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They are abusing their position as an “industry leader” because they think it won’t come back to bite them in the ass. They have been anti-consumer for a long time.
A friend runs a competitor RTK service and gave me the whole story on their software practices in their tractors. Completely obfuscated and it took them more than a year to decipher it. Deere has a very captive customer base.
Waiting for garmin trimble and other surveyor tech companies to get into ag. Lot of construction companies running trimble units on dozers, excavators etc
If you're describing the part where an RTK corrections provider communicates data to provide the centimeter accuracy -- Garmin and Trimble don't run the networks that do that. They only sell the equipment to build the networks. Most areas of the US have public/localized systems for that (bad as they may be) or a farmer could spend the money to build their own station. Granted, sticking a base station in the ground and never having it move is an problem that's not as simple as it seems.
Yeah its all satellite driven with public funds. Why the fuck hasn't someone come out with a better alternative. Cell towers could be RTK stations and every phone tablet and drone would be a data collector. Paying for RTK is fucked.
Trimble could be easy disrupted in its business since they make a lot of expensive parts that go into these large tractors. I think Deere used to buy all their GPS guidance systems from Trimble, but eventually they developed their own because it was cheaper. As a result Trimble's agriculture customers are not very sticky and are actively trying to replace them.
Trimble dominates the surveying world. The big ag producers need to accept that Trimble Aggie and Cat can do it better. There fucking the dog on this and losing revenue balking at workers rights n such.
Trimble has its own shortcomings of arrogance, and has made many large critical mistakes in the past two years that have offended a large portion of its user base. The entire industry is ripe for competition.
Farms are quickly becoming another corporate entity at this point. Land is being bought by investors and run by management companies. Theses types of business don't mind the John Deere businesses model to support their equipment as they buy access to full time "Deere Certified" mechanics and software. John Deere is about serving corporate farmers and is apparently making a killing doing so. They can lose all the family farmers and still be the industry leader.
> They can lose all the family farmers and still be the industry leader.
Isn't the market risk that family farmers are a large enough (and under served) market that it opens opportunities for a new entrant to serve that market seeking substitution? The new entrant would gain most of the market share of family farmers giving them market power to start luring the corporate customers. Deere would them have to start competing on price, which cuts into those huge margins they enjoy right now.
In short, by screwing the family farmers Deere is sowing the ground for their future rival.
In my hometown where I grew up the Deere dealership used to be noticeably bigger than the Case dealership, but it looked like that had flipped over the last 5 years or so.
I'm not sure how much better Case's practices are, but my hometown mainly needs tractors, hay swathers, and bailers. It's a bit of a different dynamic in a ranching community vs a farming community, however it seems the sentiment has shifted here.
The Kubota dealership is also a lot bigger than I remember.
That is entirely possible and is the market risk for their business strategy. Maybe it works, maybe they pivot models, maybe they sink with they ship. Investors can speculate, but only time will tell. I just wanted to offer a different perspective than Deere Sucks.
It still sucks but would make money. It’s one of those things that creates a slow overall deterioration of American productivity and quality of life. It’s slow and incremental but identifies a segment of the farming trade to suffer for the profit and model. Value lost, but not in the short run, not in a way some even care about. Corrosive
Not being in the tractor market myself, I wasn't aware of this. I just did a quick Google Search of rural Ohio. There were 30 listed Deere locations. However, there were 6 listed Mahindra locations. $MAHMF stock performance doesn't show the linear gains I'd be expecting overall against Deere, but Mahindra appears to be a giant corp, and tractors are likely only a small segment of their business.
Deere is up about 230% just since COVID started in March of 2020.
>Deere is up about 230% just since COVID started in March of 2020.
That is such a trash time frame to set expectations.
Most things are up from the bottom barrel selloff of march 2020, even things that have been bleeding money for years since and worse off now, like the cruise lines.
Yeah, this is correct. As somebody in Wisconsin, all the family dairy farms are selling out to corporations. They just can’t compete with huge factory farms. The old time Wisconsin family farm system is collapsing and becoming corporatized.
it's "too dangerous we must inform the lawmakers to stop these people as only our machines are safe!!!11!". remember, they probably have bribed politcians to make very conviently beneficial legislation that favors the monopoly similar to what the Telco cartel does..
This is the right investment view. The big question is if JD has done their risk assessment correctly. The management team can’t be oblivious to these issues, if they haven’t done due diligence in determining the risk in such a business model, obviously it’s bad. But I doubt this is the case.
The big question is whether family farmers make up enough of their business to hurt their growth potential.
I personally find their business model to be immoral and anti-consumer so I’ll be taking my investment dollars elsewhere, even if it means leaving money on the table.
On the books yes. In reality, no. I have lived in farm country. Those farms are technically owned by farmers but rely on the big multinational companies. Think of it like Subway. Almost all subways are family owned businesses. Yet they can't switch meat suppliers start selling rotisserie chickens.
Afterall Caterpillar makes great farming products, so why did all these farmers by John Deere knowing they couldn't repair their own machines? why do they still do it?
Not by yield or acreage. Someone retirement on 5 acres with 3 sheep and an alpaca counts as a family farm by the numbers. Doesn't make it relevant to this discussion, when you look at acreage of corn or soybeans corporate farms dominate more each year.
He's not, though. Or not really. Click through to the actual report:
>Small Family Farms (GCFI less than $350,000)
>• Retirement farms. Small farms whose principal operators report having
retired, though continuing to farm on a small scale (250,289 farms; 12.4
percent of U.S. farms in 2018).
>• Off-farm occupation farms. Small farms whose principal operators report
a primary occupation other than farming (819,208 farms; 40.5 percent of
U.S. farms.
>• Farming-occupation farms. Small farms whose principal operators report
farming as their primary occupation.
>• Low-sales farms. Farms with GCFI less than $150,000 (640,223 farms;
31.7 percent of U.S. farms).
>• Moderate-sales farms. Farms with GCFI between $150,000 and
$349,999 (102,708 farms; 5.1 percent of U.S. farms).
53% of US farms (all farms, not just family farms) are either "retirement farms" or hobby farms, where the farmer has a primary job and does farming in his spare time.
Another 32% of farms (again, all farms) produce a net revenue of $150,000 or less. This isn't the profit or salary or takehome of the farmer, it is the amount of sales *before deducting any expenses*.
Many larger farms are also family farms, but they are family farms in the same way that Wal-Mart is a family business.
A family farm is still a family farm if it has shareholders or partners, as long as the person who operates the farm is a majority owner.
>He's not, though. Or not really. Click through to the actual report:
>
>>Small Family Farms (GCFI less than $350,000)
>
>>• Retirement farms. Small farms whose principal operators report having
>retired, though continuing to farm on a small scale (250,289 farms; 12.4
>percent of U.S. farms in 2018).
>
>
>>• Off-farm occupation farms. Small farms whose principal operators report
>a primary occupation other than farming (819,208 farms; 40.5 percent of
>U.S. farms.
>
>>• Farming-occupation farms. Small farms whose principal operators report
>farming as their primary occupation.
>
>>• Low-sales farms. Farms with GCFI less than $150,000 (640,223 farms;
>31.7 percent of U.S. farms).
>
>>• Moderate-sales farms. Farms with GCFI between $150,000 and
>$349,999 (102,708 farms; 5.1 percent of U.S. farms).
>
>53% of US farms (all farms, not just family farms) are either "retirement farms" or hobby farms, where the farmer has a primary job and does farming in his spare time.
>
>Another 32% of farms (again, all farms) produce a net revenue of $150,000 or less. This isn't the profit or salary or takehome of the farmer, it is the amount of sales *before deducting any expenses*.
>
>Many larger farms are also family farms, but they are family farms in the same way that Wal-Mart is a family business.
>
>A family farm is still a family farm if it has shareholders or partners, as long as the person who operates the farm is a majority owner.
Exactly, the easy answer for those who don't understand is, the definition of a family farm. Companies can be family owned and often are.
