“We’re showing in a big way and hope that our customers from eastern Europe are able to attend.”
– DON HENRY, BEHLEN
Walking among the displays at Agritechnica, the world’s largest farm machinery exhibition held here in November, anyone from Manitoba or Saskatchewan could be forgiven for feeling a little proud. Canadian and provincial flags were flying at two pavilions where Prairie equipment manufacturers were using the show to help make their presence known to the world.
Although the Prairies have long been associated with agriculture, farm equipment manufacturing has historically been centred in southern Ontario. But times have changed. Today, Manitoba and Saskatchewan together account for the lion’s share of Canadian agricultural machinery exports, more, in fact, than all other regions of the country combined.
Jointly, international exports of agricultural machinery from Manitoba and Saskatchewan in 2008 amounted to over $856 million, according to Manitoba Trade and Investment statistics. And that figure has been steadily growing, increasing by 55 per cent since 2005. Most other provinces, with the exception of Alberta, have shown small declines over the same period.
There are several reasons accounting for the growth of agricultural manufacturing on the Prairies, but the old expression “build a better mousetrap and the world will beat a path to your door” may help explain it best.
Three or four decades ago, many of today’s Prairie manufacturers were nothing more than creative individuals trying to design a better implement inside farm workshops. With the rapid adoption of no-till technology in various regions around the world, many of those on-farm inventions springboarded fledgling companies into global competitors.
That kind of homegrown evolution isn’t new to farm machinery development. John Deere originally launched the modern-day giant corporation with his invention of a self-cleaning plow that outperformed others in the thick Midwestern soils. Many Manitoba and Saskatchewan implement manufacturers now seem to be following a similar path to establishing a global presence.
TARGETING SIMILAR CONDITIONS
For most, tackling markets in Australia and eastern Europe, where the climate and growing conditions are similar to those at home, is a logical choice. So far, buyers in those parts of the world have been taking notice, especially of seeding equipment.
“Appetite for the product is very strong (in those regions),” says Don Henry, chief operating officer for Morris Industries, which has been using the biannual Agritechnica exhibition for several years to display its equipment and help attract foreign buyers.
Because of Agritechnica’s location and sheer size, it attracts many potential buyers from eastern Europe, exactly those customers Prairie manufacturers want to talk to. “Agritechnica has been a very, very good show,” says Henry. “(The show) attracts planeloads and busloads of customers from eastern Europe because it is so large.”
But with the current economic crisis looming large over international sales, particularly those to the newly independent states in eastern Europe, Canadian manufacturers have seen a lull in exports, and the short-term prospects for future sales are unclear. “We don’t know how it’s going to be this year with the uncertainty,” adds Henry. We’re showing in a big way and hope that our customers from eastern Europe are able to attend.”
While Morris Industries is a veteran when it comes to showing equipment at Agritechnica, at least one other Prairie company is trying it for the first time this year.
“It’s a big leap for us,” says Trent Meyer of Brandon-based Behlen Industries. “It’s the first time we’ve ever had a display in Europe.”
The importance of being part of a major machinery exhibition with a worldwide attraction lured Behlen to Agritechnica. “The key is to be at a show like this, because the important decision makers are at these kinds of shows,” says Meyer.
In many ways, global marketing has been a team effort on the part of Prairie manufacturers and provincial export development agencies. Manitoba Trade and Investment along with Saskatchewan Trade and Export Partnership have been
working closely with manufacturers, helping establish global trading contacts. And, Meyer adds, networking with other Prairie companies experienced in overseas sales has made it easier for firms like Behlen that just are beginning to target that market.
As those efforts continue to focus primarily on eastern Europe, Canadian companies haven’t entirely abandoned the prospect of increasing sales in the West. But that may be a much tougher job. “(Western) Europe is a fairly mature market in a lot of ways, but definitely there is some room for us to manoeuvre in there and get some market share,” says Meyer.
Henry agrees with that assessment. “I think there are some opportunities in western Europe. But there are a lot of strong manufacturers there. And it’s a little bit different from a farming practices standpoint.”
Another consideration is the restrictive regulations concerning equipment design and transportation to consider. They pose additional challenges for Canadian manufacturers. Redesigning equipment to meet those requirements can make it an unprofitable venture for some.
But selling into eastern Europe isn’t without its problems, either. “The culture is different, and language is a huge barrier,” says Henry. “But going into the field and doing the work is very similar to here.”
That similarity has many manufacturers willing to make the effort to develop markets there. However, the most troublesome obstacle facing some Canadian exporters may be protective trade barriers.
The restrictive trade policies of some former Sovietbloc countries, particularly Russia, have caught the attention of European machinery manufacturers as well. One expert on a panel assembled by Germany’s Agr icultural Machinery Association, who gathered at Agritechnica to discuss machinery exports, says “an uncertain legal situation” pertaining to imports now exists in Russia.
That country mandates a level of local investment for manufacturers at tempt ing to import some machines, including tractors. However, it is unclear if that investment will then qualify companies as domestic manufacturers or if they will still be considered importers. That is an important distinction, because Russia’s attempt to protect domestic manufacturing by imposing an import tariff based on horsepower ratings has severely curtailed imports of western tractors.
Difficulties such as that, combined with a credit shortfall and devalued currency, have led to a dramatic drop in overall western machinery imports into the country. For German manufacturers, Russia has fallen from second to seventh place as a destination for agricultural machinery exports.
But for Canadian manufacturers who are intent on growing their companies, overseas trade is essential. “You can only do so much in your own backyard,” says Meyer. That leaves Prairie manufacturers with little choice but to cope with the inevitable difficulties. And, for most, their track record so far suggests they’ve been doing a pretty good job of it.
In the future, continuing to show their equipment at Agritechnica remains a key element for many. Corporate managers seem to agree shows like that are extremely valuable in exposing their products to potential customers in foreign markets.