One of the highlights of attending major farm shows is the chance to connect with high-level individuals who can offer an interesting perspective on the industry. I got that chance just before the 2015 Farm Progress Show when I connected with Jim Walker, vice president, North America, Case IH.
Walker has been with Case IH for nine years and he's shepherding the company through this latest industry downturn with an eye on the future. And he's already starting to see some good news. "Dealers are seeing more interest in product than they're willing to trade," Walker points out.
That means that more farmers are interested in buying, but dealers aren't ready to take in the used equipment, as they work down the backlog of machines on their lots. That's a good sign that demand is slowly trickling back in, and a great sign for the industry. "Producers want the new technology," Walker notes.
The overhang of used equipment on dealers' lots does create a tough situation for the industry. Walker notes that the Certified Pre-owned program his company fired up this year is for that customer who used to be a buyer of that 'first trade' machine. But as the market got better they became new-equipment buyers. The CPO program is a way to return that customer, with confidence, to being a first-trade buyer in this market.
Looking at the numbers
Of course the market numbers get a lot of attention. "The market would have looked entirely different if we had entered this slump after 2012 rather than 2013," he notes. In 2012 the farm equipment industry sold about 10,000 combines, and now it appears sales will be about 7,000 units. However, the market in 2013 climbed to 13,700 combines, so that slide to 7,000 units is a much greater slide, or what Walker calls a "devastating level."
His comments are interesting given that a couple years ago at the height of the market, Walker talked about the need for the industry to 'get a breather' in sales. A chance to catch up and manage production and inventory levels. Well that chance has arrived, and he notes that the industry has responded well too. He notes the slide was farther than anything he thought, but he also points out that sales this year are at about 2010 levels, which back then the industry thought were pretty good.
Yet the demand should return as farmers are called on to increase capacity by 50% by 2050. That will call on farmers to use the latest technology maximize every acre and ever bag of seed.
Future of R&D, and a look back >>>
And he notes another fact that many might not think of: for the past few years the entire equipment industry has been investing most research and development cost into meeting tighter emission standards. It's an interesting observation since those emission improvements meant some major changes in tractor design.
"While R&D spending may be lower as sales fall, it will be a higher percentage of those sales," Walker notes. "And we can look at innovating product how that we don't have to focus on emissions technology." The cue there is that companies, including Case IH, will be turning their attention to more innovations in their businesses.
A look back
There's been some buzz about track tractors, yet Case IH points to the original QuadTrac, which was introduced to the market 23 years ago at the Farm Progress Show as a prototype. The final machines came out a few years later, and in 2016 the company will celebrate the 20th anniversary of the machines.
Walker, who worked at another company at the time, recalls that when he saw that early QuadTrak he had his doubts about its success. He was wrong, the product performs well, and the tech is now not only on Steiger large horsepower tractors, but in Row Track form, on the Magnum Row Track and even on combines - all the same basic tech from Case IH.
Track machines are here to stay, and QuadTrac was an early winner for Case IH.