Despite the unsettled construction economy, sales of agricultural equipment such as
Deere’s 7R Series tractor should remain solid in 2012.
tractor sizes from compact machines
rated 20 hp to the big four-wheel drive
monsters rated above 200 hp. If I
were focused only on big tractors, the
numbers would be stronger for 2011.
Looking at 2012, the first half of
the year is likely to see weak demand
when compared to the strong first-half sales of 2011. I expect to see
negative sales comparisons during
most of the first half of next year. The
second half of the year is extremely
difficult to call because of the pending
national election in November. I am
not expecting any miracles from the
politicians this year or in 2012 so I am
hoping for the best and continuing a
cautious approach to my outlook.
Overall, I expect sales of machinery
in 2012 to be negative when compared
to 2011. For the most part, I am looking for downsides in the range of 8 to
10%, with an upside potential of perhaps 2%. Agricultural equipment sales
will likely be positive. Mining equipment, which is buried in the numbers
for earthmoving machinery, will also
be positive for the year, perhaps up
another 10% over 2011 results.
Production levels in 2012 will fall
in line with sales demand. I am not
expecting big exports for the year over
and above the domestic needs. Dealer
and factory inventories of machines
going into 2012 should be in line with
sales demand, so I do not see any
need to push more inventory into dealers at a time when demand is still weak.
Finally, there is growing concern that
a global economic slowing is occurring
again. Europe, Japan, China, India,
along with North America and parts
of Latin America are market regions
showing signs of economic stress. I
personally do not see the world falling
into another financial meltdown like
we witnessed in late 2008, but higher
inflation rates and real estate bubbles
are finding their way into the various
reports we see from these markets.
Any real slowing from where we were
a few months ago could reduce sales
of machines, reduce economic growth
and short-circuit construction activity to
some degree. These conditions could
ultimately have an impact on machin-
ery exports from North America, par-
ticularly the United States.