Ag equipment manufacturers anticipate strong boost in exports
Agricultural machinery manufacturers predict overall business in the United States to close out 2010 with 2.4-percent growth, then gain 3.7 percent in 2011 and 2.4 percent in 2012, followed by 2013 growth of 3.0 percent.Industry business to the rest of the world is expected to increase the most through 2013 – up 2.8 percent in 2010, followed by 7.6 percent growth in 2011 and gains of 6.9 percent in 2012 and 5.9 percent in 2013.
December 21, 2010
In the just-released agriculture equipment “business outlook” survey of the Association of Equipment Manufacturers (AEM):
• Agricultural machinery manufacturers predict overall business in the United States to close out 2010 with 2.4-percent growth, then gain 3.7 percent in 2011 and 2.4 percent in 2012, followed by 2013 growth of 3.0 percent.
• Canadian business overall is expected to be 4.1 percent higher in 2010 than the previous year, but then flatten out, down 0.5 percent in 2011, up 1.0 percent in 2012 and up 1.5 percent in 2013.
• Industry business to the rest of the world is expected to increase the most through 2013 – up 2.8 percent in 2010, followed by 7.6 percent growth in 2011 and gains of 6.9 percent in 2012 and 5.9 percent in 2013.
For 2-wheel-drive tractors, the most growth through 2013 is predicted for machines with 40-100 HP, in both the U.S. and Canada. For 4-wheel-drive tractors, strongest growth is seen for 2010 with double-digit sales increases – up 18.8 percent in the U.S. and up 14.8 percent for Canada. Sales of combines are expected to increase 6.4 percent in the U.S. by yearend 2010 and gain 6.1 percent for Canada, but then drop off. For other types of equipment, while there is a wide range in response, demand is expected to remain in the plus column for most products.
The survey asked respondents to rank how several factors would influence sales. Positive commodity prices were a key factor as well as strong export sales. Credit availability to finance purchases remains a concern as are steel prices.
AEM is the North American-based international trade group for the off-road equipment manufacturing industry. Each business-activity forecast is the average of responses from companies in each product line, predicting industry-wide expectations rather than individual company performance, and unit sales rather than company profitability. Click here for the full survey results, which are online at www.aem.org in the market information section.
"While there has been a recession, agriculture has been fortunate to have powered through, showing positive signs in most sectors of our industry. I emphasize most, because some have struggled along with other economic sectors. Those serving consumers more directly and those in the dairy industry coping with volatile milk prices have certainly faced difficulties. But for the most part, agriculture has remained in good shape," stated AEM’s Charlie O’Brien, vice president, agricultural sector.
"Equipment sales are not back up to pre-recession levels, but many customers are purchasing equipment because of the optimism," O'Brien said of farmers who raise commodities such as corn, soybeans, wheat and rice. "There continues to be good demand for these commodities."
O'Brien noted that the new Tier IV engines to meet mandated government emission regulations may play a factor in sales of some equipment types. "Manufacturers support clean-air objectives, but the regulations have posed challenges for OEMs to meet the timelines and deal with technological and commercial feasibility. And we know it can be challenging for our customers, for example, if familiar equipment options are not available," he said.
"The good news is that, besides cleaner emissions results, with some of the work that has been done, we are also seeing an increase in efficiency in fuel consumption, and this is another benefit for the customer."
O'Brien emphasized that export sales have been a bright spot for U.S. companies, helping to create and support jobs for American workers. "Especially in the current economy, Congress needs to help our farmers and manufacturers by acting on export agreements such as the ones with Korea, Colombia and Panama," he stated.
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