News Mechanization
War has major consequences for mechanization sector
The war in Ukraine has certainly not gone unnoticed by companies in the agricultural mechanization sector. More than 70% of the companies in this sector indicate that they are experiencing major to very major consequences of the conflict. Significant price increases and longer delivery times of both machines and parts are mentioned as a problem.
The above is evident from a survey conducted by the federation Fedecom among 200 member companies. Buyers and suppliers have seen prices rise sharply since the start of the war. Price increases of 20% to 30% of planned deliveries are no exception. That puts pressure on mutual relations, according to Fedecom. Uncertainty among customers is also increasing, which has consequences for investment plans.
Of the mechanization companies that participated in the survey, 77% expect costs to increase by 10% to 30% as a result of higher prices for machines, components and parts. Energy costs are also higher, according to the participants. At the same time, 70% of the agricultural mechanization companies surveyed expect a drop in turnover of up to 30% as a result of, for example, delayed deliveries. Manufacturers are also more pessimistic than dealers. The survey also shows that it is not expected that the increased costs can be fully passed on.
Measures
Mechanization companies and manufacturers are not sitting still and are now taking measures to absorb the consequences of longer delivery times and increased prices. The top-3 of measures: including an indexation of prices in the quotations, shortening the duration of the quotations and entering into a dialogue with the client. About 60% of the companies that completed the survey want additional measures. This includes transparency in cost price calculations, the use of benchmarks and additional agreements in issuing and dealing with quotations.
"The results show what is actually happening in mechanization practice today, namely that raw material suppliers, manufacturers, dealer companies and buyers/users each absorb part of the price increases and delays", reports Gerard Heerink, director of Fedecom. "This can also be concluded from the decreasing gross margins of the machine manufacturers and the dealer companies over the past two quarters. Although suppliers are taking various steps to serve customers in a timely manner and at responsible prices, there is currently limited certainty that can be offered."
Jurphaas Lugtenburg
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