Northeast DEALER€¦ · Tim Whitley, CEO of Team SI, who will help dealer’s make the most of their ... special attention to your marketing plan. An effective marketing plan is

DEALERNortheast

JANUARY 2017 c Vol. 19, No. 214

IN THIS ISSUE:3 Observations from the Field4 Association News6, 7 Regional Meetings 8 Charter Software's November

ASPEN Release8 Tax on Dealers - OH10 FREE Webinar Wednesday10 OSHA's Enforcement of Employee Rights

10 OSHA Announces Final Rule12 FMSCA News & Updates14 PA Diesel Tax to Soar Another 14 Cents15 Tax Tips16 Truck Idling Times in New York16 2016 Bonus Depreciation & Section

179 Deduction18-19 Equipment Industry News

ADVERTISER’S:2 Haylor, Freyer & Coon 5 New York Farm Show9 Charter Software9 Electronic Merchant Systems11 Fastline13 J.J. Keller & Associates, Inc.17 LED Light Special20 Federated Insurance

NEDA Salutes our Supporting Advertisers. It is our pleasure to list the names of those advertisers who support NE Dealer each month. We trust their advertisement will be remembered when goods and services are required by you, our dealer members. It is good to do business with companies who are interested in doing business with you and your industry association.

BOB SPOHN ELECTED PRESIDENT of Northeast Equipment Dealers Association Board of Directors

www.ne-equip.com The Newsletter of NoRThEAsT EquipmENT DEALERs AssociATioN, iNc.

Robert T. Spohn (Bob) of Sharon Springs Garage, Sharon Springs, NY was elected to a one-year term for 2017 as President of the Northeast Equipment Dealers Association. Bob was elected at NEDA’s November 16, 2016 Board Meeting in Liverpool, NY.

Bob’s is a third Generation Dealership that started in 1906. He currently is in partnership with Dave Handy and Dave also manages the Troy, NY store. As a Kubota, Stihl, AGCO, Toro plus other short lines they operate a three Store Dealership with locations in Oneonta, Sharon Springs and Troy, NY and they pride themselves in quality equipment and service they provide to their customers.

Bob and Dave believe the success of their company is a direct result of knowing their customer base, defining and focusing on their niche markets and providing superior customer service.

In his role as President Bob leads the 12 Member Board of Directors that is responsible for overseeing the Association’s Affairs, Budget and Programs provided to its dealer members.

Other individuals serving on the Board of Directors are:Josh Ahearn, Immediate Past President) Ahearn Equipment Inc., Spencer, MAJohn Komarisky, (1st VP/Treasurer) Main & Pinckney Inc., Auburn, NYNate Shattuck, (2nd VP) Devon Lane Farm Supply Inc., Belchertown, MAScott Bair, Mountain View Equipment Inc., Plattsburgh, NYBrian Carpenter, Champlain Valley Equipment Inc., Middlebury, VT (Brian is also ‘Chairman of the Board’ for Equipment Dealers Association (EDA), St. Louis, MOEd Hines, Hines Equipment Inc., Cresson, PABrad Hershey, Hoober, Inc., Mifflintown, PACraig Houseknecht, Moffet Turf Equipment, Inc. (MTE), W. Henrietta, NYScot Stanton, Stanton Equipment, Inc., E. Windsor, CTDavid Warner, Warner Tractor & Equipment, Inc., Troy, PAWendell Walldroff, Walldroff Equipment, Inc., Watertown, NYThe Board of Directors work with an incredibly dedicated management and employee team, whose passion for serving our dealer members is

unmatched.The entire Board and management of the NEDA, Inc. are proud of the accomplishments we have made for our members over the years, and you can

be assured what we have built in the past will position NEDA to continue to be the best place for our dealer members going forward.

NEDA Workers’ Compensation Safety Group

Exclusively for New York Members of the Northeast Equipment Dealers Association

DIVIDEND HISTORY

ELIGIBILITY

Over 23.00% Average DividendFor The Last 10 Years!

Policy Year2014-20152013-20142012-20132011-20122010-20112009-20102008-20092007-20082006-20072005-2006

Dividend20.0%15.0%15.0% 5.0%20.0%25.0%37.5%20.0%35.0%37.5%

Members of NEDA Inc. Construction/Industrial Equipment Dealers Material Handling & Lift Truck Dealers Farm Equipment Dealers Outdoor Power Equipment Dealers Rental Equipment Dealers with Repair Facilities

ADVANTAGES Aggressive Advance Discount (up to 20%) Excellent Dividend Potential Claims Management & Loss Control Services Monthly Installments for Qualifying Dealers

To see if you qualify, call Pat Burns at Haylor, Freyer & Coon 315-703-9148 / 800-289-1501 or fax a current declaration page to 315-703-8159 or Call Ralph Gaiss (Executive Director of

NEDA) at 315-457-0314 for more information.You may also visit us at www.haylor.com/NEDA

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Northeast Dealer | JANUARY 2017 … 3

The general information provided in this publication is not intended to be nor should it be treated as tax, legal, investment, accounting, or other professional advice. Before making any decision or taking any action, you should consult a qualified professional advisor who has been provided with all pertinent facts relevant to your situation. This publication is designed to provide accurate and authorita-tive information in regard to the subject matter co v ered. It is furnished with the understanding that the Northeast Equipment Dealers Association, Inc., the publisher, is not engaged in rendering legal, accounting or other professional service. Changes in the law duly ren-der the information in this publication invalid. Legal or other expert advice should be obtained from a competent professional. Some of the editorial material is copyrighted and may be reproduced only when permission is obtained from the publisher and the association.

