Agricultural manufacturers are still struggling to get enough parts to continue to put together their products. Dr. Kanlaya Barr is Director of Corporate Economics with John Deere. She spoke at the recent Ag Outlook Forum in Kansas City and talked about the kinds of parts they’re regularly missing.
Barr said, “This is like whacking a mole. You have these parts here, and the next part is missing. So, our employees are working so hard along with our dealers, as well, trying to help work through this. You know, we have chartered company planes or (other) planes to go and pick up parts in different parts of the world. We also chartered vessels to go and do that. So, things continue to be difficult, but, as you know, we have quite a number of machines that are sitting because they lack a few parts. Once we can get these parts coming in, I think that situation will continue to improve.”
Demand is expected to pull back temporarily in the next few months due to the lack of available supply. According to Barr, that may help manufacturers catch up on their back orders and re-establish supply chains. “As to when exactly, I can’t give the exact time, but I would think that with the macro (economy) softening, we will continue to see that improve in our availabilities.”
One of the biggest challenges Deere and other manufacturers are facing is not enough labor. Barr said, “As we talked about, the labor availability continues to be a problem. I think that we still have big operations in North America. We still have a big operation in Iowa. But increasingly, we also realize that having rural operations is becoming more difficult for us in terms of labor availability, so those are the kinds of things that we’re thinking about, day in and day out. But our goal is to be able to deliver products to our customers in the right time, at the right place, so that continues to be our key that drives our decisions.”
Editor’s Take:
Demand for agricultural equipment has been very strong in recent months and even years. Due to supply chain disruptions, labor strikes and labor shortages, however, keeping up with that demand has proven difficult for the OEM and dealers, not unlike what occurred in the auto industry. The difference now is that the demand for agricultural machinery remains strong versus the auto industry where reports and empirical evidence suggests demand is weakening and inventories are building. Farmers and ranchers will continue to push their suppliers for more product because they want to ensure their machinery is ready and able to perform at peak times of the year. Machinery, be it for planting, making hay or other harvesting equipment, is the equivalent of an insurance policy. When the window of opportunity opens, they must be prepared, especially if the window is short and narrow.
