A friend to farmers
Selling tractors is getting trickier – with a 12-month (or more) wait on delivery. So companies like TransAg Centre in Palmerston North are having to order millions of dollars' worth of stock well in advance.
Director Euan Avery says he’s trebled their usual spending so that he can get 90 percent of what the company sells onto the site.
“But the real elephant in the room is inflation. There are predictions inflation will run as high as
15 percent over the next few years – partly because of the increasing cost of steel, and the shortage of components.”
On the bright side, agriculture is doing well so farmers have money to spend on maintaining and buying new equipment. “Last year we actually did about 10 percent better than the previous year. The shortages this year though, may have an impact,” says Euan.
TransAg staff sell and service tractors and other farm machinery. They also assess fire-damaged machinery for insurance companies and listen sympathetically to stressed-out farmers needing to vent.
Over the last 35 years, under the leadership of owner Merv Avery (joined in 2004 by his son Euan) the company has grown from a
$2 million-dollar turnover to
$23 million. Much of the growth has happened within the Palmerston North operation, and after 2014 when TransAg took over another general farm machinery business in Taranaki.
TransAg holds the Case New Holland tractor franchise for the Wairarapa, Manawatu and Taranaki regions and the father and son have always had to keep one eye on the future. “If you don’t grow, you just get gobbled up by bigger outfits. And as a dealer, if you don’t perform, you will lose your franchise,” says Merv.
The pressure has recently been compounded by the announcement that Case New Holland Industrial Australia will start selling its tractors directly to New Zealand dealers from July next year – ending its arrangement with its current New Zealand distributor, CB Norwood.
“It’s a big capital investment for us,” said Merv. TransAag now needs to build an extension to their Palmerston North premises to hold their own stock of new tractors and about $2 million in spare parts.
The biggest challenge for 2021 has been keeping up with the demand for parts. While urgent mechanical parts can generally be brought in by air freight within a week or 10 days, glass windscreens or body parts must come by sea. This can take months. Luckily, the rural sector is taking a pragmatic view on the delays. TransAg has five ‘loan’ tractors available for contractors and farmers who are stuck waiting for parts.
Euan says TransAg provides an essential service so many of the staff have worked through all the lockdowns. “Farmers can’t stop so we can’t stop. We have to service and their equipment as and when it’s required.”
Insurance side income
During the GFC (Global Financial Crisis 2008-13), farmers tightened their purse strings, and sales of tractors and other agriculture machinery plummeted. The usual spring tractor fires during this period inspired TransAg Service Manager Brian Lett to turn disaster into an opportunity.
“Birds, particularly starlings, build their nests under tractor bonnets and in other machinery, and can make something quite substantial within an hour or two. The farmer then goes to start up the tractor and it catches fire.”
Brian says TransAg began building up its insurance work during the GFC – offering free storage for charred farm machinery, carrying out the appraisal, arranging repairs or transport. “We’ve built it into a steady income stream,” he adds.
They also regularly run a prevention campaign 'Stop and Pop' (the bonnet) – to remind farmers to check for nests – particularly in spring.
Bring the VIRM up to date
Brian has also initiated a group to advise Waka Kotahi NZTA on updating its in-service WoF and CoF certification for tractors.
As part of this, a few months ago he brought together Waka Kotahi officials, police, heavy vehicle technicians and various rural operators to see the inspection process, and discuss some of the issues and the rules around driving these heavy vehicles on the roads.
“It’s the first working group in many years that has come together to advise on heavy vehicles and Waka Kotahi is interested in our advice.”
He says some of the big steps forward in technology are not reflected in the current inspection process. “For example, there is no odometer on most tractors, instead it's their hours of use that is recorded. Modern braking, glazing, seat belts, and suspensions are also all different from what is required in the VIRM.”