Board of DirectorsOfficers

rOBerT sPOHN, President / Past President - 2005Sharon Springs Garage / Sharon Springs, NY518-852-6985 • Fax: 518-284-2774AGCO, White, Hesston, Gehl, Kubota, Allis, [email protected]

JOHN e. KOMArisKY, 1st Vice President / Treasurer Past President 2015, 2012Main & Pinckney Equipment Inc. / Auburn, NY315-253-6269 - FAX 315-253-5110New Holland, Simplicity, Brillion, Bush Hog [email protected]

NATe sHATTUcK, 2nd Vice Pres. / Past Pres.- 2010Devon Lane Farm Supply, Inc. / Belchertown, MA413-323-6336 • Fax: 413-323-5080Yanmar, Landini, Monosem, Ferris, Simplicity, Stihl, [email protected]

JOsH AHeArN, Immediate Past President 2016Ahearn Equipment, Inc. / Spencer, MA508-885-7085 • Fax: 508-885-7261Kubota, Cub Cadet, Stihl, NAPA [email protected]

rALPH GAiss, CEO and Executive Vice Pres.800-932-0607, Ext. 222 • Fax: [email protected]

DirecTOrs

BriAN cArPeNTer, Chairman of the Board for EDA, 2016-2017, St.Louis, MO / NEDA Past President 2009Champlain Valley Equipment / Middlebury, VT802-388-4967 • Fax: 802-388-9656New Holland, Case IH, Kubota, [email protected]

scOTT BAirMountain View Equipment, Inc. / Plattsburgh, NY518-561-3682 • Fax: 518-561-3724John Deere AG/CCE, Claas, Kuhn Knight, Kverneland, Stihl, Husqvarna, Frontier, Servis, [email protected]

BrAD HersHeYHoober, Inc. / Mifflintown, PA717-436-6100 • Fax: 717-463-2312Case IH, JCB, [email protected]

eD HiNes, Past President 2014, 2001Hines Equipment / Cresson, PA814-886-4183 • Fax: 814-886-8872Case IH, Gehl, New Idea, Cub [email protected]

crAiG HOUseKNecHT, EDA & UEDA/NEDA OPE Council MemberMoffett Turf Equipment (MTE) / West Henrietta, NY585-334-0100 • Fax: [email protected], Mahindra, Ventrac, Smithco, Turfco, Redexim, Golf Lift, Lely, Ryan, RedMax scOT L. sTANTON, Past President - 2003Stanton Equipment Inc. / East Windsor, CT860-623-8296 • Fax: 860-627-9832John Deere Ag., Knight, Athens, [email protected]

WeNDeLL WALLDrOff, Past President - 2002Walldroff Farm Equip., Inc. / Watertown, NY315-788-1115 • Fax: 315-782-4852New Holland, Hesston, Woods, White-New Idea, AGCO, [email protected]

DAviD WArNerWarner Tractor & Equipment Inc., Troy, PA570-297-2141 • Fax: 570-297-2074Case, Case/IH, Takeuchi, LinkBelt, LandPride, Agr. & Construction [email protected]

I hope that everyone had a happy and healthy holiday season and, more important-ly, that you were all able to truly enjoy quality time with family and friends! 2017 promises to be an exciting year. We have a new President with Republican majori-ties in both Houses of Congress. No doubt the electorate will be expecting them to act quickly and fulfill their campaign promises. One of the easiest should be President Trump’s pledge to rebuild America’s infrastructure and in turn put America back to work. Let’s hope he is able to follow through and that the

country and equipment industry will benefit. Based on recent dealer visits, the outlook for Compact, Outdoor Power Equipment and select Ag Equipment markets sales in 2017 should continue to improve along with the domestic economy. Though several experts have indicated their beliefs that sales of large Ag (New and Used) Equipment have found the floor and that the segment (over $100,000) is poised for growth, I suspect that market segment will continue to be one of our most challeng-ing. Managing equipment inventories, both new and used, will demand increased attention, planning, and thought in 2017! Attending the association’s regional meetings, participating in the discus-sions, and networking with your fellow dealers are all unique and valuable member benefits! This year, we’ll be featuring three outstanding speakers: Tim Whitley, CEO of Team SI, who will help dealer’s make the most of their digital harvest, Rex Collins of HBK CPA & Consultants who will talk about State Sale Tax and Across State Line Use Tax Issues and Laramie Sandquist, of Federated Insurance who will help us learn how to set our Dials on Low. Make the most of your membership, visit the association’s website @ http://www.ne-equip.org/registration-2017-northeast-equipment-dealers-association-annualregional-meetings-underway/ and reserve seats for yourself and your staff today! January is a great time to both review last year’s performance and plan for the year ahead. How did your dealership/department perform? Did the dealership meet last year’s goals? Communicating the dealership’s accom-plishments, as well as any “challenges”, and identifying what worked and what didn’t to your staff (all of them) are all vital to successfully figuring out “why”. Understanding “why” will better enable you and your staff to adapt to the “changing” reality of retailing equipment. I hope that, during your review, you are able to take extra time and pay special attention to your marketing plan. An effective marketing plan is far more than a budget number and a list of media outlets: it’s your dealership’s blueprint for success! Great marketing plans and dealerships maximize every customer contact. Communication, sales training, education - for all staff in all departments – is a must!

continued on page 4

Observationsfrom the FIELD

Tim WentzField Director717.576.6794

4 …”Committed to Building the Best Business Environment for the Northeast Equipment Dealer”

NEW MEMBERCEDAR STREET SALES & RENTAL 111 Cedar Street • Batavia, New York585-343-4899 • Fax: 585-343-4907Principal: Guy Clark e-mail: [email protected] Lines Carried: Cub Cadet, Stihl, Yanmar, Kohler, Briggs & Stratton, Honda

Please join us in welcoming CEDAR STREET SALES & RENTAL to NEDA.

