Slowdown takes root

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This article was published 28/02/2015 (4217 days ago), so information in it may no longer be current.

Canada’s farm-equipment industry is suffering through sagging sales and job losses as low grain prices and dwindling exports take a chunk out of the farming trade.

Manitoba’s largest players aren’t immune, either, with companies such as Macdon Industries and Buhler Industries laying people off and reducing work weeks.

The big international brands such as John Deere and Case New Holland have been cutting back for some time.

Last month, Deere announced 900 layoffs from plants in Iowa and Illinois. Last summer it pared back about 600 workers at four locations in Illinois, Iowa and Kansas.

On Friday, CNH announced close to 150 layoffs at one its plants in Nebraska that had already had more than 200 layoffs in October.

In Winnipeg, Macdon Industries, which makes a range of harvesting equipment and has a reputation as being one of the best operators in the business, laid people off last week.

The company has offices and sales reps around the world and had a workforce in Winnipeg of more than 1,500. There were unconfirmed reports the company recently let 150 go.

Steve Ward, Macdon’s vice-president of IT and corporate development did not specify how many people were laid off.

“It is a reflection of what is happening in the agricultural manufacturing sector. We were expecting a downturn to come and now it’s here. We are adjusting to what we think is appropriate for 2015-16,” he said.

Buhler Industries recently reported a 12.8 per cent decline in sales for the quarter ending Dec. 31, 2104 and noted the company expects to see a continued decline in sales in 2015

Adam Reid, director of marketing at Buhler Industries, said the company has laid off a little more than 10 per cent of the 200 production workers at its Versatile tractor plant in Winnipeg and the workforce is currently on work-share, working only two-thirds time.

“We are not having as much difficulty as some of our major competitors,” Reid said. “We’ve let attrition take place and knowing the kind of economy we were going into we started to scale back in the fall.”

Recent reports show farm equipment exports from both Canada and the U.S. were down more than 20 per cent in 2014 and are not expected to improve this year.

Jerry Engel, president of the Regina-based industry group, Agricultural Manufacturers of Canada, said the picture is not a pretty one.

“It is what it is,” Engel said. “The forecast is not that great going forward. Most of our members are anticipating a slowdown of between 10 and 20 per cent this year. All sorts of things are ganging up on everyone.”

Gary Colman, an equity analyst with National Bank Financial, covers companies in the ag equipment dealership world.

“We are pretty cautious on the near term because of the headwinds,” he said. “But at some point, three or six or nine months out we’ll start to see through the trough years and look out to 2016 and 2017 and quite frankly that looks better for agriculture.”

The current downturn in the ag equipment-manufacturing market is not unexpected and industry officials say it is part of a regularly occurring cycle.

Ron Koslowsky, the Manitoba head of Canadian Manufacturers and Exporters, said it has some similar dynamics to housing markets that heat up into a frenzy where the bubble can’t help but burst.

“Over a period of a few years, the end users — the farmers — see low interest rates, good times with prices high and good crops and there is a steady demand and things really ramp up,” he said. “But inevitably… you can’t always keep buying.”

But the decline in sales and production of heavy equipment are not necessarily hurting the entire industry across the board.

For instance, Colman believes Winnipeg-based Ag Growth International, makers of augers, conveyors and on-farm storage equipment, is in line for 10 per cent growth in its next results expected in mid-March.

Reid said Buhler has been growing its dealer network to partially insulate it from the downturn. Versatile tractor dealerships have traditionally also sold other mainline brands. Reid and his dealer development people are signing up new partners committed to a full line of Versatile equipment including its Russian parent company’s competitively-priced combines that are brand new to the North American market.

martin.cash@freepress.mb.ca