Feeding the agricultural machine during COVID-19

It was unclear if farmers would have access to parts they needed to keep equipment running when the pandemic first hit North America.

Agriculture equipment manufacturers have been considered a critical service through the pandemic, so they have stayed open.

But often, they are global enterprises that rely on international supply chains, and it is still uncertain which factories and distribution centres can be relied on.

“I don’t think any of us would have thought China, Europe and the (United States) could all be at risk for supplying, simultaneously. Who planned for that?” said Trevor Thiessen of Redekop Manufacturing.

In February and March, when the pandemic began circling the globe, Redekop’s suppliers in Europe and China said they may not be able to keep up deliveries of the components the company uses to build its lineup of harvesting equipment in its Saskatoon facility.

“I think our last container left Italy the day before the company had to close their plant. That was a little too close for comfort from my perspective,” Thiessen said.

It was a tough spring for everyone, including equipment manufacturers that scrambled to learn how to keep their employees safe, source production material and keep their clients supplied. It ended up being the worst May Redekop had in six years, which is significant, especially considering new products including the Seed Destructor the company recently added to its lineup.

A major blow to the company came when it had to stop deliveries of its harvest products to an OEM for eight weeks, because it was forced to close a major U.S. plant.

Cam Cornelsen of Northstar Industries said their biggest challenge this spring was trying to forecast demand.

Northstar Industries produces grain-handling equipment, including bin sweeps, bucket elevators and conveyors at its Manitoba and Ontario plants.

Typically the company ramps up production during the winter to meet demand later in the year, but when the lockdown hit last fall, it was difficult for Northstar staff to see how it could be a good year for sales so production was curtailed.

“Commodity prices were not great. Farmers still had products out on the field in some cases,” Cornelsen said.

“We didn’t want to overproduce and end up sitting on inventory.”

Instead of bringing in extra staff through the winter as it usually does to help increase production, Northstar instead kept a base-level of staff.

But when spring came around there was very good field conditions in Canada and farmers were able to get a good start on planting.

“The farming sector woke up and went, ‘wait a minute we are an essential service, we are going to put in a crop like we always have,’ and the realization was we are going to operate like we have in other years,” Cornelsen said.

“At the end of April and into May we saw a real rebound. Business that had not happened or was put on pause was pent up and just came onto the market. Really from May 1, we operated in a very positive market, got a lot of business and had a good year.”

Trevor Thiessen of Redekop said after a poor spring the industry showed off its resiliency and returned to strong flows. | Mike Raine photo

Redekop didn’t slow during the early stages of the pandemic, and instead built up its inventory levels.

This ended up being a good decision because it also saw a strong demand for their products on the prospect of strong Canadian and Australian crops.

Redekop’s OEM customer also reopened its plant, which helped cut into the company’s inventory.

“Thankfully, they ramped up their supply when they opened their plant up again and took all the orders they missed in the eight weeks and a few more,” Thiessen said.

“Borderline miraculously, by the end of June it (the market) had done a complete 180 degree turn. We thought we would be well under budget, but by the end of June it looked to be turning into a very good year.”

Redekop ended up hiring extra staff this summer to increase production to meet extra demand, including extra containers of their harvest equipment to Australia than had been originally forecasted.

However, Australian has harsh restrictions related to COVID-19 in place, which has affected the ability of farmers there to source agricultural equipment components compared to farmers in North America.

“The farmers who are suffering are in places like in Australia that are so restrictive and still locked down. I know the major companies, like Deere, CNH, and Agco are struggling to get parts into the country, and get them into their distribution systems,” Thiessen said.

“They might be in the country but they are sitting in containers and not being distributed. And they are in the middle of harvest right now. We don’t know lockdown compared to what the Australians are experiencing.”

He said regions in Europe also had challenges sourcing agricultural parts because there were shutdowns in production facilities across the region.

However, Redekop didn’t have issues supplying customers with parts in Canada, and that most equipment manufacturers were able to keep up with Canadian demand.

“Generally speaking whether it was the major companies like the Deeres and the CNHs of the world, or even smaller companies like ourselves, we were able to keep the product flowing pretty well in North America,” Thiessen said.

So far the North American supply chains for agricultural parts has fared better than other growing regions, largely because of a robust production capacity and the ability to import from multiple manufacturing areas.

“I think the U.S. Canada’s border remaining open, and all the excess capacity that we have in North America, allowed the North American business to run pretty smoothly. And it didn’t hurt that the U.S. really didn’t have a lot of shut down comparatively speaking.”

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