Farm Equipment Manufacture

The US farm equipment manufacturing industry includes about 1,200 companies with combined annual revenue of $15 billion. Major companies include Deere, AGCO, and CNH. The industry is highly concentrated: the 20 largest companies generate more than 80 percent of revenue.

COMPETITIVE LANDSCAPE

Sales are directly tied to farm income and crop production projections for the next season, and can vary highly year to year. The profitability of individual companies depends on the volume of products sold, since many manufacturing costs are fixed. Big companies have large economies of scale, especially in manufacturing tractors and combination machines. Small companies can be successful by making specialized equipment, especially tractor attachments. Smaller companies, which are more labor-intensive, produce annual revenue per employee of about $150,000. Larger companies, more capital-intensive, produce about $350,000 per employee.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products are tractors, self-propelled harvesting combines, tractor attachments, and other equipment used for crop production and farm animal management. Smaller utility vehicles and ATVs are coming into general use on farms. Tractors account for about 30 percent of the market, combines 25 percent.

Large companies, such as John Deere, AGCO, and CNH, produce a full array of products, while smaller companies generally make a single product line. Production of diesel engines is the major separator between large and small companies, because of the large amounts of capital and expertise required. Large companies have highly automated production lines and make products that can be ...