December 21, 2009
Long-term forecast
The farm tire market remains strong, but what will 2010 bring?
By: Mike Manges
Tuschner: This year we are feeling the effects of the global economic downturn. However, agriculture isn’t as badly affected as construction or some other segments. Regardless, dealers have been more hesitant to take large stocking positions with inventory. As dealers stock more cautiously, it has helped tremendously to have a North American distribution point: our warehouse in Tennessee.
Vasichek: There has been a decrease in demand at OE due to the crunch in global financing. Many growth areas, such as Eastern Europe — particularly Russia and the Ukraine — had substantial decreases in farm machinery being imported into the region. Some foreign markets put in place tariffs to restrict the equipment coming in; that, in turn, slowed down sales.
3. What will the North American farm tire market be like in 2010? What actions will you take to ensure that your dealers have the right products in the right place at the right time?
Allen: The 2009/2010 crop marketing year has a number of variables that will not be fully realized until later than normal. The crops in 2009 were estimated to be record levels, yet most were late-planted and the early cold could diminish estimates. However, on a long-term basis, grain prices and yields are generous. Without any other influencing factors — such as the value of the dollar — there should be good buying power in production agriculture. The challenge for the supply chain to satisfy the needs of the farmer in 2010 will be inventory and quality of inventory. The entire supply chain — manufacturers, distributors and dealers — has been very aggressive in managing inventory during the economic uncertainties. Any unexpected levels in demand may prove difficult to satisfy on short-term needs.
Dashiell: It’s anyone’s guess on how far the recovery will be in 2010, but the farm tire market will improve with better credit access and improvement in commodity prices.... We are building our inventories and production base to meet our customers’ growing demands for our brand.
Haney: We believe the 2010 farm tire market will be much like 2009. We are working on our 2010 relationships now, and fortunately, we have our own capacity secured.
Jankowski: Dealers are saying they’re going to keep their inventories down. It’s a challenge for us and the dealers to have the right inventory at the right place at the right time. But crop prices are well above where they were three years ago. Farmers are going to make money in 2009 and I anticipate they’ll make money in 2010, as well. But it’s not going to be container, container, container.
Sweigart: There are already positive indicators in both the domestic market and the global OE business. The upswing is expected to be strong and dramatic and we are doing everything we are able to be adequately prepared. We are investing in capacity and improving our supply chain mechanics.
Tuschner: The coming year is anybody’s guess. There are indications that globally, we are seeing some signs of improvement. But regardless of that, this is still going to be a challenging year. On the marketing side, people will probably remain hesitant to take large stocking positions, and on the production side, raw material prices are escalating, which we have to take into account.
Vasichek: Harvest this year has been delayed in many areas due to cold weather and rain. This has delayed combining by more than four weeks and farmers are reaching out to their dealers to have tires in stock during this critical time. We have seen many farmers change over their tires to R-2s to give them added traction in the wet muck.
My recommendation to dealers is to know their markets and the tires their customers’ need. The tire dealer needs to be partnered with their customers. Those dealers who provide 24-hour mobile service to get their customers up and running will be successful. ■
Sign up for our Enews and receive the latest news, trends, and product information right in your e-mail inbox.