Observationscontinued from page 3

Personally, I’m excited to hear Tim Whitley’s presentation and am look-ing forward to his help answering the following questions: Are dealership customers using “smart phones”? Are they using Social Media? Is it true that over 50% of internet searches are “mobile”? Is it true that customers are most interested in two things: the dealership’s phone number and its street address (GPS)? How can we ensure calls and e-mails handled appropriately? How do we track if they were converted into sales? Did you/your staffs turn those opportunities into customers for life?

When you REAP the benefits of membership,your PROFITS will follow!

New I-9 Must be Used by January 22, 2017 On Nov. 14, USCIS released a revised version of Form I-9 (Rev. 11/14/2016 N), Employment Eligibility Verification. Employers may continue using Form I-9 with a revision date of 03/08/2013 N. through Jan. 21, 2017. By Jan. 22, 2017, employers must use the revised form. Employers should continue to follow existing storage and retentions rules for all of their previously completed Forms I-9. See USCIS at: https://www.uscis.gov/i-9

New York State Fairgrounds Syracuse, NY February 23, 24, 25 Thursday, Friday & Saturday 8:30am To 4pm Daily

OutstandingIndoors

and

• The Spring Planning Show of the Northeast• Over 400 Exhibitors• Latest In Farming Technologies• Robotic Milker• Forestry Workshops• Daily Beef Seminars• Together ... Let’s Build

The Northeast Agricultural Future

Tickets Available From Your Local Northeast Equipment DealerCo-sponsored by American Agriculturist Magazine and The Northeast Equipment Dealers Association

Robert Watson Memorial Toy AuctionLeClar Bros. Auction Service

Friday, February 24, 2017 5:00pm • Building 2, Arts & Home Center For More Information

Contact Scott Grigor - 315.457.8205www.newyorkfarmshow.com / [email protected]

32nd ANNUAL


Northeast Equipment Dealers Association and Federated

Insurance are presenting a seminar you won’t want to miss.

- Risk Management Culture - Industry Loss Analysis - Hiring, Screen, and Retaining Employees - Employment Practices and 3rd Party Harassment - Distracted Driving – What is Important to You? - Claims Management

- Cyber Risk Management

Monday, February 6, 2017 Wednesday, February 8, 2017

Friday, February 10, 2017 More specific details to follow

- Owners

- HR Managers

- Designated Risk Managers


Northeast Equipment Dealers Association Regional Meetings

� When and Where?February 6, 2017: Lancaster, Pennsylvania February 8, 2017: Liverpool, New YorkFebruary 10, 2017: Concord, New Hampshire

� Why Attend?� Learn from an Industry Leader� Get to visit with a leading expert from Google� Increase your dealerships overall ROI � Innovate your digital media tactics for the benefit of your dealership� Learn and solve the challenges your dealership is facing in 2017� Walk away with a list of website goals for your dealership

Your Website – Your Most Valuable ImplementIn order to thrive in today’s market, you must have an online storefront that is as organized and pleasant as your physical location. Your website is an extension of your physical locations, so it should include the core values and priorities of each of your locations. It is important that your dealership matches your look and feel throughout every medium. Information-only websites aren’t useful to potential customers anymore. Consumers will look at 7.2 websites prior to purchasing new or used equipment. You are trained to convert customers who come onto your lot, but are you converting lookers into customers in your online store?

Renowned digital innovator and CEO Tim Whitley from Team SI and a category expert from Google will provide an overview of digital marketing tools, platforms and techniques that can take sales to a new level and provide constant contact and insights for your most valuable customers.

Speaker:TIM WHITLEY

CEO, Team SI

About Tim Whitley� CEO and Founder of Team SI� Google All-Star Partner since 2012� Business Executive of the Year� Inc. 500 and 5000 Member� Degreed Meteorologist� 10+ years in Television� Arkansas Business 40 under 40

“Tim Whitley had the room full and engaged as he educated our Agricultural, Construction and Outdoor Power Equipment dealers on the latest digital media tactics to drive additional business to our

dealer members. He was without question the most popular speaker during our annual meeting.”– Mike Caraway, Executive Vice President, Midwest-SouthEastern Equipment Dealers Association

Your website is just as important as your physical location. Are you sure you're giving customers the right impression?

Seepage 12 for

moreinformation.


Charter Software Inc., maker of ASPEN Business Management Software, announced additional enhance-ments to their existing Bobcat/Doosan, Mahindra, John Deere and PMPro integrations, designed to increase dealers’ productivity and profit margins. The enhance-

ments are available with the November ASPEN release (v. 6.11.11), and include the following:

■ Bobcat/Doosan Flat Rate Times are now sup-ported in ASPEN, enabling dealers to provide more accurate estimates that increase customer satisfaction. Additionally, dealers can better assess their service technician’s productivity and improve profit margins. Charter Software is one of the few business systems who provide this information.

■ With the November release ASPEN also sup-ports integration with the new United OPE Flat Rate Guide, which allows users to populate work orders with OPE flat rate repair times and report back actual times to the Guide.

■ ASPEN’s Mahindra Parts Order Submission integration eliminates the need for re-keying data, reduces lost orders, and results in higher order accuracy and time savings. Charter Software is committed to their relationship with Mahindra, and plans to continue working with them on other integrations.

