Spending time during the last few weeks at a handful of industry events, I had the chance to take the pulse of both precision dealers and manufacturers on their market outlook for 2015.
Now that we’re a couple months in, the mood appears generally positive on both fronts, with the caveat that the next 60-90 days will help set the tone for annual sales.
“Our dealers will know where they stand by the summer,” one precision manufacturer told me at the National Farm Machinery Show in Louisville. “I think they know what needs to be done in this market.”
Certainly, precision products aren’t jumping off the shelves as they perhaps did for dealers during the last several years. When commodity prices were up, farm customers didn’t mind spending money on a new system, even if they didn’t fully utilize its capabilities.
Talking with a diverse group of about 10 precision dealers last month, the majority said their precision hardware sales had dipped. This wasn’t cause for panic among the group, who all recalled when the last economic downturn began in 2007.
“We used that time to grow our business and it was a wake up call for farmers with precision,” says one group member. “It’s the same thing now, but the big difference is that most of these precision specialists weren’t around for the last downturn.”
A good point, since many dealers have rapidly grown their precision departments as hardware sales soared. How much sales adversity have precision dealers faced during the last few years?
As one dealer in the group notes, his two precision salespeople have only been with the company since 2012 and had grown accustomed to farmers calling them to request quotes on new precision products.
“They can’t wait by the phone anymore,” the dealer says. “If they don’t get out and make cold calls, they are going to struggle. You’ve got to work for your deals now.”
This could be a harsh reality for some dealers, but at the same time, it could also be an opportunity. Diversifying product offerings and including more service and support options are some ways which dealers are looking to supplant sagging hardware sales.
One member of the precision dealer group says that shortly after the last economic downturn, about 75% of his dealership’s precision business came from selling auto-steer and GPS systems. Today, that is closer to 25% as the company moved into more sustainable revenue sources including data management service.
“We had hardware to rely on during the last downturn, but we knew there would be another decline,” he says. “If we didn’t have anything to replace that hardware revenue today, we’d be more worried.”