Team Tractor Ranch Experts Discuss the Nationwide Tractor and Equipment Shortage with AG Media, AgriPulse and IndustryUpdate.com
At the beginning of March, Bryce Meehan ordered more Titan tools to sell to farmers eager to upgrade their business. However, as manufacturers struggled to keep up with demand, it took until June 18 for the equipment to be loaded onto trucks and shipped to Arizona dealers.
Meehan, sales manager for Team Tractor Ranch Co. in Phoenix, said it took five to six weeks for the various tools to ship. “We’re currently talking somewhere in the 18-22 week, depending on the size of the order,” he said.
He expects to wait another order for pallet forks for 6 weeks and post-hole digger and box blades for at least 18 weeks. Currently, we sell 75 to 85 tractors every month, but we made a lot of plans to meet the demand and started inventory purchase in March next year.
“It was absolutely amazing, but at the same time, it’s one of the hardest things to compete and fight just by implementing all sorts of supplies,” Meehan said. Agripulse.. “Whatever you want, you need to know what you are waiting for.”
High demand for farm equipment and supply chain issues make it difficult for dealers across the country to maintain lot inventory. Orders for new equipment from some companies have taken months to fill, and the price of used equipment is rising.
Arnie Goss, an economist at Creighton University, said: “Farmers are buying it now. The question is, can you get it?”
by Equipment Manufacturers Association From the beginning of this year to May, 136,227 tractors were reportedly sold, up 26% from the same month last year. Combine sales increased 13% to 1,774 during the period.
According to Goss, there are many reasons why farmers decide to buy equipment now. Federal Reserve interest rates are record low, which means lower borrowing costs, and many farmers appear to be spending more than in the previous year. The Ministry of Agriculture’s Economic Research Services reports that average farm-level net cash income jumped from $ 38,000 in 2019 to $ 48,500 in 2020.
The current age and limitations of equipment have also persuaded farmers to invest in new machinery.
“Sometimes, just buying new equipment can be much more effective, more productive, and in the long run, more productive on the farm,” Goss said.
Increasing interest in agricultural machinery such as tractors, combines and attachments puts additional strain on the supply chain, which is currently tackling other challenges. Scott Harris, vice president of Case IH North America, said the company was unable to provide a stable supply of components such as semiconductors, tires and wire harnesses.
“Because we operate in a global supply chain, how the supply chain and other countries are affected can have a significant impact on the supply to our factories,” he said. .. Agripulse.. “As the pandemic progresses, declines in different countries, flows, and mountains and valleys expand, where stress occurs in the supply chain changes.”
Scott Harris, Case IH
The challenge is that many of these confusions are difficult to predict. Wallace Wiggins, Global Vice President of Supply Management and Logistics at John Deere, said it happened suddenly and usually doesn’t last long. For the most part, it is a temporary obstacle for manufacturers.
“We work closely with manufacturing to see if the parts, supplies are drivers, and arrange production around them,” Wiggins said. “If not, we’ll continue production as usual, so we’re pretty good at these random and sporadic mess.”
Curt Blades, senior vice president of agricultural services and forestry for the Association of Equipment Manufacturers, said most manufacturers see a shortage of four key components: semiconductors, steel, labor and transportation.
The global semiconductor market growth is expected to more than double from 6.8% in 2020 to 19.7% in 2021. According to world semiconductor trade statistics.. However, this growth came after the sale of chips in the automotive industry. Dramatically reduced in March and April 2020.. It will take time for the market to adapt to rapid changes in consumption.
As tractors have become more and more computerized in recent years, microchips have become an integral part of the system. Agricultural machinery specialists, along with high-tech and automakers, are struggling to keep car production in line with demand.
The shortage of semiconductors has attracted the attention of some lawmakers and even President Joe Biden himself.Introduced by Senator John Cornyn (Republican), Mark Warner (Republican), Doris Matsui (Republican), Michael McCaul (Republican) Creating useful incentives to produce semiconductors (CHIPS) for American law, Enacted in the law in fiscal year 2021 as part of the National Defense Authorization Act. The bill approves some incentives for semiconductor manufacturing, but it still requires funding.
Biden White House $ 50 Billion for Semiconductor Manufacturing and Research The administration’s American work plan. US Secretary of Commerce Gina Raimondo emphasized these steps after discussing with representatives of various companies at the April 12 Summit on Semiconductor and Supply Chain Resilience, which Biden also attended.
“These conversations embody the need for a $ 50 billion investment in the American Jobs Plan to ensure that governments have the ability to monitor supply chain issues and remittances and tools to address them.” Said Lymond In the statement.. “We need to prioritize funding the CHIPS Act. We are encouraged by a group of bipartisan US Senators working to achieve this.”
Acquisition of steel is also an issue for manufacturers, and shortages of materials will reduce supply and raise prices.
According to June 16th Steel Benchmarker ReportThe global export price of hot-rolled steel bands was $ 1,091 per metric ton. It broke through the latest high of $ 773 recorded on February 4, 2011, but is still $ 22 to break the $ 1,113 per ton high since July 28, 2008. not.
Equipment companies also need a sufficient supply of workers to increase the production of farm equipment to adequately meet demand. Harris said CASE IH has been struggling to find skilled and unskilled workers for some time.
“This remains a challenge, especially as we change and shift people’s line rates to meet production demand,” he said.
The final challenge facing equipment companies today is the availability of materials to factories and equipment to retailers. However, shipping by sea, air freight, or trucking requires companies to compete both inside and outside the industry.
“Because of the growing demand and the strong desire of all industries to fight for the same logistics space when things finally loosen or break,” Harris said. “There is very high demand, and as a result, it is very difficult to receive an increase in cost. System congestion.”
Coupled with rising demand, these problems create a complex situation where equipment companies struggle to deliver enough tools to dealers on time to sell to an increasing number of buyers.
CoxTractorCo in Kingsport, Tennessee. John Cox, owner and general manager of the company, said that sales have been strong this year so far, but at this point they are “basically selling from empty wagons.”
“The amount of our business is still decent,” he said. Agripulse.. “The first six months were pretty good, but the next six months I couldn’t sell anything and I’m not very likely to get anything.”
Wallace Wiggins, John Deere
Cox says this hasn’t happened since he started working as a manager for a company that sells tractors from Mahindra and New Holland Agriculture in 1978.
Wiggins said the situation forced John Deere to adapt. For example, the company has increased its truck fleet to provide additional transportation capacity as needed.
He believes these changes will be beneficial when the company moves into the future.
“We have a mission to act with different ideas, different behaviors, and perhaps speed and empowerment that never existed in Deer’s DNA,” he said. “This is really really good, because No. 1 is actually working well. We believe so, but No. 2 is the business Deere wants for the future. Set the type of tone. “
At this time, there seems to be no clear (or quick) solution to the challenges that exist in the supply chain. Both Wiggins and Harris said they expect some of these issues to continue throughout the year.
Blade said it will take some time for the supply chain to recover and the market to adapt to current demand levels.
“We are all trying to understand this together, as is the administration,” he said. “If we have a solution to a supply chain problem, we can do it tomorrow, but there’s no silver bullet other than flipping through the calendar for another month.”
If you need any further help or have any questions about the equipment shortage, tractors, implements, or anything else equipment-related, please contact your dealer, local mechanic, or call us at 602-734-9944. Please ask about our current new and used tractor supply.
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