■ Support for PMPro and JD Parts Advisor was also updated in ASPEN, since both moved to a dynamic, web-based system from information pre-viously installed from DVDs.

Charter Software views their strong partnerships with leading manufacturers as a key component to their customers’ success. “Many OEMs are actively investing in IT initiatives that connect their back-end systems with business systems that their dealers use. ASPEN’s architec-ture and our close relationships with OEMs like Doosan/Bobcat, John Deere, Mahindra and the like allow us to react quickly to new initiatives so that the dealers can streamline their transactions as much as possible to pro-vide a competitive edge over other area dealers,” said Anne Salemo, Charter Software President/CEO. (About Charter Software Inc.: Charter Software provides scal-able, integrated Microsoft-based business management software designed to increase communication and profitability across all departments for equipment dealerships, golf car, and turf dis-tributorships. ASPEN, Charter Software’s business management software, provides best-in-class mobile and rental tools that help companies manage multiple aspects of their business both in and out of the office. Close relationships with industry’s leading OEMs and suppliers allows them to create streamlined EPC/e-commerce integration that strengthen dealers’ and distributors’ connections with their business partners. For more information on Charter Software please visit http://chartersoftware.com/ or contact us via email at [email protected], or phone at 303.932.6875.)

Mahindra, Bobcat/Doosan and John Deere Dealers Improve Performance with Charter

Software’s November ASPEN Release

TAX ON DEALERS Recently, the Ohio Supreme Court decided Crutchfield Corp. v. Testa, Slip Opinion No. 2016-Ohio-7760, Newegg, Inc. v. Testa, Slip Opinion No. 2016-Ohio-7762, and Mason Cos., Inc. v. Testa, Slip Opinion No. 2016-Ohio-7768. The court held that a taxpayer's physical presence in Ohio is not a necessary condition for imposing the Commercial Activity Tax ("CAT"). In addition, the court held that the CAT's $500,000 sales-receipts presence standard satisfies the substan-tial nexus requirement of the "dormant" Commerce Clause under the United States Constitution, even if a taxpayer does not maintain a physical presence with the state. The Bottom Line: Dealers in states other than Ohio may be required to pay tax to Ohio. Every dealership is unique; so, please give Rex Collins (317.504.7900) or another member of the HBK Dealership Industry Group (317-886-1624) a call and we can help you determine whether you are impacted by this ruling. I shared this when the ruling was initially issued but thought a quick mention might be worthwhile for your constituents as we approach the end of the year. Call me anytime at 317.504.7900. Rex A. Collins, CPA (IN), CVA Principal 3976 Bent Tree Lane Greenwood, IN 46143 (317) 504-7900 Cell: (317) 504-7900

PLEASE NOTE: Rex will be a workshop presenter at the NEDA 2017 Regional Meetings. He will speak on State SaleS tax and acroSS State line USe tax iSSUeS where you will learn about state specific (and dealership industry specific) sales and use tax issues. Also, transactions with customers from other states are a huge issue and one for which many dealers are ill-prepared to deal correctly and will be discussed as well.


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FREE Webinar WednesdayHosted by Fastline Media Group, specifically with equipment dealers in mind.

Held on the 2nd Wednesday of the month, Fastline Media Group’s Webinar Wednesday covers a variety of topics for agricultural equipment dealers. “At Fastline Media Group we are always looking for new ways to disseminate important and timely information to our equipment dealer customers,” said Susan Arterburn, Marketing Director. “As industry experts in the field of agriculture marketing, Webinar Wednesday provides a unique way for us to share and communicate with equipment dealers.” Topic: Beyond Price – What Brings the Buyers in Your Door Date: Wednesday, January 11, 2017 Time: 3 PM EST Duration: 60 minutes Register: https://cc.readytalk.com/r/f02z7wejjcn&eom Cost: Free A survey of 600 active ag equipment buyers reveals five factors in dealership loyalty and purchase decision making. Learn what those essential factors are and how to leverage them within your dealership. Visit www.FastlineMediaGroup.com/Resources to register for upcoming Webinars or view past episodes.

OSHA Announces Final Rule on Walking-Working Surfaces, Fall Protection and Update on PPE Standard According to a Nov. 17 news release from the Department of Labor, a final rule has been issued by the Occupational Safety and Health Administration (OSHA) updating Walking-Working Surfaces standards as well as a new section under general industry Personal Protective Equipment Standards. The rule will go into effect on Jan. 17, 2017, and, according to OSHA estimates, the rule, "will prevent 29 fatalities and more than 5,842 injuries annually." The release states that the update will affect approximately 112 million workers at seven million worksites. The final rule's updates include the following:

•Employerselectionoffallprotectionsystems• Increasedconsistencybetweengeneralandconstructionindustries•Newregulationsonropedescentsystems•Prohibitingbodybeltsinfallarrestsystems•Newworkertrainingonfallprotectionsystemsandequipment

While OSHA did not specifically exempt commercial motor vehicles from the fall protection requirements, OSHA "did not propose any specific fall protection requirements for... motor vehicles." However, OSHA suggested that it "will continue to consider the comments it has received, and in the future the Agency may determine whether it is appropriate to pursue any action on this issue." The final rule did include new requirements for dockboards, repair pits, loading docks, guard-rails, fall protection and employee training, and outlined OSHA's authority to enforce wheel chock-ing requirements. The majority of the rule goes into effect in on January 18, 2017, but new training requirements go into effect on May 18, 2017. ATA's executive summary: http://www.trucking.org/ATA%20Docs/News%20and%20Information/Testimony%20and%20Comments/11%2022%2016%20-%20OSHA%20Walking%20Working%20Surfaces%20Final%20Rule%20Summary%20Nov%202016.pdf The release may be read in its entirety here: https://content.govdelivery.com/accounts/USDOL/bulletins/17328da (~SC&RA)*Note: It is possible that Congress may choose to review and overturn this rule under procedures authorized by the Congressional Review Act. However, this will not occur until after much of the rule takes effect, if it happens at all, and those subject to the rule are advised to plan accordingly.

