The key words are "lower earnings". JD is still making money, it just is not as much as they wanted/expected. JD and other agriculture companies are coming off of an extended HIGH market. They had a 7-8 year run of record high earnings and volume. So they are crying wolf to a large degree.
I have over 30 years of dealing with JD management. They will make money one way or another. The ones standing in the gun sights are the JD dealership owners. JD gets paid or your toast. Makes no difference if your doing a good job or not JD gets paid the tenth business day of each month or your closed. I think that these mega dealerships are going to get an education dealing long term with JD. The people that they deal with at JD rarely have any skin in the game. The majority of the management chain at JD has nothing of their own invested in JD or the general agricultural economy. I owned JD stock until two years ago. I asked around at company meeting over the years and there where darn few that ran things on either side that had anything personally invested. So there is a massive disconnect from reality with a lot of them.
Also in the last ten years the average JD tractor or combine price has increased an average of 40%. There is all kinds of fat built into those numbers. Now that the farmers are not rolling in the gravy of high grain prices those price increases will reverse or JD will lose more market share. The high flying farmers are the ones with the majority of the new equipment debt. Many of them will be the first to have economic set backs or simply fail. This same group is the one JD chose to cozy up to. So I feel they deserve each other.
JD needs quarters of HUGE loses to wake them up to how they have messed up their brand to a lot of Green blooded farmers.
Here are some hard numbers. In the last two years we have reduced our parts purchases of JD parts, 60%. We look to other venders first now, where before many times we used the JD stuff just because it was handy and usually good quality. We now look at quality and price.
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