ford to concentrate on cars and trucks and trying to stay profitable in those markets while keeping or increasing their market share. Ford briefly retreated from the US production of tractors until they hooked up with Ferguson and took another stab at it, after the war they continued to try to build a viable farm equipment business even to the point of buying out short liners or contracting with them to Build "Ford" equipment. For reasons not totally known to us (possibly a need to concentrate on cars again) Ford sold off their agricultural equipment division to Fiat, who in turn bought up Case/International or Case/IH and merged them all together along with their European manufacturers to become a major player. So sometimes the results are products chasing capital, other times it's capital chasing products or markets