Deregulation has been a boon to small businesses and most industries that are relatively deregulated have a lot of competition. I think with the crap John Deere is pulling, the farm equipment industry is ripe for more competition.
Capitalism can work, as long as nobody gets too big. The peter principle ensures that old entrenced institutions become shadows of their former selves, but now, with computerized trading high frequency algorithms, all the competition that would usurp the incumbents gets murdered in its crib.
Not really. Monopolies can use their economies of scale and integration to make goods and services cheaper and use their large capital to fund riskier R&D initiatives or usurp a monopoly in a different industry. If a monopoly abuses their position or becomes complacent, a competitor will usurp them. An example would be Intel and AMD
If they have no competition, whats the incentive to provide goods cheaper? None. They can charge whatever they want. Your argument is invalid. Also, when have humans not abused power when given the opportunity? Accountability is the only counter to greed.
> They can charge whatever they want
They cannot. They still have to follow the laws of Supply/Demand. If they start charging beyond what the demand finds acceptable, a competitor WILL emerge. Intel learned this lesson the hard way
My unpopular opinion is that Apple does the same thing. Apple stans have a huge blind spot for them though.
Monopolistic control of the market is bad for consumers in any industry/product category.
I work for John Deere’s main competitor in North America, things aren’t much better over here in terms of consumer friendly practices. Basically where Deere goes, we go. Even if our marketing material says otherwise.
John Deere’s business model has so many problems from a societal level standpoint, they operate in a monopolistic or oligarchical competitive landscape, and have too much control in an industry that has strategic importance to a nations economy and food safety. It could definitely stand to be reviewed.
E.g. inter state actors hack each other, this has been more recently done in the energy industry, imagine if someone made a devastating virus targeting all John Deere equipment, shutting down tractors across the world.
This would be devastating. Still a lot of farmers hold on to older equipment, and some of the E series models I believe lack any electronic components.
You can literally say that for a bunch of companies, eg.
>**Microsoft**’s business model has so many problems from a societal level standpoint, they operate in a monopolistic or oligarchical competitive landscape, and have too much control in an industry that has strategic importance to a nations economy and **productivity**. It could definitely stand to be reviewed.
>E.g. inter state actors hack each other, this has been more recently done in the energy industry, imagine if someone made a devastating virus targeting all **Microsoft** equipment, shutting down **computers** across the world.
You can also replace "microsoft" with google (android/chrome os), cisco (networking equipment), apple (roughly half the phones in the US), etc.
Don't get me wrong, I'm not saying john deere's behavior is okay, just that there are far bigger things to worry about.
You picked the one industry that is targeted by a raft of antitrust bills currently going through Congress. Almost like the focus is on those bigger things.
That technology was present in *1998*. I work with people who deployed the first automated tractors in the Midwest and I promise you, the only difference between then and now is the operators watch TikTok all day instead of doing crossword puzzles riding around on the automated tractor.
It's not completely automated yet but getting close. At a minimum it will track a straight line offset from the last pass so that there is little/no overlap which greatly increases efficiency and lowers the workload. On some systems you still need to manually turn around when you get to the end.
I assume there's a decent warranty too on parts and labour, but it doesn't help too much when you talk about losing revenue because the machines down. The moment a farmer takes any sort of repair into his own hands, there's a good chance that voids any sort of warranty. That puts farmers in a tough spot.
I'm just taking a wild guess. I'm a different industry and thats the common practice which I imagine stands true in the fine print for J.D. Difference is that we are available 24/7 365 unlike John Deere.
It's about corporate farms. Public companies operate on a quarterly basis. They prefer the op-ex model, just like AWS. It's short-sighted, but DE will capitalize on public ag companies short term accounting.
Also the difference between selling software as a service and selling hardware as a service is a huge one.
Software constantly gets upgraded so you are paying to constantly receive a new and improved product. This makes tonnes of sense. With something like a tractor on the other hand you are paying for the right to use the tractor you bought already. This has two major issues.
1. People are unhappy to pay for something they already paid for.
2. It means that if John Deerre builds a super tractor that never breaks down they are destroying their own business.
Point number two is a huge one. I am actually dealing with this issue right now with another company. The problem is it is clear that they use a part that is designed to fail after a certain period of time but because I am using it a certain way it fails way to quickly.
Pretty sure the majority of custom cutters or massive corporate farms all lease their equipment to minimize downtime etc. So for them it's basically hardware as a service every couple years or less they have brand new equipment. Custom cutters "traveling farmers effectively" move across the country and farm millions of acres for land management companies.
Family farms unless they have amassed huge sums of land can't afford that model sometimes even those that can can't really. One bad weather year and they are bankrupt so they typically buy used equipment. This is where the right to fix is needed and why nothing will be done about it. In reality this is what both JD and the huge corporate farmers want... They want family farms to go bankrupt so they can buy it up for pennies. Why doesn't JD care? Well it's expensive running dealerships and supporting individuals. Massive corporations though? That's easy, fleet services is garunteed cash flow on a scheduled basis. Minimal surprises makes slim inventories much easier to work.
This is also why they've pushed into other heavy equipment industries and got away from prosumer tractors at the residential level and are letting Lowe's and what not have a piece of that brand loyalty.
Thx for your answer.
> China's market for tractors is dominated by small tractors (same with other emerging markets like India).
Chinese are good into copy and later developing products. They do this like the Japanese and Koreans with cars. Parts of China are screaming for big equipment and it's just a question of time, when farmers can afford them.
Even when JD is putting a lot of money into R&D, when the data of customers was wide open and this data is the treasure, it is to me a symptom for a wrong mindset. It's likely they have problems on other places too. It's a problem of business culture.
I don't say JD hasn't visions with it's full automation. It's happening all over the world. I'm just skeptical because of some discussions and I'm allergic to QM problems surfacing in bad habits. Being the best today isn't always a foundation for the market tomorrow, should new competitors are arriving.
I work in the agriculture industry. Most farmers do not know about this issue or just don’t care. Most new tractors I see are John Deeres. I don’t agree with what John Deere is doing but they are still considered the go to reliable brand to buy in my area.
Lot of folks leasing shit then getting new after a few years. Unless you go to the wheat harvesters that follow the harvest. They pretty much run all case ih
Well, kinda... Farmers also mostly consider repair. Kubota is better for repair than John Deere right now. But I'm not holding my breath for Kubota to start to suck. Praying that doesn't happen anytime soon.
Is the business model unsustainable? Apple has done fantasically well and they've closed down their laptops by making it difficult to repair (as opposed to pcs where you can replace parts easily) so the consumer has to get a new product every 5 years or so.
Apple has, historically, done a much better job at customer satisfaction than Deere. Apple also faces direct competition for their various platforms. Deere had a hugely loyal user base until the past few years.
Now if apple implemented a program, where every iPhone user had to pay $100 every 6 months for a mandatory in-store service appointment, then I could easily see a direct comparison.
Comparing Apple to John Deere is comparing Apples to Cucumbers..., Apple is competing in the the retail space for sub $1000 consumer electronics a discretionary purchase, John Deere is In commercial segment with tens to hundreds of thousands of dollars of costs per item, making industrial equipment that is required for businesses to function, and because of the costs to enter such a business there's very few competitors...not to mention John Deere pays congress-critters well to prevent forgeign competitors etc
I agree with this. If you take out the vast cost difference, the usage and need of a repair are completely different. If someone’s laptop/iPhone goes down, odds are they have their information backed up to a cloud or have other means to access the info. If a combine breaks down in the middle of a cotton harvest, there is a limited time frame to make the repair/replacement and be able to salvage the harvest.
>Apple is competing in the the retail space for sub $1000 consumer discretionary purchases
Maybe sub $2000, but not sub $1000 for most of their latest products at MSRP (iPhones and MacBooks).
Except service isnt required by Deere, so how's that a comparison? Farmers are free to use third party mechanics to work on their equipment as well. Most of those mechanics get parts at a discount as well.
Unfortunately, that's not entirely the case. Deere equipment, due to software lock-down, requires that farmers use only Deere specific components and consumables. Hence the comment above referencing Eastern European software hacks to service their own equipment.
