When Case IH invited farm writers to Ames, Iowa to see their new line of equipment for 2018, the company’s vice-president Jim Walker was also there. At an evening dinner on the last day of the event, he presented his thoughts on the state of the ag equipment industry, and hinted at his strategy for keeping the company on track for growth in Canada and the U.S.
With the red brand using its new, permanent facility on the grounds of the U.S. Farm Progress Show in Boone, Iowa, as the location for this year’s product reveal to the media, Walker had some thoughts on the value of farm equipment shows.
Despite the current trend among buyers to rely on the internet for virtual looks at equipment, he confirms Case IH will maintain its presence at shows all across North America.
“People talk back and forth about the value of farm equipment shows,” he told the group. “But I think [their continued popularity] shows that producers, no matter how they evolve, still want to kick tires, to go see equipment. I think the farm show itself, what’s done at those shows, the producers that attend, and what their expectations are, are always evolving.”
What the company puts on display at the shows, however, and how it does it, will be under pressure to evolve to remain relevant.
Attempting to meet those changing expectations is part of the reason the company has invested in permanent facilities at one of the U.S.’s most popular outdoor shows. And, he explained, there are plans afoot to make further investments in show facilities at other locations.
Part of the reason for wanting to maintain a strong presence at those events may also be down to preserving the heritage of the brand in the minds of the public, who often hold strong brand loyalties. Walker notes he keeps an eye on what producers, owners and enthusiasts have to say about his company and machinery.
“This is the celebration of the 175th anniversary of our company,” he said. “People have an affinity for what Case IH really means, whether you pick up the IH heritage, the Case heritage or other things, we’re proud of it.”
Preserving heritage is important to the company, which has even kept the original J.I. Case office building in Racine, Wisconsin, as part of its headquarters. Inside that building, founder J.I. Case’s office is preserved in its original condition, and staff will gladly show it to anyone who makes the effort to stop by.
“Across the road we have a state-of-the-art campus,” Walker said. “But we refuse to give up that heritage building or change it for any other end use than what it was originally designed for, as an office building.”
In the same place on the Iowa show grounds where the company showed its new permanent facility this year, Case IH had something significant to show last year as well. That was the fully autonomous Magnum tractor. Executives clearly defined it as an early concept machine, but they promised to introduce one to the market in roughly three years.
So where are engineers with that project?
“It was a way to show all the different forward-looking technologies we’re working on,” said Walker. “It’s just finishing up its world tour of introduction, making its last stop in Australia. Then we’ll start evolving that into more of a concept, [determining] what the value-adds of forward-thinking technology are.
“We’re running and still committed to an autonomous vehicle, obviously. We have vehicles running out in California. You get into some of those vegetable operations, tomatoes, carrots… It’s perfect for that type of vehicle, at least the early adoption of it. That’s what we talked about a year ago, and that’s what it’s doing at this point.”
But although widely available market-ready autonomous tractors wearing Case IH colours are still some distance off, Walker has found that producers are eager consumers of any new technology that can improve their bottom lines or solve their problems, especially in Canada.
“Into the 2017 calendar year, I think it’s pretty interesting to look at what has happened and what we think will happen for the year,” he said.
“First and foremost, we have a tale of two cities, if you will. In the Canadian marketplace, I call it the S&P of agriculture. It never really deteriorates too much, but it never really just explodes. Yet with the weakening of the U.S. dollar and the advantageous Canadian dollar in the first six months of the year, the markets boomed in Canada, especially Western Canada.
“Good market prices and good sales of commodities (in Canada). What happens with that is an acceleration of technology needs. We see a completely different customer desire and drive in the Canadian marketplace than we do in the U.S. right now, especially in technology. We’re getting tremendous demand for innovations right now, far different than in the U.S.”
In the U.S. there is still a need for dealers to work through the lingering effects of a period of hyper sales activity that began there — and here — in 2008, leaving many American retailers still trying to sell their way out of a surplus of some types of used equipment.
“The real driver of deterred investment in new equipment has been the enormous amount of equipment that was sold in 2012, 2013. That generated an enormous used equipment glut that is taking us quite a while to rid ourselves of and enable dealers to even want to take trades,” Walker said.
Meanwhile, however, the glut of combines and four-wheel drive tractors, which are common on western Canadian operations has eased, according to Walker. That’s another factor helping drive both new and used machine sales on this side of the border.
But producers’ expectations on how often they cycle their fleets are lengthening — as Walker believes they need to.
“In combines and four-wheel drives, those used markets look very, very strong, both in pricing and low inventory levels. From the producer end of it, they’re not going to get the good price trade they used to back in 2012, 2013. They’re coming to the realization they’re going to have to keep it a little bit longer and expense it over a longer period of time. So they’re raising the amount they’ll pay for the product.”
That is helping keep those used equipment prices at competitive levels that leave dealers some margin for profit.
“Both Deere and Case IH got into an aggressive mode on 8Rs and Magnum tractors in 2012, 2013, 2014. Now we’re re-marketing those products and steering a lot of buyers to those used machines rather than buying new.”
Walker expects the surplus supply of those tractors will soon ease as well. But it, too, has caused producers to accept new realities.
“Although it’s a young fleet, those customers aren’t used to putting that many hours on those machines. They’re not used to repair bills. They’re not used to having delayed technology. So there’s a real pent-up demand out there. There’s a decent appetite by the dealers to take trades. So there is an upside coming. We can at least say we’ve hit bottom. I’m comfortable with that.”
Walker thinks the fact CNH Industrial (Case IH’s parent company) kept its R&D investment up during the downturn will serve the brand well in coming years, with new technologies already in the pipeline to capitalize on future market demand.
And he notes that while many in agriculture have been around long enough to see significant sales downturns in the farm machinery business before, many younger people in the industry are seeing it for the first time. And, fortunately for them, the company has weathered this economic storm with very little damage.
“For the newer people in our business, whether they’re employees in our own company, dealers or producers, this [downturn] is something many of them are experiencing for the first time,” he said. “The last real downturn was in the early ’80s. I think we’ve come through this really well. The brand itself is right-sized and smart-sized and has done well financially. We’re ready to move forward and take advantage of all the opportunities that come our way.”