~ The Dispatch

OSHA's Enforcement of Employee Rights Provisions Go Into Effect On Dec. 1, after two delays and a court chal-lenge, OSHA's employee rights provisions within the new electronic reporting final rule go into effect. The section now being enforced (§1904.35) requires that employers: (1) inform each employee of how he or she is to report a work-related injury and illness; (2) provide access to their injury and illness records for employees and their representatives; and (3) not discharge or in any manner discriminate against any employee for reporting a work-related injury or illness. For further informa-tion on OSHA's Injury and Illness Rule, click here.: http://www.trucking.org/ATA%20Docs/What%20We%20Do/Trucking%20Issues/Documents/Labor/FINAL%20Summary%20o f % 2 0 O S H A % 2 0I n j u r i e s % 2 0 a n d % 2 0Illness%20Reporting%20Final%20Rule%20-July%202016%20Update.pdf

~ The Dispatch

OSHA


CREDIT CARD PROGRAMEMS (ELECTRONIC MERCHANT SYSTEMS)Steven Miller866-367-1818, Direct 585-285-9954F: [email protected]

FEDERATED INSURANCE COMPANYProperty & Casualty Insurance (8 states except VT), Health Insurance (PA only)Workers' Comp (All states except NY)Jerry Harness at 800-241-4925, C: 412-720-4697Fax [email protected]•www.federatedinsurance.com

HAYLOR, FREYER & COON, INC.Health Insurance Program Dan Elliott Mgr., Group Benefit Consulting315-703-9149 / 800-289-1501, ext. [email protected]•www.haylor.com Jim McGarvey Supervisor Benefit Consulting 315-703-3239•[email protected]

Physical Damage Insurance (HF&C, Inc.),Rental / Leasing EquipmentPatrick Burns at 800-289-1501, Ext. [email protected]•www.haylor.comWorkers' Comp (Return Dividend Program for NY Dealers only)Property & Casualty Insurance for VT Patrick Burns at 800-289-1501, Ext. [email protected]•www.haylor.com

LEGAL ASSISTANCE – FREE LIMITED Dave Shay at 816-421-4460Fax:816-474-3447•[email protected]

NEDA ON-LINE CAMPUSDave Close at 800-932-0607 x [email protected]

OSHA WORKPLACE SAFETY COMPLIANCE PROG.Dave Close at 1-800-932-0607 Ext. [email protected]

PARTNERSHIP FREIGHT PROGRAMYellow Freight, UPS Freight, FedEx GroundKeith Korhely at 800-599-2902 x [email protected]

DEKRA INSIGHTCERTIFIED SPCC PLANDave Close at 800-932-0607 x 235Robb Roesch at 800-888-9596 x [email protected]

TCF EqUIPMENT FINANCE,A DIvISION OF TCF NATIONAL BANKStacey Simmer, Sales AssociateP. [email protected]

Ralph Gaiss, Executive VP/CEO800-932-0607 x [email protected]

Dave Close, Operations Manager800-932-0607 x [email protected]

Kelli Neider, Administrative Assistant800-932-0607 x [email protected] (Business Forms)

Tim Wentz, Field Services DirectorC: 717-576-6794, P: 717-258-1450F: [email protected]

Scott Grigor, NY Farm Show Manager800-932-0607, Ext. [email protected]

Art Smith, Consultant/Editor, NE Dealer717-258-8476, F: [email protected]

CHARTER SOFTWARE BUSINESS SYSTEMSMelissa Amen303-932-6875 - Ext. 219www.chartersoftware.com

CERTIFIED BUSINESS vALUATIONSWestern Financial Consulting, P.C.Curtis A. Kleoppel / Bob Charbonneau816-561-5323 x 116 & 117Fax: 816-561-1249 or 800-762-5616

For Service / SPoNSoreD ProGrAMS,cAll Your ASSociAtioN

800-932-0607 • 315-457-0314 • Fax: 315-451-3548 • www.ne-equip.com

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HIGHWAY

FMCSA to Maintain the Current Carrier Drug Testing Rate at 25% for 2017 The Federal Motor Carrier Safety Administration announced Dec. 13 that it will maintain the current controlled substances random testing rate at 25% for motor carriers during 2017. The agency in 2016 lowered the minimum annual drug testing rate to 25% from 50% the prior year in response to improved positive drug test rates for truck and bus drivers. FMCSA requires motor carriers to randomly test their pool of drivers for drugs and alcohol at the nationally prescribed percentage rate. If the positive test rate is higher than 1%, the testing rate will automati-cally revert to 50%, the agency said. "We will continue to monitor the data closely, and should the positive rate for drug use rise above the 1% threshold in the upcoming 2017 survey, the national random testing rate requirement will be immediately increased to 50%," FMCSA Administrator Scott Darling said in a statement.

