Last week, Farm Equipment Magazine held a virtual event that included panels of dealers, farmers and manufacturers, and presentations by editors Dave Kanicki and Jack Zemlicka. I was able to attend, and wanted to share a few of my takeaways.
2019: The year in review
From the dealers’ perspective, 2019 was a mixed bag. While pre-sales helped dealerships start 2019 strong, most saw business slow considerably with the wet conditions in the majority of the Midwest during the spring. Some farmers were able to salvage part of the season by switching to hay (also benefiting dealers), but most dealers in the middle of the country saw a considerable slowdown until fall when federal farm insurance payments were made, harvest was planned and factory incentives kicked in. Dealers on the panel agreed whole goods sales were disappointing, but some were able to make up revenue through used equipment sales & service, and focusing heavily in improving inventory turns. The disruption in trade agreements also negatively impacted business.
2020: Cautious optimism
Dealers share the same cautious optimism for 2020, provided the trade and tariff issues are resolved, and farmers feel better about crop prices and supply at the end of the year and early 2020. Uncertainty around an election year has historically resulted in flat to modest growth. Depending upon where the dealerships are located, some may see more opportunities to grow service revenue because equipment was run hard due to a shortened harvest period and in poor ground conditions where winter came early. Most dealers expect the slowness in whole good sales to continue into at least the front half of 2020 and are looking for other ways to grow revenue. Dealer panelists agreed that change is inevitable, and you have to keep looking for the next opportunity.
Top concerns for 2020
According to research done by Dave Kanicki, editor and publisher of Ag Equipment Intelligence (AEI), in addition to concerns about tariffs and trade wars driving up whole goods prices and falling farm commodity prices, finding and retaining employees (especially technicians) is a major concern. As the economy continues to improve, finding good, skilled employees remains challenging. As a result, dealerships need to focus heavily on training. Nick Rust, Precision Ag Coordinator at H&R Agri Power summed it up:
“I want retention. I want to keep people. If I’m not constantly training and putting my experience to work, ultimately we’re not making more money. Turnover is expensive and we can’t afford to be constantly starting over.”
Let’s all wish for a resolution to the trade issues and better weather in 2020!