Poet Lucy Ariel Williams wrote a poem "Northboun" in 1926. It goes, "Since Norf is up, An’ Souf is down, An’ Hebben is up, I’m upward boun.’" Thus was the social commentary on the northward migration of the nation's workers to the factory laden northern industrialized areas from all areas of the US.
The roaring 1920's, the depression '30's, the warring '40's, then the greatest generation returned home from abroad — all resulted in the industrialization of North America that put us as the only powerhouse manufacturer in the world. We were mature as a goods-producing nation. Then circa 1960 some geniuses in economics led a movement called by economist Victor R. Fuchs as a switch to a 'servicing society.' We had rebuilt the war-torn world for the most part and these developing nations worked cheaply for us. Businesses looking for entry into the marketplace and even those established corporations eyed foreign, lower cost, means to produce the products they engineered and sold. Japan and Europe all were willing producers.
Then, as they gained strength and their workers demanded more money and their companies more profit, the prices went up. Actually, quality did as well. The U.S. profit margins thus narrowed as outsourcing continued, and prices of our outsourced products continued to rise. Some economists and business leaders started to question our future.
We were at a dealer meeting in the early 90's when Agco's founder Robert Ratliff addressed the group and commented on the 'servicing society.’ He stated what we have created is not sustainable to our American economy. His statement was that we cannot continue to have the world build our products and we just do service and survive as an economic leader. He stated “I can fix your pipes, and you can change my oil, but until some BUILDS something there is no worth created. Someday, probably in some of your lifetimes, you will have to deal with it. It will not be pretty."
Today Ratliff’s words are coming true. Yes, some service is productive, as in programming and engineering, but the lion's share of the money goes to mines, factories, machine shops and assembly lines. Our President is tackling the issue with resolve. Is he doing it correctly? Can a bull in a China shop (pun intended) leave the shop in business? I certainly have no answers, but I certainly appreciate the problem. We have kicked the can down the road to the point of not having a can to kick.
All of us who are farm equipment dealers have a LOT of products that come from China and abroad. If products come from Asia, more than likely they originate in China, then to places like Japan, India and South Korea then to the U.S. Add to the issue one player, China, who doesn't play fair. Say I come and buy a tractor from you - I offer you a $100 bill for your $10,000 tractor and tell you my $100 is worth ten grand today. You call the bank, and they say that is correct - the next day you deposit the bill, and it is back down to 10 sawbucks. That is called currency manipulation.
There is an old saying: when your outgo exceeds your income, your upkeep becomes your downfall. Our bleeding of trade and budget deficits has to be stopped, but what will be the cost? Will Harbor Freight become the tool company that is higher than Snap-On? Shipments of Ag Equipment international shipments have been stopped, started and stopped again. Surcharges are ready to be applied at a moment's notice by all. This is the biggest game of high stakes poker ever played — and they are playing with our chips.
I would advise staying abreast of the tariff roller coaster ride as we make key decisions. I hear of some stocking up before the price goes up and others, in fear of continued farm equipment recession, or depression, dumping inventory. When will it end? I can find no one with any answers. The only thing I can think of is that these are certainly not boring times! We can't be ostriches with our heads in the sand, nor can we be glued to the media news in fear, thus ruining our health. Take a deep breath, say a prayer and have faith that right will prevail and that our leaders are right, with us helping them out in guidance. Until we meet again, wishing you miles of smiles and profits.
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Told from the perspective of an in-the-trenches owner/operator — Tim Brannon of B&G Equipment, Paris, Tenn. — Equipment Dealer Tips, Tales & Takeaways shares knowledge, experiences and tips/lessons with fellow rural equipment dealerships throughout North America. Covering all aspects required of an equipment dealership general manager, Brannon will inform, entertain and provide a teachable moment for current — and future — leaders within equipment dealerships. |
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