~ Transport Topics

BREAKING NEWS: FMCSA Releases Drug And Alcohol Clearinghouse Final Rule This morning, the Federal Motor Carrier Safety Administration is-sued its final rule creating a first-ever federal clearinghouse for driver drug and alcohol test results. According to an FMCSA press release, motor carriers, medical review officers, third-party administrators and substance abuse professionals will be required to report information about drivers who test positive for drugs or alcohol, refuse required drug and alcohol tests or who have undergone return-to-duty drug and alcohol rehabilitation pro-cess. ATA staff are reviewing the full details of the final rule, but for more than two decades, ATA has pressed for the creation of a clearinghouse in order to close the job-hopping loophole and to help prevent drivers who use drugs or alcohol from getting behind the wheel of a commer-cial vehicle. Carriers can find more information about FMCSA's rule here: https://www.fmcsa.dot.gov/regulations/commercial-drivers-license-drug-and-alcohol-clearinghouse ATA will be soon issuing a full evaluation and guide to the rule, which TANY will pass along to its members.

~The Dispatch

FMCSA Issues Final Entry-Level Driver Training Rule Federal trucking regulators an-nounced a final entry-level driver train-ing rule on Dec. 7 that dropped an earlier proposal requiring that new truck driv-ers complete a minimum of 30 hours of behind-the-wheel training to become eli-gible for a commercial driver license. The Federal Motor Carrier Safety Ad-ministration's final rule requires that be-hind-the-wheel proficiency of an entry-level truck and bus driver be determined solely by the instructor's evaluation of how well the driver-trainee performs the fundamental vehicle control skills and driving procedures set forth in the curri-cula. The 281-page entry-level driver train-ing rule revises the standards required for new interstate and intrastate commercial vehicle operators to obtain a Class A and Class B commercial driver license. The rule, which carries a compli-ance date of Feb. 7, 2020, also sets no minimum number of hours of classroom instruction. "However, training providers must provide instruction in all elements of the applicable theory curriculum, and driver-trainees must receive an overall score of at least 80% on the theory assessment," according to the rule. The behind-the-wheel curricula for the Class A and Class B CDL, composed of range and public road segments, include discrete maneuvers that each driver-trainee must proficiently demonstrate to the satisfaction of the training instructor. The rule dictates that the training provid-er must not issue the training certificate unless the driver-trainee demonstrates proficiency in performing all required behind-the-wheel skills. "ATA has consistently advocated that skills, not simply time spent in a class-room or behind the wheel, should be the deciding factor if a student should be allowed to take a commercial driver's license test," said American Trucking Associations Executive Vice President of Advocacy Bill Sullivan. "Today's rule is a victory for common sense and for safety."

~ Transport Topics

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Pennsylvania truckers, who already pay the nation's highest diesel fuel taxes, won't be happy when they fill their vehicles after the New Year. That's because on Jan. 1 that tax will rise from 63.87 cents per gallon to 77.59 cents per gallon. Truckers elsewhere don't pay more than 49.4 cents per gallon. Also, gas is increas-ing from 50.3 cents per gallon to 58.2 cents per gallon. Pennsylvania's three-year-old transportation funding law, Act 89, is the basis for the high rates. "Comparisons with fuel tax rates in other states are misleading," said Pennsylvania Department of Transportation spokesman Rich Kirkpatrick. "In Pennsylvania, we have a user fee system. Drivers pay some fees and fuel taxes that go into a dedicated fund that supports highway and bridges and also state police enforcement. Meeting the trans-portation and state police needs has been challenging as state police costs have risen dramatically over the last decade. The added revenue is needed for critically need-

ed bridge and road repairs that benefit the trucking industry." Which is why the Pennsylvania Motor Truck Association supported Act 89. However, PMTA President Kevin Stewart is concerned about this year's diesel price hike. "Act 89 brought in much-needed infrastructure rev-enues to the Commonwealth," Stewart said. "However, an almost 14 cent per gallon increase will have a signifi-cant impact on a carrier's bottom line and may impact the ability of many carriers to invest in new technologies or more fuel efficient vehicles. I don't believe anyone anticipated or planned for that large of an increase." State Rep. Joseph Petrarca introduced a bill in July that would have prevented wholesale fuel prices from rising but it died in committee. "With the added resources from the Act 89 rev-enue increases, PennDOT is making significant progress against a huge backlog of highway and bridge improve-ment needs," Kirkpatrick said, noting that the number of structurally deficient bridges have been cut from 6,034 in 2008 to 3,662 in 2016. "Pennsylvania has a large and old network of highways and bridges that still needs a lot of work. We have the fifth largest state-maintained highway system and the third largest state-maintained bridge system. That system is roughly the same size of the state-maintained systems of all of New York, New Jersey and the New England states combined."

~ Transport Topics

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cOMMERcIAL PIck-UP TRUckS HAULINg RULES POSTERS NOW AVAILABLE Get your CMV hauling rules by State for towing a trailer by going to our website. Click here: http://www.ne-equip.org/

resources/truckinghauling-rules/ to down-load your poster by state. You will need to login with your user ID/Password. Safety Regulation books are available for $4.00 each. Call the Association @ 800-932-0607 to order yours today!!