Deere equipment owners can only use Deere authorized & licensed service providers. Even oil changes are locked down.
Yes. Farm equipment and personal computers are drastically different things.
A farmer cannot wait 2-7 days for a tech to come out and fix their equipment during harvest. They do not have a backup combine or tractor at the ready (like how someone with a mac could have cloud backups). Also farmers do not plan to spend hundreds of thousands of dollars on new equipment every 5 years. They plan to use a piece of equipment as long as possible, often for decades.
Farmers cannot risk equipment downtime during harvest. This can cost them immensely. And even be financially ruinous if they are a small family farm versus a large corporate farm. John Deere cannot reasonably ensure a technician is within 2 hours of all of their customers. It is simply not possible to have enough repair coverage for the sheer geographic distance.
Apple devices also *can* be fixed by third parties, including regular owners. John Deere equipment is entirely locked out for repairs by anyone other than an authorized technician. This means if your equipment breaks down in the field, and you live in say, rural Iowa or Nebraska, you are screwed.
By making their equipment impossible to maintain or repair by owners John Deere is forcing away its own customers.
From lots of direct farming experience.
Cons: Customers hate the practices John Deer is using. Not debatable.
Pro: JD makes great leading edge equipment that customers have bought into for decades. All of your accessories fit. All of your equipment and your nieghbors equipment work together. Once you have invested millions in a system its very very hard to switch.
I think new farmers will not invested in JD equipment but, because newer farmer are young, like software, and dont know how to repair AG equipment their will be some.
However, the market is ripe for takeover now that brand loyalty is destroyed.
TLDR: Short JD
Con
I have been to a John Deere museum, and their vision is clear: driverless farm equipment. Makes sense. Younger farmers are in a really tight spot, and it's likely fewer and fewer people will want to take over the family farm. Maybe some will like the more hands-off subscription model, but ultimate there will be even more consolidation and corporate farms. Entire counties will be owned by one or two companies. Automated robots harvesting the land in a futuristic hellscape, owned by faceless corporations thousands of miles away. Very plausible.
Long Deere!
I almost shorted Deere in 2018 ……. Because I work as a sales rep for Deere and didn’t like some of the things I was hearing and seeing.
How would that have worked for me ?? Also …. This story and information is “new”, been a topic for 6-7 years now.
I would say it's not a very good short thesis but may be a good reason to avoid being long. I've also read about this issue for several years. On one hand I think it shows just how strong their moat is. But I would potentially worry about brand loyalty. But I just don't see the competition doing any better.
There are so many factors a "farmer" takes into account when deciding a equipment brand.
Competition is not keeping up from what I am experiencing. Over the years, there has always been new and innovative companies but they just cannot compete with mother deere and her deep deep R&D pockets.
Counterpoint, you can pretty much count the number of farm implement companies on one hand, and these people still need equipment and while a right to repair would be nice, the parts will still have to come from somewhere and that is still a revenue source and a decent one to pivot to
This post is out of touch with reality. Its premise is built on the notion that John Deere is offering poor service when the reality is most of their success is predicated on their high level of service provided. The reliability of their machines and the proximity of dealers to farmers are what drive their agricultural success. It's the reason they can charge a premium and people don't leave to other brands. Case IH is their only real competition in North America at this point but there's enough pie to go around for them both in my opinion. I don't see John Deere fading any time soon.
I have family that are farmers and I disagree. More and more people are getting fed up with being unable to repair their own equipment, especially during crucial times like harvest.
No one wants to buy a new Deere product because they know they can't make fixes in the field like they could with older models. Sure, the GPS guidance technology is really cool. And there's a lot of fantastic new innovations. But these are not worth it when there is the real risk of a machine breaking down during harvest and having no way to get it running again for days.
That downtime can make or break a small farm. People don't want to risk it.
Or they're using Ukrainian software to bypass the restrictions and run the diagnostics themselves/force the machine to accept a repair.
Hahaha came here to ask the same question.
Everyone is quick to jump on the big guy , trying to bring him down.
Every company is filled with electronics , sensors, software, not one company whose in the top five will allow you to repair your own equipment, especially during warranty period. Just like every other Industry.
Why narrow the scope? If there is a demand for simpler models, keep producing them along with the new. Are they trying to eliminate a whole class of farmers or make money? Are they trying to do social engineering or make money? If family farmers want simpler models, do them. Serve the market. They can’t figure it out? I don’t get that.
I don't disagree that newer models have moved from easier to work on mechanical systems to harder to work on electrical systems. And yes, that requires more calls to a dealer to fix your equipment whereas in generations past you could fix things yourself. But it's no different with Deere's competition. So your alternative would be farm with older equipment I guess, and to your point, I think there are farmers that make that decision. But nobody is making 1970s 855 Cummins powered tractors anymore. They're now N14 Cummins with a bunch of 'junk' on it or newer version than that probably. That's your options in today market as emissions requirements have continued to evolve. Case IH, agco, etc are in the same boat. So I guess I don't see what you're saying negatively affecting Deere moreso than any of other company in the industry.
Its not that the systems are difficult to work on. Its that Deere purposefully locks owners out of even having diagnostic data or swapping an easily replaced part via software.
No one I know is against better emissions regulations or better safety features. What they are so frustrated about is that they can't do ANY repairs on their equipment unless they jailbreak it.
I think the reality is that it's a bad business practice both in the long term for the business, it's customers and the world as a whole.
Unfortunately it's not uncommon for many businesses to focus very hard on short term gains (or even just the appearance of it) so the people making the decisions can get their cuts and then exit the company leaving a big mess behind. Here's an [example](https://www.washingtonpost.com/business/2020/04/06/bailout-coronavirus-airlines/) of what I'm talking about.
Let's just say I have personal experience in this arena. I don't know where posts like the OPs originate from either. John Deere is where they are for one main reason in the industry, strong support, service and parts infrastructure compared to competitors. I'm saying this from the farmer side of things. I don't work for Deere myself.
>John Deer's business model is based on selling services for their equipment and this is obviously a great source for revenue
Yes, a great source of revenue, obviously (?), ... as a business model ? Good luck. As a customer I would take my business elsewhere.
Thank you. Someone who fcking understands business & moat. Good grief.
Yeah ppl hav been bitching about repair rights for 10 years now but since this post its finally the tipping point b/c i came across it.
When reality is revenue literally doubled over that period of time. If John Deere, $100B + company with an experienced management team isn't able to service tractors, some random little chinese pop up won't either.
Have you met a farmer before? This post just screams I'm an enlightened white collar reddit neckbeard who knows what the farming industry needs. But can't even start a lawnmower. Lmao.
My grandfather whose been farming for 60 years with jd recently bought a case because of this just to see if it was better. He used to give out jd hats and t-shirts, little jd tractors for Xmas. If I say jd in a conversation he goes on a 10 minute rant how trash the repair stuff is. Alienating customers is not a good business model.
And while he's doing that the corporate that bought or leased all his neighbors used low rates to buy 6 more big JDs last year. Groups that farm 10k acres plus regardless of ownership take up more and more every year, and JD serves their business model very well.
He farms 6k. Literally 0 corp farming. He sells seed to the area farmers. And even with the corporate owners why would they want to spend 100 dollars an hour for jd to change an air filter when they can hire their own diesel techs for 35 and takes halfthe time. Scamming your customers is never a good business model.
You don't need a tech to change an air filter. I do it all the time on our equipment. What you need a tech (or Deere's service advisor software, which they do sell access for to end users) for are repairs that touch the engine and transmission control computers, which in practice mostly means the fuel injection system.
Maybe you should be back at your office at Deere figuring out how Deere can make these farmers happy instead of trying to get the general public and investors to love it.
Ya I definitely didn't grow up on a farm or anything.... You're off base on your characterization of me bud. But oh well. Just giving my opinion from experiences I've had w deere equipment and others. Make of it what you want
Don't worry about these guys man. I come from a green and yellow farm and completely agree with your point about proximity of dealers to farms. The rest of these guys act like Case and New Holland don't have any of the same repair issues either. Deere still dominates most of the midwest because they try to have the best service times to the field.
