15 August 1997

BHFdemands more security in dealerships

By Stephen Howe

UK FARM machinery dealers need greater contract security with their manufacturers, according to the British Hardware Federation.

"Without such protection some dealers could face closure and many others will lack the confidence to invest in spare parts, new machinery and training," warned BHF managing director Jonathan Swift.

His organisation, on behalf of the UK dealer trade association BAGMA, has appealed to the EU Commission to approve changes in agricultural machinery dealer agreements with manufacturers and suppliers.

It wants machinery dealers to benefit from the secure contract relationships which exist between dealers and manufacturers in the motor trade.

"Agricultural machinery dealers, particularly tractor and combine harvester franchise holders, are looking for similar dealer agreements on a European basis to those that apply to the motor trade.

"That is suppliers can enjoy exclusive dealership contracts and dealers can sell exclusively in one area," said Mr Swift.

Two factors underline the need for greater contract security, he said. First, the EC is reviewing block exemptions to the Treaty of Rome, which stipulates that there must be no restraints on the free trade of goods in Europe.

Second, contract protection would allow the industry to face the future with greater confidence at a time when restructuring in the manufacturing and supply trade is leading to dealer closures, said Mr Swift.

"Without some contract security farmers could suffer the consequences of declining dealer outlets. They may have to travel further for service and experience reduced parts availability.

"Less competition could also lead to price rises for sales, parts and service," he warned.

A management buy-out at Simba International should enable the company to take a longer-term view of the agricultural market.