U.S. Ag Equipment Manufacturers Caught in Squeeze as Farmers Tighten Belts

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Researched by Industrial Info Resources (Sugar Land, Texas)--Faced with falling sales, U.S. farm equipment manufacturers are laying off employees as farmers tighten their belts to cope with rising costs and falling commodity prices.

Industrial Info is tracking projects by CNH Industrial America Limited, a subsidiary of CNH Industrial (NYSE:CNHI) (London, England), which is one of the world's largest agricultural-equipment manufacturers. CNH Industrial reported $5.6 billion in first-quarter net sales, down 12% from first-quarter 2014.

CNH in April laid off 90 workers at its plant in Benson, Minnesota. The plant makes cotton pickers and sprayers, and floaters for fertilizer and chemical applications. CNH laid off 80 workers in May at a tractor and construction equipment plant in Fargo, North Dakota, and plans to lay off another 38 this month.

Ernie Goss, director of Creighton University's (Omaha, Nebraska) Economic Forecasting Group, said: "Firms linked to energy and agriculture are experiencing pullbacks in economic activity. Job growth in [the] two energy-producing states [of] Oklahoma and North Dakota has moved into negative territory."

Farming equipment companies normally conduct semi-annual plant shutdowns for needed maintenance and capital projects. Many are starting their shutdowns earlier than July, and are planning one- to two-month closures, leading to worker layoffs. They have no, or fewer, new capital projects or production lines planned at the plants. These extended maintenance shutdowns could lead to future plant closures if the economy doesn't pick up and commodity prices rise.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.