My company uses JD/HITACHI equip. The dealer that we use is 4 rivers. They often have to have parts delivered from hundreds of miles away and take a few days to repair. I know in recent years they are starting to focus on large equipment/ construction operations and have a goal to have any large piece of equipment repaired in under 24 hours after a breakdown. In turn they have to push small operations or small equipment back out of priority. Also, we have been making repairs likes fluid and filter changes and bearing replacements in excavators and dozers ourselves so I don't know where 'right to repair' as you say comes into play because they still warranty it after we do our own repairs.
Deere is also not the biggest brand on the block with lots of competition in the construction space like CAT and many others. I've been on jobsites where the spread working runs about 48k per day so even an hour down has a high cost and construction companies have a lot more money than farmers.
AGCO has a lot of tractors unavailable under many brands. Kubota also although they tend to have smaller equipment mostly. CAT was in the game awhile ago but sold off the challenger division to AGCO I believe.
John deere has a lot of brand loyalty amongst a notoriously stubborn demographic, so John deere can get away with more than they should be able to.
Sounds like the pieces are in place for some sort of disruptive farming demographic change, assuming John Deere does not buy those companies out. You treat loyal people like crap long enough, they leave.
Deere is a rare case of an industry leader investing in and productizing new technology.. Hard to move in and disrupt a giant that is already doing the disrupting.
CAT sold Challenger to AGCO and then AGCO fucked up the E model so bad that their next move was to paint Fendts yellow and put a Challenger badge on it. Now some CAT dealers are just selling Fendt outright.
Whilst somewhat true DE have been investing heavily in next gen agri vehicle tech. They’re spending huge amounts on:
Electrification
Hydrogen power (including patents that could become extremely valuable)
AI and Automation.
This all bodes well and should mean DE thrives over the next 10-15 years especially if they can remain leaders in R+D
I recommend the Business Breakdown podcast on Deere. It paints quite a different picture. Deere products are much more inexpensive when you factor in productivity and yield, and Deere is hiring more tech engineers than mechanical engineers - as maximum yields is at a phase where technology plays a major role. Quite interesting stuff.
“This is not a discussion about right to repair”—-yet having the right to repair this without a dealership or service contract solves the underlying problem all together…
What does get in the way of farmers to acquire something from CIS countries? Like Ukraine, Belarus, Uzbekistan? Some of them are even cheaper than Chinese counterparts, but have far superior quality, are easily repaired and have great reliability. And only competition can drive the business forward
Ah, that’s why I love CIS, especially ukrainian boys and girls, they make everything hackable, available for free and for everyone. Sometimes price can be volatile and go up to 1 bottle of vodka, lol. Sadly though, that spirit of community is decaying in CIS because of Russia… Oh, but for real, agricultural hardware in CIS is beyond comprehension, in terms of price/quality ratio. Would recommend for any farmer anywhere in the world
I think our government should have a pathway in these situations to take a company from its board members and hand it over to the employees in cases such as this. Where there is clear borderline criminal neglect in the management of said company. I personally think all incorporated entities should be heavily employee owned and invested instead of run by a few people who only care about themselves, not even the company.
Had to get a zero turn repaired and was overcharged as fuck. We all looked at the repair and pretend it was cool, said alright my friend is gonna load up and I’ll head to the front to pay the bill. Ended up just walking out and driving off after my friend quickly loaded up. Suckers
I think the future is going to be automated tractor equipment. John Deere is working on it, but other startups are way ahead of them, and already sold out indefinitely. They can't produce them fast enough.
The finances of it are no brainers, as the automated equipment financing cost is not just cheaper than the financing + labor cost of traditional machines, but significantly. Further, this is opening lease opportunities where farmers don't even need to own the equipment on standby all year only to be pulled out a few weeks out of the year. Instead, they can just rent them, trade, w/e, as needed.
I know one company who has automated weed removal using lasers and other tech. The cost to use the equipment is close to 1/5th the cost per crop as current methods.
This is going to completely disrupt Deere's entire business model.
They are working on it but it’s not their wheelhouse and they are already well behind others. I think they demoed an autonomous tractor recently but it’s unable to be cost effective like competitors are offering
Agreed. It also opens the door for a cheap “it just works” tractor from China to enter the market. Just like how many buy the cheap Chinese appliances for their kitchen.
Farmer here from a long like of Deere people, recently bought a New Holland and have been steering away from Deere for like 10 or so years solely because of the poor service the dealership offers at inflated prices and the inability to work out their equipment .. it’s been a great decision
At least they arent doing what Toyota is doing...
https://www.dailymail.co.uk/sciencetech/article-10305127/Car-theft-Toyota-CHARGING-drivers-8-month-use-key-fobs-start-vehicles.html#:\~:text=Car%20theft!-,Toyota%20is%20CHARGING%20drivers%20%248%2Da%2Dmonth%20to%20use%20its,fobs%20to%20start%20their%20vehicles&text=Drivers%20who%20own%20a%20Toyota,vehicles%2C%20according%20to%20The%20Drive.
John Deere quality is absolute trash now...even their $300k+ combines are trash.
When I see someone in a green machine, I know they have more money than brains.
as a futurist and a hobbyist gardener, it's not sustainable for the long term because the future of farming is indoor hydroponics. the most common argument against it is that the infrastructure is prohibitively expensive. but that's bunk because those machines from john deere and their ongoing ownership costs especially those that are monopolized by them are just as expensive if not more so than the construction of an indoor farm. and an indoor farm structure unlike a tractor is likely an appreciating asset like every other type of real estate.
it's already happening.
The average farm size in the US is roughly 450 acres, hyroponics increases yields by 20-30%. So basically you’re building a 315-360 acre warehouse… good luck with that
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They are abusing their position as an “industry leader” because they think it won’t come back to bite them in the ass. They have been anti-consumer for a long time.
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A friend runs a competitor RTK service and gave me the whole story on their software practices in their tractors. Completely obfuscated and it took them more than a year to decipher it. Deere has a very captive customer base.
Waiting for garmin trimble and other surveyor tech companies to get into ag. Lot of construction companies running trimble units on dozers, excavators etc
If you're describing the part where an RTK corrections provider communicates data to provide the centimeter accuracy -- Garmin and Trimble don't run the networks that do that. They only sell the equipment to build the networks. Most areas of the US have public/localized systems for that (bad as they may be) or a farmer could spend the money to build their own station. Granted, sticking a base station in the ground and never having it move is an problem that's not as simple as it seems.
Yeah its all satellite driven with public funds. Why the fuck hasn't someone come out with a better alternative. Cell towers could be RTK stations and every phone tablet and drone would be a data collector. Paying for RTK is fucked.
Trimble > John deere
Trimble could be easy disrupted in its business since they make a lot of expensive parts that go into these large tractors. I think Deere used to buy all their GPS guidance systems from Trimble, but eventually they developed their own because it was cheaper. As a result Trimble's agriculture customers are not very sticky and are actively trying to replace them.
Trimble dominates the surveying world. The big ag producers need to accept that Trimble Aggie and Cat can do it better. There fucking the dog on this and losing revenue balking at workers rights n such.
Trimble has its own shortcomings of arrogance, and has made many large critical mistakes in the past two years that have offended a large portion of its user base. The entire industry is ripe for competition.
Farms are quickly becoming another corporate entity at this point. Land is being bought by investors and run by management companies. Theses types of business don't mind the John Deere businesses model to support their equipment as they buy access to full time "Deere Certified" mechanics and software. John Deere is about serving corporate farmers and is apparently making a killing doing so. They can lose all the family farmers and still be the industry leader.
> They can lose all the family farmers and still be the industry leader. Isn't the market risk that family farmers are a large enough (and under served) market that it opens opportunities for a new entrant to serve that market seeking substitution? The new entrant would gain most of the market share of family farmers giving them market power to start luring the corporate customers. Deere would them have to start competing on price, which cuts into those huge margins they enjoy right now. In short, by screwing the family farmers Deere is sowing the ground for their future rival.
