Global business-advisory firm AlixPartners this month released the results of its Global Agricultural-Equipment Industry Outlook, which analyzed all major OEMs globally. Here are some key findings from that report.
- Market-share game: While macro factors such as rising populations and per-capita food consumption globally provide good long-term fundamentals for the industry, original-equipment manufacturers (OEMs) are seeing their share in some established markets, such as Western Europe, under attack as new entrants grow by as much as 10% per annum in the low-horsepower equipment market, says the study.
- Platform approaches: Recent acquisitions have saddled many OEMs with additional product complexity and costs. Companies hoping to stave off new, low-cost competitors in developed markets will need to adopt automotive industry-like "platform" approaches to standardization and cost control, according to Francesco Barosi, managing director at AlixPartners.
- Production volumes outlook: In the U.S., ag equipment production volumes will slowly recover and lead global growth over the next three years and reach 2008 levels in the next four to five years. By contrast, Western Europe is not expected to hit 2008 production volumes (about 177,000 units) until after 2015 and to remain relatively flat after that.
- Emerging markets: Even though recent strong growth in emerging markets is expected to temper through 2015, these markets continue to be key targets for all OEMs. AlixPartners expects India to remain a strong growth engine going forward, while China’s unit sales will level off and South America’s decline.
- Raw-materials cost impact: Francesco also discussed the challenge of raw-materials costs price fluctuations, and what companies must do to mitigate them. The study also notes that fluctuating raw-materials costs can greatly affect the industry going forward, as the raw-materials portion of purchased content accounts for as much as 20% of dealer net pricing.
For more information about the study, visit www.alixpartners.com.