Pennsylvania's National-High Diesel Tax To Soar Another 14 Cents On Jan. 1

Pennsylvania Switches to Annual Inspections –

(TRUCKS) Pennsylvania trucking companies and the Pennsylvania Motor Truck Association are celebrating in the wake of Gov. Tom Wolf's sign-ing of pro-trucking legislation into law on Nov. 4. The new law requires annual inspections instead of semi-annual inspections for large commercial trucks as had been the case in Pennsylvania. The Federal Motor Carrier Safety Administration requires all trucks to undergo FMCSA-certified inspections annually. Only California, Delaware, Hawaii, Maryland and New Hampshire require trucks to be inspected more often. "It's a very big victory for us," said PMTA's assistant general manager, Dean Riland. "We really started focusing on this about six months ago. Some of our members have vehicles that are registered in Pennsylvania but are stationed in other states. So they had to bring those vehicles back to Pennsylvania twice a year just to get them inspected. "Inspecting trucks on an annual basis instead of every six months is going to be a big help because we run in so many states," H.R. Ewell President Calvin Ewell said. "There've been times where we've gotten close to not getting some trucks back in time for a six-month inspection. We'll be saving approximately $125 per year per truck. At 205 trucks, that equals a savings of $25,625 per year." Pennsylvania's new trucking law also allows carriers to recoup prorated registration fees if their trucks are stolen or demolished. "That's a big issue for smaller fleets if a tag that cost a couple of thousand bucks is just sitting there dormant," Ewell said. "Now they can give it back and receive the balance."

~ Transport Topics

TAX TIPS


TAX TIPS The Internal Revenue Service today issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for busi-ness, charitable, medical or moving purposes. Begin-ning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

•53.5 cents per mile for business miles driven,down from 54 cents for 2016

•17 cents per mile driven for medical or movingpurposes, down from 19 cents for 2016

•14centspermiledriven in serviceof charitableorganizations

The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automo-bile. The rate for medical and moving purposes is based on the variable costs.

- IRS

IRS Backs Off Taxing Dollies By a memorandum from the Office of the Chief Counsel dated December 6, 2016, the Internal Revenue Service has announced that it is "re-evaluating" its recent shift in position on the application of the 12 percent federal excise tax to converter gear (dollies or auxiliary axles). For nearly thirty years, IRS's position had been that dollies were exempt from the FET, but, by memos issued last December and in June this year, IRS reversed itself unilaterally, without notice or public hearing, and concluded that dollies used with semitrailers over 26,000 pounds gross weight - that is, all dollies - are taxable. ATA and the Truck Trailer Manufacturers Asso-ciation requested IRS to reconsider, and IRS is evidently doing so. The most recent memo closes with a direction to tax-payers not to follow the two earlier memos. This leaves dollies nontaxable, at least for the time being. ~ The Dispatch

TAX UPDATESFORM 1099S AND W-2S are now due by January 31 for all filings. Under the old law, businesses were required to send 1099 and W-2 forms to employees and payees by January 31 and could file them with the IRS and Social Security Administration by the last day of February. It is critical that taxpayers make sure the information re-ported on the Form 1099s and W-2s is correct to avoid fil-ing amended forms for errors discovered after January 31. Vendors should complete a FORM W-9 to verify name, address and taxpayer identification number to help en-sure the accuracy of Form 1099s.

FORM 1065 (partnership and most LLC returns) are now due March 15. Partnership tax returns previously were due April 15 (for calendar year filers), but it is believed that many extensions for individuals relate to waiting for part-nership K-ls. Therefore, the due date has been moved up to March 15.

FORM 1120-S (S-corporation returns) keep the same due date of March 15.

FORM 1120 (corporation returns) are now due April 15. The due date of these returns has been moved ahead from the previous due date of March 15.

YEAR-END REMINDERS: Employers should update employee payroll informa-tion for 2017. Employers should have each employee com-plete an updated FORM W-4 and LOcAL RESIDENcY cERTIFIcATION FORM. These forms should be submitted to the payroll provider. This information will account for any change in tax withholdings and/or address. The FORM 1-9 (Employment Eligibility Verification) should be kept in the employer's files.

FORM 1098-T (tuition statement) must be obtained in or-der to claim an education credit. In the past, you could claim the credit without the form.

FORM 1098 (mortgage interest statement) will now report (1) the beginning principal balance, (2) the mort-gage origination date and (3) the address of the property securing the mortgage. These changes allow the IRS to more fully determine the proper amount of mortgage interest deduction.

SEcTION 179 depreciation deduction is $500,000 (limited to $2,000,000 of purchases) until further notice. Special 50 percent bonus depreciation is available through 2019. Businesses of all sizes can depreciate 50 percent of the cost of new equipment acquired and placed in service during 2016 and 2017. The amount of bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.

2017 Standard Mileage Rates Announced



Truck Idling Times in New YorkHowever, This Affects ANY Truck that Travels into New York State While the official winter season began December 21, December 1 marks the beginning of "meteorological" winter- the time when it really begins to feel like winter. With that in mind, the SMMC is reminding its members of the maximum idling times in New York and beyond, before the season brings sub-zero temperatures. New York (State) - (see below for various towns, counties and other cities of New York state.)

Maximum idling time: 5 minutes Fines: $375-$15,000 - 1st offense; Up to $22,500 - 2nd offense & subse-quent offenses

Exemptions:• Trafficconditions• Auxiliarypowerormaintenance• Emergencyvehicles• Withinminesorquarries• Parkedformorethan2hours&lessthan25°F• StateInspections• Recharginghybridelectricvehicles• Farmvehicles• ElectricvehiclesOther areas of New York State have individual laws: They are: New

York City, Larchmont, town and city of Mamaroneck, New Rochelle, Rock-land County, Saratoga Springs and Westchester County.