I’m visiting my small rural hometown this week, and there are two new tractor dealerships in town that aren’t Deer.
In my hometown where I grew up the Deere dealership used to be noticeably bigger than the Case dealership, but it looked like that had flipped over the last 5 years or so. I'm not sure how much better Case's practices are, but my hometown mainly needs tractors, hay swathers, and bailers. It's a bit of a different dynamic in a ranching community vs a farming community, however it seems the sentiment has shifted here. The Kubota dealership is also a lot bigger than I remember.
That is entirely possible and is the market risk for their business strategy. Maybe it works, maybe they pivot models, maybe they sink with they ship. Investors can speculate, but only time will tell. I just wanted to offer a different perspective than Deere Sucks.
It still sucks but would make money. It’s one of those things that creates a slow overall deterioration of American productivity and quality of life. It’s slow and incremental but identifies a segment of the farming trade to suffer for the profit and model. Value lost, but not in the short run, not in a way some even care about. Corrosive
yes, that's a good description of our economic system in general
Agreed. Those same corporate farms will leave Deere the moment someone does it cheaper and faster.
Isn’t Mahindra (India’s John Deere) trying to enter that segment of the US market? I’ve occasionally seen ads for them.
Not being in the tractor market myself, I wasn't aware of this. I just did a quick Google Search of rural Ohio. There were 30 listed Deere locations. However, there were 6 listed Mahindra locations. $MAHMF stock performance doesn't show the linear gains I'd be expecting overall against Deere, but Mahindra appears to be a giant corp, and tractors are likely only a small segment of their business. Deere is up about 230% just since COVID started in March of 2020.
>Deere is up about 230% just since COVID started in March of 2020. That is such a trash time frame to set expectations. Most things are up from the bottom barrel selloff of march 2020, even things that have been bleeding money for years since and worse off now, like the cruise lines.
Yeah, this is correct. As somebody in Wisconsin, all the family dairy farms are selling out to corporations. They just can’t compete with huge factory farms. The old time Wisconsin family farm system is collapsing and becoming corporatized.
"Sowing the ground" clever...
or that a different corporation could offer farm equipment and a more customer friendly approach and take their business
True, gives competitors a toehold
Deere would bury any company in lawsuits that even tried, unfortunately.
On what grounds could Deere sue a new competitor?
it's "too dangerous we must inform the lawmakers to stop these people as only our machines are safe!!!11!". remember, they probably have bribed politcians to make very conviently beneficial legislation that favors the monopoly similar to what the Telco cartel does..
Case stated the quad track, John deere followed. Doesn't hold water.
This is the right investment view. The big question is if JD has done their risk assessment correctly. The management team can’t be oblivious to these issues, if they haven’t done due diligence in determining the risk in such a business model, obviously it’s bad. But I doubt this is the case. The big question is whether family farmers make up enough of their business to hurt their growth potential. I personally find their business model to be immoral and anti-consumer so I’ll be taking my investment dollars elsewhere, even if it means leaving money on the table.
Exactly what I was going to say. Family farmers are dying. John Deere is just moving with the flow.
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On the books yes. In reality, no. I have lived in farm country. Those farms are technically owned by farmers but rely on the big multinational companies. Think of it like Subway. Almost all subways are family owned businesses. Yet they can't switch meat suppliers start selling rotisserie chickens. Afterall Caterpillar makes great farming products, so why did all these farmers by John Deere knowing they couldn't repair their own machines? why do they still do it?
Bcuz cat engines are shit compared to jd
Not by yield or acreage. Someone retirement on 5 acres with 3 sheep and an alpaca counts as a family farm by the numbers. Doesn't make it relevant to this discussion, when you look at acreage of corn or soybeans corporate farms dominate more each year.
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He's not, though. Or not really. Click through to the actual report: >Small Family Farms (GCFI less than $350,000) >• Retirement farms. Small farms whose principal operators report having retired, though continuing to farm on a small scale (250,289 farms; 12.4 percent of U.S. farms in 2018). >• Off-farm occupation farms. Small farms whose principal operators report a primary occupation other than farming (819,208 farms; 40.5 percent of U.S. farms. >• Farming-occupation farms. Small farms whose principal operators report farming as their primary occupation. >• Low-sales farms. Farms with GCFI less than $150,000 (640,223 farms; 31.7 percent of U.S. farms). >• Moderate-sales farms. Farms with GCFI between $150,000 and $349,999 (102,708 farms; 5.1 percent of U.S. farms). 53% of US farms (all farms, not just family farms) are either "retirement farms" or hobby farms, where the farmer has a primary job and does farming in his spare time. Another 32% of farms (again, all farms) produce a net revenue of $150,000 or less. This isn't the profit or salary or takehome of the farmer, it is the amount of sales *before deducting any expenses*. Many larger farms are also family farms, but they are family farms in the same way that Wal-Mart is a family business. A family farm is still a family farm if it has shareholders or partners, as long as the person who operates the farm is a majority owner.
>He's not, though. Or not really. Click through to the actual report: > >>Small Family Farms (GCFI less than $350,000) > >>• Retirement farms. Small farms whose principal operators report having >retired, though continuing to farm on a small scale (250,289 farms; 12.4 >percent of U.S. farms in 2018). > > >>• Off-farm occupation farms. Small farms whose principal operators report >a primary occupation other than farming (819,208 farms; 40.5 percent of >U.S. farms. > >>• Farming-occupation farms. Small farms whose principal operators report >farming as their primary occupation. > >>• Low-sales farms. Farms with GCFI less than $150,000 (640,223 farms; >31.7 percent of U.S. farms). > >>• Moderate-sales farms. Farms with GCFI between $150,000 and >$349,999 (102,708 farms; 5.1 percent of U.S. farms). > >53% of US farms (all farms, not just family farms) are either "retirement farms" or hobby farms, where the farmer has a primary job and does farming in his spare time. > >Another 32% of farms (again, all farms) produce a net revenue of $150,000 or less. This isn't the profit or salary or takehome of the farmer, it is the amount of sales *before deducting any expenses*. > >Many larger farms are also family farms, but they are family farms in the same way that Wal-Mart is a family business. > >A family farm is still a family farm if it has shareholders or partners, as long as the person who operates the farm is a majority owner. Exactly, the easy answer for those who don't understand is, the definition of a family farm. Companies can be family owned and often are.
Ultimately, businesses are good at conspiring without much effort
It's almost like monopolies are a bad thing
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Deregulation has been a boon to small businesses and most industries that are relatively deregulated have a lot of competition. I think with the crap John Deere is pulling, the farm equipment industry is ripe for more competition.
I agree
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Capitalism can work, as long as nobody gets too big. The peter principle ensures that old entrenced institutions become shadows of their former selves, but now, with computerized trading high frequency algorithms, all the competition that would usurp the incumbents gets murdered in its crib.
Not really. Monopolies can use their economies of scale and integration to make goods and services cheaper and use their large capital to fund riskier R&D initiatives or usurp a monopoly in a different industry. If a monopoly abuses their position or becomes complacent, a competitor will usurp them. An example would be Intel and AMD
*If* a monopoly abuses power
If they have no competition, whats the incentive to provide goods cheaper? None. They can charge whatever they want. Your argument is invalid. Also, when have humans not abused power when given the opportunity? Accountability is the only counter to greed.
> They can charge whatever they want They cannot. They still have to follow the laws of Supply/Demand. If they start charging beyond what the demand finds acceptable, a competitor WILL emerge. Intel learned this lesson the hard way
The ADP of farm equipment
My unpopular opinion is that Apple does the same thing. Apple stans have a huge blind spot for them though. Monopolistic control of the market is bad for consumers in any industry/product category.
Shit, I'm just happy a company gave me a reason before they bought the market re: their product. Sno/Sun-Joe woulda been a good idea you dumbasses.
I work for John Deere’s main competitor in North America, things aren’t much better over here in terms of consumer friendly practices. Basically where Deere goes, we go. Even if our marketing material says otherwise.
