Machinery Chatter
Jim Patrico Progressive Farmer Senior Editor

Monday 04/28/14

Machinery Manufacturers Make Some Noise

Every once in a while we humans feel the need to "toot our own horn," as my mother used to say. We naturally want other people to acknowledge we are doing a good job and are making our mark in the world. Much of the time, Mom warned against this behavior, calling it "boasting." But sometimes, she thought, it is a necessary exercise, especially when important good work is overlooked or taken for granted. Then, a little horn toot is good for both the tooter and the hearer.

Factories like AGCO's combine assembly plant in Hesston, Kan., produce machines that not only help farmers, they help the whole economy. (DTN/The Progressive Farmer photos by Jim Patrico)

That's what the Association of Equipment Manufacturers (AEM) did recently when it released a whitepaper titled, "The Economic Footprint of the Agricultural Equipment Industry." It laid out with impressive numbers the positive impact agriculture and farm equipment manufacturers have had on our country and on the planet as a whole.

Here is a sample: "Over the past century, agricultural production in the United States has increased by more than 500%. At the same time, the workforce share of agricultural employment fell from 30% to less than 2%. That productivity explosion was a key factor in overall U.S. economic growth and development, and agriculture machinery and equipment have been a strong driver behind this progress."

The whitepaper delved deep into the role ever more sophisticated machinery has played in farming's success story and how that has translated into dollars, which the whole economy shares. It noted that in 2011, "Equipment manufacturers generated $15.8 billion in domestic value added (GDP)." And that, "The downstream distribution sector (including transportation) produced $12.3 billion of value added. Upstream supply activities for both the agricultural equipment manufacturing and distribution generated roughly another $22.8 billion in domestic value."

The bottom line for farmers, of course, is they benefit directly from better ag equipment.

The total amount the ag equipment industry directly and indirectly contributed to GDP was $51.0 billion, during that time frame. Manufacturing jobs in the sector numbered about 78,000 and wholesaling jobs were at 96,000. These are good-paying jobs that brought a multiplier effect to their communities.

The ag equipment industry makes up only 0.34% of the U.S. entire economy. But as the rest of the nation struggled with effects of the Great Recession, the ag machinery sector was a bright spot that remained strong and expanded shipments by more than 31% and contributed 2.1% of total GDP growth in 2011.

AEM's whitepaper contains some great factoids. For instance, 30% of ag equipment manufacturing is clustered in three contiguous states: Iowa, Wisconsin and Illinois. And this nugget: "In the 1930s a farmer could harvest an average of 100 bushels of corn by hand in a nine-hour day. Combines produced today can harvest 900 bushels of corn per hour, or 100 bushels of corn in under seven minutes."

As in any industry, research and development is the engine that drives the train forward. "Agricultural machinery manufacturers typically spend 2 to 4% of their sales on R&D," AEM's whitepaper says. "In 2010, world-wide R&D by farm machinery manufacturers was $2.2 billion, half of which ($1.1 billion) was conducted in the U.S."

In a nod to key government assistance in this area, the report notes, "In 2011, the U.S. public sector spent $5 billion, and the private sector invested another $5 billion on research and development in agricultural R&D."

Half of the R&D money that produces advances in farm machinery comes from government? Mom would say: Now there's a horn that probably doesn't get tooted much by the slash-and-burn budget cutters in Congress.


Posted at 12:58PM CDT 04/28/14 by Jim Patrico
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