News Mechanization
Mega machine sale, but parts are running out
Agricultural machine manufacturers often suffer little from the corona crisis. Especially in North America, new tractors, combines and implements are hard to come by. The pressure on the supply of parts is therefore increasing. There are significant problems here. Manufacturers in Europe are also facing delivery problems. For example, Fendt is forced to temporarily close its doors.
It is a luxury problem for manufacturers, but a very annoying one. Placed orders cannot be fulfilled by any means because belts, castings and microchips are not available. A similar supply problem arose at the start of the corona crisis. Then world trade was severely disrupted by the first corona wave. Suppliers are still unable to keep up with the pace. Manufacturers, importers and dealers see the sales season go by with gritted teeth.
Fendt closes doors
The American machine giant Agco Corp is one of the manufacturers facing major supply problems. In their American factories, but now also in Europe. Fendt announced this week that it would close its doors from April 22 to 30. The 2 South German factories cannot receive new castings, but there are also problems with other parts. Fendt attributes the problem to production problems at the suppliers, which have not run normally since the outbreak of the corona pandemic.
"We have to sell no and wait times for new machines are up to 6 months," Agco's supply manager Greg Toornman told Reuters news agency. "That's too late for the US harvest season." According to Reuters, it's not just Agco that has problems. The other 2 major concerns: John Deere and CNH, are also struggling with shortages. Agco, JD and CNH aren't the only ones clamoring for parts. The entire US economy is on the rise this year. This results in an above-average number of orders for parts. After a difficult year, suppliers have not yet been able to replenish their deficient stocks. Logistical problems worldwide are added to this.
Season passes
According to research by the American bank Morgan Stanley, the stock of tractors in North America has not been this small in 18 years. Dealers are concerned about the situation. Delivery dates cannot be met and the sowing and harvest season has passed before the machines are ready. That is why farmers decide not to buy anything. Manufacturers and dealers are trying to do what they can. For example, Agco dealers are not allowed to hold stock. These machines are sold directly to end users. John Deere did not respond to questions from Reuters, but announced in February that it mainly struggles with delivery problems in the field of electronics.
These electronics are an increasingly important component for all agricultural machines. The use of microchips in tractors and harvesters is still much smaller than in an average passenger car, but the use is increasing. Deliveries of these chips are at the top of the agenda. Steel and plastic are also in high demand. Agco tries to solve this by sourcing parts from South America or Europe, where there is more stock than in the US.
perfect storm
Toornman calls it a "perfect storm" to Reuters. The corona crisis, logistical problems, shortages for all raw materials and farmers with a big wallet. In the US, arable farmers have benefited from skyrocketing corn and soy prices. The highest in 8 to 10 years. The expectations for the coming season are also good. Everyone wants to buy new machines, but they simply don't exist.
This jubilation is much less in Europe. In the Netherlands, potato and onion prices dictate the sentiment of arable farmers and milk prices that of dairy farmers. They do not make it possible to invest a lot. However, sales are still going ahead. Elsewhere in Europe - where the grain market in particular determines the mood - the situation is somewhat rosier. Rapeseed is expensive, but sugar beets hardly yield anything. Added to this are the 3 dry years, which means that not everyone has benefited from higher prices. Nevertheless, Fendt has also filled the order books and European manufacturers performed well in 2020. The tractor manufacturer hopes to be able to deliver all orders this year, problem or not.
Niels van der Boom
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