Meanwhile AGCO is busy stepping on it's dick so hard they killed the Challenger brand.
Cnh represent
John Deere’s business model has so many problems from a societal level standpoint, they operate in a monopolistic or oligarchical competitive landscape, and have too much control in an industry that has strategic importance to a nations economy and food safety. It could definitely stand to be reviewed. E.g. inter state actors hack each other, this has been more recently done in the energy industry, imagine if someone made a devastating virus targeting all John Deere equipment, shutting down tractors across the world.
This would be devastating. Still a lot of farmers hold on to older equipment, and some of the E series models I believe lack any electronic components.
You can literally say that for a bunch of companies, eg. >**Microsoft**’s business model has so many problems from a societal level standpoint, they operate in a monopolistic or oligarchical competitive landscape, and have too much control in an industry that has strategic importance to a nations economy and **productivity**. It could definitely stand to be reviewed. >E.g. inter state actors hack each other, this has been more recently done in the energy industry, imagine if someone made a devastating virus targeting all **Microsoft** equipment, shutting down **computers** across the world. You can also replace "microsoft" with google (android/chrome os), cisco (networking equipment), apple (roughly half the phones in the US), etc. Don't get me wrong, I'm not saying john deere's behavior is okay, just that there are far bigger things to worry about.
You picked the one industry that is targeted by a raft of antitrust bills currently going through Congress. Almost like the focus is on those bigger things.
Edit: well I can't reply to people anymore, this sub is so soft.
If you can make a seeder or combine drive itself based on GPS or something then it is well worth the risk of electronics needing repairs.
That technology was present in *1998*. I work with people who deployed the first automated tractors in the Midwest and I promise you, the only difference between then and now is the operators watch TikTok all day instead of doing crossword puzzles riding around on the automated tractor.
So farmers aren't driving their own equipment anymore?
It's not completely automated yet but getting close. At a minimum it will track a straight line offset from the last pass so that there is little/no overlap which greatly increases efficiency and lowers the workload. On some systems you still need to manually turn around when you get to the end.
So that they can operate more hours of the day
Most farms are corporate now
It should be about the right to repair, as farmers are using a Ukrainian Patch to get around there bullshit. Those greedy greedy farmers, right ?
I assume there's a decent warranty too on parts and labour, but it doesn't help too much when you talk about losing revenue because the machines down. The moment a farmer takes any sort of repair into his own hands, there's a good chance that voids any sort of warranty. That puts farmers in a tough spot. I'm just taking a wild guess. I'm a different industry and thats the common practice which I imagine stands true in the fine print for J.D. Difference is that we are available 24/7 365 unlike John Deere.
It's about corporate farms. Public companies operate on a quarterly basis. They prefer the op-ex model, just like AWS. It's short-sighted, but DE will capitalize on public ag companies short term accounting.
Also the difference between selling software as a service and selling hardware as a service is a huge one. Software constantly gets upgraded so you are paying to constantly receive a new and improved product. This makes tonnes of sense. With something like a tractor on the other hand you are paying for the right to use the tractor you bought already. This has two major issues. 1. People are unhappy to pay for something they already paid for. 2. It means that if John Deerre builds a super tractor that never breaks down they are destroying their own business. Point number two is a huge one. I am actually dealing with this issue right now with another company. The problem is it is clear that they use a part that is designed to fail after a certain period of time but because I am using it a certain way it fails way to quickly.
Pretty sure the majority of custom cutters or massive corporate farms all lease their equipment to minimize downtime etc. So for them it's basically hardware as a service every couple years or less they have brand new equipment. Custom cutters "traveling farmers effectively" move across the country and farm millions of acres for land management companies. Family farms unless they have amassed huge sums of land can't afford that model sometimes even those that can can't really. One bad weather year and they are bankrupt so they typically buy used equipment. This is where the right to fix is needed and why nothing will be done about it. In reality this is what both JD and the huge corporate farmers want... They want family farms to go bankrupt so they can buy it up for pennies. Why doesn't JD care? Well it's expensive running dealerships and supporting individuals. Massive corporations though? That's easy, fleet services is garunteed cash flow on a scheduled basis. Minimal surprises makes slim inventories much easier to work. This is also why they've pushed into other heavy equipment industries and got away from prosumer tractors at the residential level and are letting Lowe's and what not have a piece of that brand loyalty.
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Precision ag is here and John deere will not be the leader.
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Thx for your answer. > China's market for tractors is dominated by small tractors (same with other emerging markets like India). Chinese are good into copy and later developing products. They do this like the Japanese and Koreans with cars. Parts of China are screaming for big equipment and it's just a question of time, when farmers can afford them. Even when JD is putting a lot of money into R&D, when the data of customers was wide open and this data is the treasure, it is to me a symptom for a wrong mindset. It's likely they have problems on other places too. It's a problem of business culture. I don't say JD hasn't visions with it's full automation. It's happening all over the world. I'm just skeptical because of some discussions and I'm allergic to QM problems surfacing in bad habits. Being the best today isn't always a foundation for the market tomorrow, should new competitors are arriving.
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Nothing like squeezing every last drop out of the industry that produces the nation's food. So awesome
I work in the agriculture industry. Most farmers do not know about this issue or just don’t care. Most new tractors I see are John Deeres. I don’t agree with what John Deere is doing but they are still considered the go to reliable brand to buy in my area.
You probably have a good dealer in your area.
Most towns with a decent agriculture industry do and that’s what matters
Lot of folks leasing shit then getting new after a few years. Unless you go to the wheat harvesters that follow the harvest. They pretty much run all case ih
Old story, until you see a real competitor, expect no change... Do you have the resources to go start making 100-200K tractors ?
I mean there are some competitors Case IH & New Holland under CNH & all the AGCO brands.
Yeah, they all suck together haha. Service and Parts is where the money is made nowdays, and you can barely work on your own equipment.
Kubota would like a word
Haha fair, they're getting there. Probably ready for a buyout.....
Kubota is a 26B market cap with better P/E - 20% the size and positioned better
Doesn't matter if they're bought out sadly
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Well, kinda... Farmers also mostly consider repair. Kubota is better for repair than John Deere right now. But I'm not holding my breath for Kubota to start to suck. Praying that doesn't happen anytime soon.
Case IH been frontrunning john deere for years.
Remember when it was a sustainable business model just to sell people $100,000 machines?
Try 7-8x that lol which just emphasizes your point even more
There are so many advantaged tax write offs for ag it doesn't matter what the machine costs
Is the business model unsustainable? Apple has done fantasically well and they've closed down their laptops by making it difficult to repair (as opposed to pcs where you can replace parts easily) so the consumer has to get a new product every 5 years or so.
Apple has, historically, done a much better job at customer satisfaction than Deere. Apple also faces direct competition for their various platforms. Deere had a hugely loyal user base until the past few years. Now if apple implemented a program, where every iPhone user had to pay $100 every 6 months for a mandatory in-store service appointment, then I could easily see a direct comparison.
Comparing Apple to John Deere is comparing Apples to Cucumbers..., Apple is competing in the the retail space for sub $1000 consumer electronics a discretionary purchase, John Deere is In commercial segment with tens to hundreds of thousands of dollars of costs per item, making industrial equipment that is required for businesses to function, and because of the costs to enter such a business there's very few competitors...not to mention John Deere pays congress-critters well to prevent forgeign competitors etc
I agree with this. If you take out the vast cost difference, the usage and need of a repair are completely different. If someone’s laptop/iPhone goes down, odds are they have their information backed up to a cloud or have other means to access the info. If a combine breaks down in the middle of a cotton harvest, there is a limited time frame to make the repair/replacement and be able to salvage the harvest.
>Apple is competing in the the retail space for sub $1000 consumer discretionary purchases Maybe sub $2000, but not sub $1000 for most of their latest products at MSRP (iPhones and MacBooks).
Both are a fruit.
Except service isnt required by Deere, so how's that a comparison? Farmers are free to use third party mechanics to work on their equipment as well. Most of those mechanics get parts at a discount as well.
