Los Angeles, CA (PRWEB) March 30, 2013
The Tractors and Agricultural Machinery Manufacturing industry benefits from the essential nature of agricultural equipment, such as tractors and combines, to modern-day farming operations. Nevertheless, the industry faced significant challenges over the past five years. “When farmers delayed new equipment purchases amid tough domestic and global economic conditions, demand for big-ticket items like large tractors plummeted,” says IBISWorld industry analyst Kevin Boyland. “However, the industry has since emerged from its 2010 lows, driven by global farm demand.” In 2013, revenue is expected to increase 6.1% to $3.4 billion. This strong recovery has served to offset recessionary declines. As a result, IBISWorld expects revenue to rise at a modest annualized rate of 0.9% over the five years to 2013.
Amid a tough economic environment, Tractors and Agricultural Machinery Manufacturing industry firms sought to protect their margins by streamlining their operations. Nonessential employees were laid off, causing the size of the industry's workforce to decrease at an annualized rate of 1.7% to 11,553 over the five-year period. “Wages declined 3.6% per year on average as well, as remaining industry employees worked fewer hours to fill fewer orders,” adds Boyland. “These measures served to protect and even grow margins.” Average industry profit accounts for a greater share of revenue in 2013 than in 2008. The industry exhibits a moderate level of concentration. A high level of research and development, large economies of scale, extensive dealer networks and longstanding reputations make it difficult for new players to compete with the major operators, Deere & Company and CNH Global. Moreover, the industry's heavy reliance on exports, particularly to the United States, has naturally led large, well-established US operators to set up shop in Canada. IBISWorld expects mergers and acquisitions to increase industry concentration through the coming five years.
International trade is the lifeblood of the industry. Indeed, exports account for 65.2% of revenue, while imports satisfy 82.3% of domestic demand. The United States accounts for 73.8% of all exports and 74.4% of all imports. The industry's major players all have operations in both the United States and Canada and routinely move merchandise back and forth. This, along with a shared border and the North American Free Trade Agreement, accounts for the United States' prominence in industry trade. However, rising agricultural investment in newly industrialized countries (e.g. Brazil, India) is expected to increase exports to these emerging economies moving forward.
Over the next five years, improving economic conditions worldwide and larger downstream farming operations will stimulate demand for industry machinery, both abroad and domestically. Strong global demand for food and biofuels, rising productivity and strong export growth will drive demand for new machinery and equipment. For more information, visit IBISWorld’s Tractors and Agricultural Machinery Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures agricultural machinery and equipment and powered home lawn and garden equipment. Agricultural equipment includes tractors, harvesting and seeding machinery and other machinery, such as grinders, mixers, wool presses and windmills.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.