Layoffs are seen as the best way to avoid previous downturn mistakes.
By Andrew Joseph, Farms.com; Photo by James_Gabbert/iStock/Getty Images Plus photo
Despite the recent round of industry layoffs by ag equipment mainstays John Deere and CNH Industrial, the Association of Equipment Manufacturers (AEM) remains unconcerned.
According to Curt Blades, the Senior Vice President of the AEM, the layoffs are merely cyclical, and they are looking to avoid past mistakes.
John Deere and CNH Industrial—the parent company of New Holland and Case IH—recently announced layoffs in their production shops.
In an interview with Brownfield, Blades stated that he felt that the manufacturers were doing a good job of anticipating a slowdown in the ag economy over the next year or more.
During the COVID-19 pandemic, many people received money to prop up their homes, including farmers. Many within the ag industry used the “found” money to purchase ag equipment—more often a new tractor rather than the more expensive combine.
But, speaking to the cyclical nature of the ag industry, Blades could have been referring to the fact that, thanks to a recent spate of new equipment purchases, farmers are less likely to purchase any new equipment for a while.
Already seeing a downturn in equipment purchases and not anticipating an immediate industry turnaround, companies like John Deere and CNH Industrial are cutting back now to avoid a bigger loss later. No one wants to have too much inventory sitting in a backlog.