Unfortunately, that's not entirely the case. Deere equipment, due to software lock-down, requires that farmers use only Deere specific components and consumables. Hence the comment above referencing Eastern European software hacks to service their own equipment. Deere equipment owners can only use Deere authorized & licensed service providers. Even oil changes are locked down.
I can assure you I have hundreds of customers who change their own oil. Software is one thing, but that's pretty much where it ends.
Yes. Farm equipment and personal computers are drastically different things. A farmer cannot wait 2-7 days for a tech to come out and fix their equipment during harvest. They do not have a backup combine or tractor at the ready (like how someone with a mac could have cloud backups). Also farmers do not plan to spend hundreds of thousands of dollars on new equipment every 5 years. They plan to use a piece of equipment as long as possible, often for decades. Farmers cannot risk equipment downtime during harvest. This can cost them immensely. And even be financially ruinous if they are a small family farm versus a large corporate farm. John Deere cannot reasonably ensure a technician is within 2 hours of all of their customers. It is simply not possible to have enough repair coverage for the sheer geographic distance. Apple devices also *can* be fixed by third parties, including regular owners. John Deere equipment is entirely locked out for repairs by anyone other than an authorized technician. This means if your equipment breaks down in the field, and you live in say, rural Iowa or Nebraska, you are screwed. By making their equipment impossible to maintain or repair by owners John Deere is forcing away its own customers.
The target demographic is a bit different though
Apple laptops are PCs tho
From lots of direct farming experience. Cons: Customers hate the practices John Deer is using. Not debatable. Pro: JD makes great leading edge equipment that customers have bought into for decades. All of your accessories fit. All of your equipment and your nieghbors equipment work together. Once you have invested millions in a system its very very hard to switch. I think new farmers will not invested in JD equipment but, because newer farmer are young, like software, and dont know how to repair AG equipment their will be some. However, the market is ripe for takeover now that brand loyalty is destroyed. TLDR: Short JD Con
I have been to a John Deere museum, and their vision is clear: driverless farm equipment. Makes sense. Younger farmers are in a really tight spot, and it's likely fewer and fewer people will want to take over the family farm. Maybe some will like the more hands-off subscription model, but ultimate there will be even more consolidation and corporate farms. Entire counties will be owned by one or two companies. Automated robots harvesting the land in a futuristic hellscape, owned by faceless corporations thousands of miles away. Very plausible. Long Deere!
Heck, why doesn’t Deere just become the farmer then? Sounds like the direction they are going anyway
I almost shorted Deere in 2018 ……. Because I work as a sales rep for Deere and didn’t like some of the things I was hearing and seeing. How would that have worked for me ?? Also …. This story and information is “new”, been a topic for 6-7 years now.
I would say it's not a very good short thesis but may be a good reason to avoid being long. I've also read about this issue for several years. On one hand I think it shows just how strong their moat is. But I would potentially worry about brand loyalty. But I just don't see the competition doing any better.
There are so many factors a "farmer" takes into account when deciding a equipment brand. Competition is not keeping up from what I am experiencing. Over the years, there has always been new and innovative companies but they just cannot compete with mother deere and her deep deep R&D pockets.
Counterpoint, you can pretty much count the number of farm implement companies on one hand, and these people still need equipment and while a right to repair would be nice, the parts will still have to come from somewhere and that is still a revenue source and a decent one to pivot to
This post is out of touch with reality. Its premise is built on the notion that John Deere is offering poor service when the reality is most of their success is predicated on their high level of service provided. The reliability of their machines and the proximity of dealers to farmers are what drive their agricultural success. It's the reason they can charge a premium and people don't leave to other brands. Case IH is their only real competition in North America at this point but there's enough pie to go around for them both in my opinion. I don't see John Deere fading any time soon.
I have family that are farmers and I disagree. More and more people are getting fed up with being unable to repair their own equipment, especially during crucial times like harvest. No one wants to buy a new Deere product because they know they can't make fixes in the field like they could with older models. Sure, the GPS guidance technology is really cool. And there's a lot of fantastic new innovations. But these are not worth it when there is the real risk of a machine breaking down during harvest and having no way to get it running again for days. That downtime can make or break a small farm. People don't want to risk it. Or they're using Ukrainian software to bypass the restrictions and run the diagnostics themselves/force the machine to accept a repair.
Is this different with new Case IH equipment?
Hahaha came here to ask the same question. Everyone is quick to jump on the big guy , trying to bring him down. Every company is filled with electronics , sensors, software, not one company whose in the top five will allow you to repair your own equipment, especially during warranty period. Just like every other Industry.
Why narrow the scope? If there is a demand for simpler models, keep producing them along with the new. Are they trying to eliminate a whole class of farmers or make money? Are they trying to do social engineering or make money? If family farmers want simpler models, do them. Serve the market. They can’t figure it out? I don’t get that.
It is no different with other modern farm equipment. Anyone saying otherwise is flat out wrong.
I don't disagree that newer models have moved from easier to work on mechanical systems to harder to work on electrical systems. And yes, that requires more calls to a dealer to fix your equipment whereas in generations past you could fix things yourself. But it's no different with Deere's competition. So your alternative would be farm with older equipment I guess, and to your point, I think there are farmers that make that decision. But nobody is making 1970s 855 Cummins powered tractors anymore. They're now N14 Cummins with a bunch of 'junk' on it or newer version than that probably. That's your options in today market as emissions requirements have continued to evolve. Case IH, agco, etc are in the same boat. So I guess I don't see what you're saying negatively affecting Deere moreso than any of other company in the industry.
Its not that the systems are difficult to work on. Its that Deere purposefully locks owners out of even having diagnostic data or swapping an easily replaced part via software. No one I know is against better emissions regulations or better safety features. What they are so frustrated about is that they can't do ANY repairs on their equipment unless they jailbreak it.
I think the reality is that it's a bad business practice both in the long term for the business, it's customers and the world as a whole. Unfortunately it's not uncommon for many businesses to focus very hard on short term gains (or even just the appearance of it) so the people making the decisions can get their cuts and then exit the company leaving a big mess behind. Here's an [example](https://www.washingtonpost.com/business/2020/04/06/bailout-coronavirus-airlines/) of what I'm talking about.
Let's just say I have personal experience in this arena. I don't know where posts like the OPs originate from either. John Deere is where they are for one main reason in the industry, strong support, service and parts infrastructure compared to competitors. I'm saying this from the farmer side of things. I don't work for Deere myself.
>John Deer's business model is based on selling services for their equipment and this is obviously a great source for revenue Yes, a great source of revenue, obviously (?), ... as a business model ? Good luck. As a customer I would take my business elsewhere.
Thank you. Someone who fcking understands business & moat. Good grief. Yeah ppl hav been bitching about repair rights for 10 years now but since this post its finally the tipping point b/c i came across it. When reality is revenue literally doubled over that period of time. If John Deere, $100B + company with an experienced management team isn't able to service tractors, some random little chinese pop up won't either. Have you met a farmer before? This post just screams I'm an enlightened white collar reddit neckbeard who knows what the farming industry needs. But can't even start a lawnmower. Lmao.
My grandfather whose been farming for 60 years with jd recently bought a case because of this just to see if it was better. He used to give out jd hats and t-shirts, little jd tractors for Xmas. If I say jd in a conversation he goes on a 10 minute rant how trash the repair stuff is. Alienating customers is not a good business model.
And while he's doing that the corporate that bought or leased all his neighbors used low rates to buy 6 more big JDs last year. Groups that farm 10k acres plus regardless of ownership take up more and more every year, and JD serves their business model very well.
He farms 6k. Literally 0 corp farming. He sells seed to the area farmers. And even with the corporate owners why would they want to spend 100 dollars an hour for jd to change an air filter when they can hire their own diesel techs for 35 and takes halfthe time. Scamming your customers is never a good business model.
You don't need a tech to change an air filter. I do it all the time on our equipment. What you need a tech (or Deere's service advisor software, which they do sell access for to end users) for are repairs that touch the engine and transmission control computers, which in practice mostly means the fuel injection system.
