Association Looks at Risks in Industry

Risks are everywhere, it’s an accepted part of life. Our members know the risks in agriculture, and they know how to respond.

An example is how many of you have diversified to help manage the budget during down ag cycles. Some of you have added products to serve the construction industry, which may have led you last week to Las Vegas for one of the construction industry’s largest shows.  

An article from that show explored how China’s heavy equipment industry is targeting the U.S., specifically the billions of dollars expected to be invested in our infrastructure. The coverage said the Las Vegas expo was a $1 million investment for the Chinese contingent.

“Most of the folks speculating about further Chinese entry into the (American) market fall into the ‘when’ camp, not the ‘if’ camp,” said former Sany America CEO Mike Rhoda.

In reading about the Chinese threat to U.S. manufacturers of heavy equipment, I could not help but wonder where their interest will transfer when attention shifts from construction, and what new risks that may pose for our members. 

I did not have to wonder long. The next morning, our office received a call from a Chinese official in Washington D.C. who wanted help finding out how many farm implements are manufactured and sold annually in the U.S.

We are all too aware of the risks our members face in finding distribution outlets for their products. At the Association, we’re monitoring efforts by state and regional dealer associations as they respond to moves by multi-national tractor corporations to micromanage their independent dealerships.  

Last week, we addressed that issue with the chairman of the North Dakota House Ag Committee prior to a hearing on proposed changes to the state’s statutes dealing with dealer contracts, which we outlined in our March 1 issue of Shortliner.

In our communication to the chairman, we wrote:

“We believe every independent dealer in North Dakota should be free to select the equipment that best meets the needs of local customers and offers the dealership the best return on its investment. If dealers offer only one brand of equipment, built to one design standard and sold globally, the decision to do so should be made by the local independent dealer without pressure from a major supplier.

“Should the independent dealer, however, offer several equipment brands, the consumer gains the benefit of competition in the marketplace, and the dealer, in addition to bringing diversity to the marketplace, gains the ability to negotiate contract terms with shortline suppliers. These shortline manufacturers are thrilled to compete for the independent dealer’s business.”

Some of the major tractor corporations saw a different risk.

• Deere wrote: “If ultimately enacted, this (dealer purity) provision of the legislation would destroy the competitive lines aspect which actually John Deere customers currently benefit from.”
   
• CNH also saw risks to its new dealer contract and called the legislation “anti-consumer and anti-competitive market. . . This provision will reduce competition, adversely influence consumer pricing.”

Destroy competitive lines?  Anti-consumer?  Anti-competitive market?  Reduce competition?

While we also had some issue with the North Dakota proposal, it is interesting to note the bill passed out of the Ag Committee on a 13-0 vote.

Whether the risks come from foreign competition or multi-national tractor corporations, they are ever-present and often shifting. This Association is committed to supporting members in finding ways to manage these risks.