John Deere laying off about 900.

It seems the low grain prices are taking their toll on farm equipment. Also saw land values in Iowa are down 9% +/-. Most of Deere layoffs will be in Iowa, & Illinois factories. I bet more companies will follow before long! I don't notice any slump in used prices so far as I can tell.
 
Well it depends on what level of used your looking at.

The high end equipment like late model used combines are down 15-25% depending on the model.
Example: JD 9670 combines are down $20,000-35,000 from just two years ago. Contrary to the popular farmer thinking, that dealers are getting rich selling high end combines, the margin is usually around 10% of dealer invoice price. List means nothing. An example of this would be: they sell a $250,000 combine they plan on a $25000 profit. Then the value of the trade-in drops more than that and take longer to sell. The JD dealerships have to pay floor plan interest from day one now. They do not get interest free terms anymore. So they can get into losing money real easy in a declining market.

IN JDs case the company has already told the dealerships to not be as concerned about the market share numbers like in years past. This market share helped set the volume rebates that dealerships got.

The equipment that only has the LARGE grain farmers as it's market is off in price.

Now the more modest price equipment, usually under $100,000 is holding it's own or even slightly higher. Also things livestock producers usually buy is stead to up because of better livestock prices.

Then the lower priced collector stuff is still much lower than it was several years ago. The only stuff still bringing high dollars is the rare or unusual equipment.

There is still some models that are just outrageous in price for what they where and are. Example is the JD late model 4020s. Also the IH 1206 and AC D-21. These tractors are hot property as the 40-50 year olds are collecting the tractors from their youth.


There is going to be some serious pain in the new and late model used equipment market. I really think there will be some major players go broke in this down turn. I do not think any of the manufactures will go out but they easily could change ownership.

Examples of this would be Fiat as a owner. The parent company is still in serious money problems from their car divisions. The AG division is the one that has made consistent profits. This makes it ripe to be sold off. The Italian banks have been pushing for Fiat to do so and pay down their debt load.

At the dealership level. I am pretty sure the Titian chain of dealerships will not survive in it's current form. The industrial division has already closed stores and reorganized once an is still bleeding money. Titian stock is a penny stock almost now. They are having issues just getting operating capital.

There are none of the JD chains that pop to mind as being in trouble YET but there will be. It just will take a few years of low new equipment sales to show up. Then add in major losses on late models equipment and there will be money issues at these chains.
 
Used prices going down on late model and holding steady to slight decline on older but good condition equipment. Has been trend for past 6 months and looks to continue.

Most everyone replaced marginal equipment in 2011 through 2013 when farm income was high. Demand is low, money is tight, and nothing much is selling.
 
Wholeheartedly agree, JD.

Myself, I believe MF is weak and precarious.

Personally, I do not like how AGCO treats repeat customers. I've bought two new MF tractors recently, one in 2007 and one in 2012. I've had trouble with both and MF has not treated me well with either.

CNH and Kubota have been much, much better.

Dean
 

Massey Ferguson have laid off 100's of production workers at their assembly plants in France. And the office staff who were left at Banner Lane in England have been cut back to the bone including the Managing Director.
 
I worked for John Deere Des Moines works for 33 years. Every time the grain prices drop drastically there will be a layoff. Seems like you need about 12 to 15 years to be employed steadily. Most were just short term layoffs except during the 80s farm crisis. Then I was off almost 3 years at one point. You just go find another job and forget about the place.
 
Fiat really has a two headed monster. They would love to sell one or the other but the red side has the combine market while the blue side has the total tractor sales. Not as strong on the high hp side but overall still more units. Not sure who is going to buy either side. May be a case of just waiting to see how long Fiat can hang in with two brands. Really depends on what part of the country you are in for what color looks best.. Massey.... dying on the vine just a matter of time.
 
In Britain the farmers have until recently had a good run of profitable years, and their tractors & machinery are relative new and in good condition. But the BIG problem is shifting large HP 3 year old tractors with huge hours, this is due to the high value of the GB Pound against other currencies and lower demand from European Countries who are going through tough economic times.

CaseIH went through a bad sales time for several years and lost a lot of market share. In past 2-3 years Fiat have been throwing money into their CaseIH dealers to buy back market share. The crazy thing is the identical tractors in NH blue colour are much more expensive than red CaseIH models.

JD is still market leader but there is a back-lash against them with their premium prices and their higher fuel consumption against most competitors.

Kubota have set on more agricultural dealers but their tractors are having serious mechanical & castings problems when fitted with larger sized mounted implements. They have however increased their market share dramatically to Councils and municipal type buyers.

Fendt are enjoying increased sales, although expensive to buy new, they have higher residual values secondhand.

The family livestock farmers have been buying new sub-100HP tractors. These are often older designs with new Tier3 engines, made in Turkey, India and China sold by CaseIH, NH, MF & JD who are looking for cheaper production costs.

With decreasing margins in arable farming due to lower farm-gate prices and rapidly increasing costs of seed, fertilizer, sprays and machinery costs sales are decreasing.

Livestock farmers, especially dairy farmers are in a desperate financial state so they are not going to be buying anything unless absolutely essential.

Official figures for dairy farmers to producing milk are $1.70 US gallon. Currently milk processors are paying the farmers $1.14 per US gallon. The super markets are selling fresh milk at $1.33 for 4 pints!!!

I work on conversion rate of 1 GB Pound {£} = 1.50
 
I managed a division of a company that made a good profit; after I left that company they sold off that division to keep the loser division going for awhile longer, until they were forced into bankruptcy.

I don't know why companies sell a profitable division to keep a loser, except that's a way for the executives to keep drawing their high salaries a little longer before it all caves in.

Never did understand laying off the janitor when finances went south. The janitor had no influence over the company finances. The executives that caused the financial problems should have been the first ones let go. Smart we are not.
 
So, is it a good time to buy a new tractor? I keep thinking about a new 55hp or so, 4x4 with a loader. Our local ag show starts next week. It will be interesting to see what the pricing looks like. It's just a good time to side by side compare. Over the past few years at this show the prices have not seemed to change much and everyone was priced about the same.
 
Where I live the crops burned in 2012, drowned in 2013 and given away in 2014.
Hearing about layoffs will be a common thing for the next few years.
 
(quoted from post at 11:39:53 01/24/15) So, is it a good time to buy a new tractor? I keep thinking about a new 55hp or so, 4x4 with a loader. Our local ag show starts next week. It will be interesting to see what the pricing looks like. It's just a good time to side by side compare. Over the past few years at this show the prices have not seemed to change much and everyone was priced about the same.

Check out the residual values of all makes & models before you buy new. Local after sales & service is a big consideration. Ex-demonstrator models can show a big discount , or low interest finance.

For example when I bought my 4x4 SUV, Mitsubishi were offering big discount off retail price, + 3 years warranty + 3 years free service. Plus the finance package was 50% deposit and 50% balance at 365 days {1 year}.

I offered full cash on the day of collection but wouldn't get the warranty & servicing - to refuse the Mitsubishi offer was a no-brainer!
 
Not sure,but doesn't Deere employ about between 65,000 and 70,000 people. If the past is any prediction of the future, it will take more than a few years of low prices to see any real painful effects. Farmers are the most optimistic people in the country as a whole.
 
(quoted from post at 11:44:27 01/24/15) Where I live the crops burned in 2012, drowned in 2013 and given away in 2014.
Hearing about layoffs will be a common thing for the next few years.

I was never laid off in 35 years in the crop insurance industry.

Gene
 

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