The Rural Voice, 1987-04, Page 19same thing with the lawn and garden
people. They've done this in the
States quite successfully with several
associations."
"In the old days, even if
you went to a dealers' meeting,
the three or four International
dealers would sit together, and
John Deere dealers would sit
together — it just doesn't
happen any more."
Peart says he's also happy to assist
with market orientation. "I try to find
out first of all whether they want to do
their own distributing. If they don't, I
would try to put them together with a
distributor. If it's something they
would like to distribute on their own
and they think there is a specific
market there ... I suggest that they
might work with me possibly on a
dealers' marketing list or put an
advertisement in the bulletin."
ORFEDA does present itself as a
co-operative group, despite the fact
that its members are competitors. "I
guess that's the biggest change I've
seen in my years with ORFEDA,"
Peart notes, "In the old days, even if
you went to a dealers' meeting, the
three or four International dealers
would sit together, and the John Deere
dealers would sit together — it just
doesn't happen any more."
"It's the problems we've got. It's
nothing to do with what colour you
sell."
The worst years for the dealers,
Peart says, were 1982 and 1983. Not
only have dealer numbers dwindled,
hut dealers, like farmers, have had to
adjust to the demands of finely tuned
financial management and high tech-
nology. "Actually," Peart says, "a lot
of our farm equipment is ahead of cars
in technology."
Labour charges in dealerships
remain an issue, and were one of the
major subjects at ORFEDA's 1987
convention. "They (dealers) do have
to get their labour rates competitive.
But the real problem in our industry ...
is that we're having trouble attracting
young people into the farm equipment
industry. We have to change our
image. I guess that's the best way to
say it."
Making an industry attractive is a
problem farmers themselves often
consider, and of late the essential pro-
blem for farmers, and for machinery
manufacturers and dealers alike, is
excess capacity.
"Certainly inventories have been
brought down considerably," says
Brent Harare, "I suspect that there's
still work to be done in that area by
many of the companies. But by and
large the inventories have been
brought under control. The bell-
wether of that will probably be a
return to perhaps more realistic pric-
ing. There's any number of sophisti-
cated discounting programs going on
right across the industry. And that
again was a result of trying to move
this equipment to clear that pipeline."
"You may say it has been stabil-
ized," says John Kessler, "but not
completely. There will probably be a
number of moves yet before the end of
this decade."
"I think it's been a buyer's market
in the past number of years because of
the discounting programs the compa-
nies had to have in place in order to
survive," Kessler adds, "It will con-
tinue to be a buyer's market until the
surpluses are exhausted. I think you're
still looking at — maybe not in every
category — certain categories that
will continue to be available practi-
cally at wholesale costs in the next
two or three years in any case."
Consider, for example, that total
yearly Canadian tractor sales were less
than 20,000 last year. Those tractors
came from 22 distributors, Kessler
notes, but 80 per cent of the market
was spoken for by four manufacturing
companies.
Or take combines: during the
1970s, about 4,500 were sold annu-
ally. In 1985, sales numbered 2,600.
"It's hard to imagine how a business
can survive a loss of 40 per cent of
units," Kessler says.
What's produced the surplus of
farm machinery inventory? "It's been
badly miscalculated, let's put it this
way," Kessler remarks. When the
crunch came, "it was very convenient
to blame it on high interest rates at
one time, or low commodity prices.
Of course low commodity prices are
a factor. Of course the decreasing
number of farmers is a factor, and
also the increased capacity. If you
have something that has the capacity
of two or three times what you had
15 to 20 years ago, but you have no
more acreage to do ...
"If the other factors (interest rates,
low commodity prices, etc.) account
for 15 to 20 per cent, I'd say that
increased capacity is at least 70 per
cent of the problem — the capacity is
just too great."
"There is no question that there
will be fewer units sold year to year
because of the growth in the size and
productivity of the particular mach-
inery," adds Brent Hamre.
And as Kessler notes, "It was
very costly to have all this power
out there."
That excess power was costly
not only for the manufacturers and
dealers, but for the farmer. Econom-
ies of scale, it seems clear, have their
upper limits, and when those limits
are reached they take their toll on the
farming community — not only
economically, but in terms of the
traditional farming Iifestyle.0
Lise Gunby
APRIL 1987 17