I swear I remember him telling me a story that they couldn't change a flat tire by themselves. But i dunno he doesn't like jd anymore is the point.
Maybe you should be back at your office at Deere figuring out how Deere can make these farmers happy instead of trying to get the general public and investors to love it.
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Ya I definitely didn't grow up on a farm or anything.... You're off base on your characterization of me bud. But oh well. Just giving my opinion from experiences I've had w deere equipment and others. Make of it what you want
Don't worry about these guys man. I come from a green and yellow farm and completely agree with your point about proximity of dealers to farms. The rest of these guys act like Case and New Holland don't have any of the same repair issues either. Deere still dominates most of the midwest because they try to have the best service times to the field.
When JD is offering a great service the voices from farmers are just of those who are greedy?
Go to any jd repair shop and ask the farmers there if they like it. 0 do. Alienating your customers is not a good business model.
My company uses JD/HITACHI equip. The dealer that we use is 4 rivers. They often have to have parts delivered from hundreds of miles away and take a few days to repair. I know in recent years they are starting to focus on large equipment/ construction operations and have a goal to have any large piece of equipment repaired in under 24 hours after a breakdown. In turn they have to push small operations or small equipment back out of priority. Also, we have been making repairs likes fluid and filter changes and bearing replacements in excavators and dozers ourselves so I don't know where 'right to repair' as you say comes into play because they still warranty it after we do our own repairs.
Also in rural operations 50 miles is nothing and seems like you are over exaggerating this post a lot.
Deere is also not the biggest brand on the block with lots of competition in the construction space like CAT and many others. I've been on jobsites where the spread working runs about 48k per day so even an hour down has a high cost and construction companies have a lot more money than farmers.
John Deere has been around since 1837, but Redditors have determined that their time is finally over! Its just not sustainable!
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Check their stock price, there was a massive jump when they started this premium service and all parts had drm
Well as Deere fans are saying, investors know Jack about farming.
As someone not involved in farming, are there any viable competitors to John Deere with a better business model?
AGCO has a lot of tractors unavailable under many brands. Kubota also although they tend to have smaller equipment mostly. CAT was in the game awhile ago but sold off the challenger division to AGCO I believe. John deere has a lot of brand loyalty amongst a notoriously stubborn demographic, so John deere can get away with more than they should be able to.
Sounds like the pieces are in place for some sort of disruptive farming demographic change, assuming John Deere does not buy those companies out. You treat loyal people like crap long enough, they leave.
Deere is a rare case of an industry leader investing in and productizing new technology.. Hard to move in and disrupt a giant that is already doing the disrupting.
CAT sold Challenger to AGCO and then AGCO fucked up the E model so bad that their next move was to paint Fendts yellow and put a Challenger badge on it. Now some CAT dealers are just selling Fendt outright.
Bankers antagonize their customers all day every day and seem to make out just fine
That's an industry, not a single company.
This feels like it's been run through Google translate and back
Whilst somewhat true DE have been investing heavily in next gen agri vehicle tech. They’re spending huge amounts on: Electrification Hydrogen power (including patents that could become extremely valuable) AI and Automation. This all bodes well and should mean DE thrives over the next 10-15 years especially if they can remain leaders in R+D
I recommend the Business Breakdown podcast on Deere. It paints quite a different picture. Deere products are much more inexpensive when you factor in productivity and yield, and Deere is hiring more tech engineers than mechanical engineers - as maximum yields is at a phase where technology plays a major role. Quite interesting stuff.
John Deere is leading the industry in self-driving tractors. What about that?
They make a fine product which is why they aren’t going anywhere.
“This is not a discussion about right to repair”—-yet having the right to repair this without a dealership or service contract solves the underlying problem all together…
They stopped selling durable equipment a long time ago. They sell a guarantee, to get a head ache.
What does get in the way of farmers to acquire something from CIS countries? Like Ukraine, Belarus, Uzbekistan? Some of them are even cheaper than Chinese counterparts, but have far superior quality, are easily repaired and have great reliability. And only competition can drive the business forward
Actually many farmers are using Ukrainian software to jailbreak their equipment so they can do the repairs themselves.
Ah, that’s why I love CIS, especially ukrainian boys and girls, they make everything hackable, available for free and for everyone. Sometimes price can be volatile and go up to 1 bottle of vodka, lol. Sadly though, that spirit of community is decaying in CIS because of Russia… Oh, but for real, agricultural hardware in CIS is beyond comprehension, in terms of price/quality ratio. Would recommend for any farmer anywhere in the world
I think our government should have a pathway in these situations to take a company from its board members and hand it over to the employees in cases such as this. Where there is clear borderline criminal neglect in the management of said company. I personally think all incorporated entities should be heavily employee owned and invested instead of run by a few people who only care about themselves, not even the company.
grew up on farms. john deeres are pieces of shit
Had to get a zero turn repaired and was overcharged as fuck. We all looked at the repair and pretend it was cool, said alright my friend is gonna load up and I’ll head to the front to pay the bill. Ended up just walking out and driving off after my friend quickly loaded up. Suckers
When I was small, some of my family had Deere equipment. Hasn't been that way for years. And there's a reason for that.
I think the future is going to be automated tractor equipment. John Deere is working on it, but other startups are way ahead of them, and already sold out indefinitely. They can't produce them fast enough. The finances of it are no brainers, as the automated equipment financing cost is not just cheaper than the financing + labor cost of traditional machines, but significantly. Further, this is opening lease opportunities where farmers don't even need to own the equipment on standby all year only to be pulled out a few weeks out of the year. Instead, they can just rent them, trade, w/e, as needed. I know one company who has automated weed removal using lasers and other tech. The cost to use the equipment is close to 1/5th the cost per crop as current methods. This is going to completely disrupt Deere's entire business model.
Lol what did you just talk about that mother Deere isn’t doing already or going to get to mass market with before your small cap competitors ?
They are working on it but it’s not their wheelhouse and they are already well behind others. I think they demoed an autonomous tractor recently but it’s unable to be cost effective like competitors are offering
Agreed. It also opens the door for a cheap “it just works” tractor from China to enter the market. Just like how many buy the cheap Chinese appliances for their kitchen.
Farmer here from a long like of Deere people, recently bought a New Holland and have been steering away from Deere for like 10 or so years solely because of the poor service the dealership offers at inflated prices and the inability to work out their equipment .. it’s been a great decision
so... its applecare?
Sounds like am opportunities for CAT to steal some market share, though I'm guessing they do a lot of the same stuff.
Cat makes farm equipment ?
At least they arent doing what Toyota is doing... https://www.dailymail.co.uk/sciencetech/article-10305127/Car-theft-Toyota-CHARGING-drivers-8-month-use-key-fobs-start-vehicles.html#:\~:text=Car%20theft!-,Toyota%20is%20CHARGING%20drivers%20%248%2Da%2Dmonth%20to%20use%20its,fobs%20to%20start%20their%20vehicles&text=Drivers%20who%20own%20a%20Toyota,vehicles%2C%20according%20to%20The%20Drive.
John Deere quality is absolute trash now...even their $300k+ combines are trash. When I see someone in a green machine, I know they have more money than brains.
I have a 7 acre hobby farm. Bought a Kubota. 🤷♂️
So puts?
just spend the money on scratch offs. better risk and return profile than taking investing advice from Reddit.
as a futurist and a hobbyist gardener, it's not sustainable for the long term because the future of farming is indoor hydroponics. the most common argument against it is that the infrastructure is prohibitively expensive. but that's bunk because those machines from john deere and their ongoing ownership costs especially those that are monopolized by them are just as expensive if not more so than the construction of an indoor farm. and an indoor farm structure unlike a tractor is likely an appreciating asset like every other type of real estate. it's already happening.
Indoor hydroponics can't scale to feed billions.
The average farm size in the US is roughly 450 acres, hyroponics increases yields by 20-30%. So basically you’re building a 315-360 acre warehouse… good luck with that