12 November 1999

BETTER BUT FAR UNDER PAR

NOT quite as bad as last year but there is still some way to go before sales figures – and profits – return to those enjoyed only a few years ago. This will be the view of most machinery manufacturers, as 1999 draws to a close.

The question is: Will machinery sales ever return to these levels or, as appears to be happening, should the manufacturing industry adapt its business to meet market demands?

It is a difficult question. One solution – as ever is – for companies to amalgamate their resources and create savings by economies of scale. The impending Case/New Holland situation should create a dynamic force in the industry and follows moves which have seen Fendt and Massey Ferguson come under the Agco banner and purchases by major tractor manufacturers of a whole series of products to create a "full line" show room. More historically, brands such as Fiat, Ford, David Brown, International and many others have been swept up throughacquisitions and mergers.

By the end of this year it is likely we will be left with the "Big Three" – New Holland/Case, Agco and John Deere to supply about 80% of the UK tractor market.

What effect this will have on dealer networks remains to be seen but one has a suspicion that there could well be fewer with the result that farmers will ultimately have to travel farther to contact their local dealer.

But, in some sectors, it is not all doom and gloom. In many ways it has been the year of the big machinery – tractors, combines and cultivation equipment.

Many dealers have reported that, while sales of machinery remain at low levels overall, sales of larger kit have been bordering on the reasonable.

Which is logical when it is known that, according to the AEA, the actual amount of horsepower sold has increased. It follows that fewer but more powerful tractors require the purchase of ever-larger equipment.