~ ATRI

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ortheastquipmentealersssociationEstablished 1901

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2016 Bonus Depreciation and Section 179 Deduction It is a common tax management strategy to use accelerated deprecia-tion, which includes bonus deprecia-tion and section 179 depreciation, to reduce taxable income on farms and ranches. Dealers are reminded that for 2016, up to $500,000 of section 179 depreciation and 50 percent bo-nus depreciation can be used when purchasing assets. Relatively low ex-pected net returns make these ac-celerated depreciation methods less attractive than they were a few years ago. However, above trend yields and stronger than expected prices in some commodities, increase the likelihood that some farms and ranches will be examining the use of accelerated de-preciation as a tax management strat-egy in what time is left in 2016.

~ Courtesy of EDA,St. Louis, MO


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EQUIPMENT INDUSTRY NEWS

Deere’s short - Term outlook outshines usDA Comparing Deere & Co.’s outlook for 2017 issued on Nov. 23 to that of USDA’s issued earlier this year, you would have to conclude that the world’s largest manufacturer of farm equipment is a bit more optimistic about the year ahead than is the U.S. Ag Agency. Nonetheless, both forecasts are well down from the $404 billion in cash receipts and $136 billion in net cash income levels the industry achieved in 2013.

~ AEI

While crop Receipts held steady in 2016, Livestock Receipts Took a Dive USDA’s Economic Research Service is projecting 2016 net cash farm income will slip to $90.1 billion and net farm income to $66.9 billion, largely the result of declining animal and animal product receipts. Both measures are forecast to decline for the third consecutive year after reaching record highs in 2013 for net farm income and 2012 for net cash income. Net cash farm income is expected to fall by 14.6% in 2016, while net farm income is forecast to decline by 17.2%. These declines follow the 19.8% and 12.7% reductions in net cash income and net farm income, respectively, that occurred in 2015. Overall, cash receipts are forecast to fall $23.4 billion (6.2%) in 2016 due to a $23.4 billion (12.3%) drop in animal/animal product receipts; crop receipts are forecast essentially unchanged from 2015. Nearly all major animal specialties — including dairy, meat animals and poultry/eggs — are forecast to have lower receipts, including a 14.8% drop ($11.6 billion) in cattle/calf receipts. The slight gain in crop cash receipts is driven largely by a $5.3 billion increase in soybeans. Since reaching a record high of $49.4 billion in 2014, milk receipts are forecast to drop $15.4 billion (31.2%) over 2015-16 as declining prices continue to outweigh expected increases in milk production. Cash receipts from cattle and calves are also expected to decline in 2016, falling $11.6 billion (almost 15%) from 2015. Hog production is expected to continue rising in 2016 as the industry recovers from the porcine epidemic virus (PEDV) in 2014. Hog prices are expected to drop in 2016, leading to a forecast drop in hog cash receipts of nearly 7%. On the other hand, turkeys (up $0.6 billion or 10.6%) and miscellaneous livestock (up $0.2 billion or 2.9%) are both expected to grow in 2016. Poultry and egg cash receipts are expected to fall over 18% in 2016, due primarily to a decline in egg receipts.

~ AEI

Use of all articles in the Equipment Industry News pages are used with permission of Lessiter Media (LM), Ag Equipment Intelligence issue of Dec. 15, 2016, Vol. 22, Issue 12. Use of any of the articles and information contained in Ag Equipment Intelligence, Rural Lifestyle Dealer or any other Lessiter Publication Media Brands requires permission of the publisher.

Large Ag Equipment sales Remain soft Typically, November is a seasonally slow month for North American large Ag equipment sales, and that held true once again this year, according to the latest numbers released by the Assn. of Equipment M a n u f a c t u r e r s . November marked the 34th consecutive month of large Ag year-over-year declines (November 2015 and November 2014 both down 36%), Mircea (Mig) Dobre, an analyst with RW Baird notes.

~ AEI

Ag Equipment Intelligence/December/2016 7

Typically, November is a seasonally slow month for North American large ag equipment sales, and that held true once again this year, according to the latest numbers released by the Assn. of Equipment Manufacturers. November marked the 34th consecutive month of large ag year-over-year declines (November 2015 and November 2014 both down 36%), Mircea (Mig) Dobre, an analyst with RW Baird notes.

There was a bit of positive news in the latest release, however. For the first time in nearly 3 years, last three months (L3M) sales for 4WD tractors were up.

U.S. and Canada large tractor and combine retail sales decreased 18% year-over-year in November, down from the 15% decrease the previous month. U.S. sales were down 25% year-over-year, while Canadian sales were down just 1%.

4WD tractor sales dropped 7.7% year-over-year in November vs. an 18.8% increase in October (U.S. -4.2%, Canada -13.9%). L3M sales increased 3.4% year-over-year after declining for 33 consecutive months and 41 of the past 42 months. U.S. dealer inven-tories of 4WD tractors decreased 19.3% year-over-year in October. Combine sales posted a 14.3% year-over-year decline in November following October’s –27.3%. L3M sales declined 24.7% on a year-over-year basis follow-ing a 24% L3M decrease the month prior. U.S. combine inventories were 30.4% lower year-over-year in October vs. down 34.4% the month before. November is typically a below-average month for combine sales, accounting for 5.4% of annual sales the last 5 years.

Row-crop tractor sales were down 21.7% year-over-year compared with a 16.7% decrease in October. U.S. row-crop tractor inventories decreased 6% year-over-year in October vs. a 0.2% decrease during the previous month.

Mid-range tractor sales decreased in November, down 1.9% year-over-year after a 0.4% increase last month. Compact tractor sales increased 20.8% year-over-year, following a 7.4% increase last month.

Large Ag Equipment Sales Remain Soft

NOVEMBER U.S. UNIT RETAIL SALES

Equipment November 2016

November2015

Percent Change

YTD 2016

YTD 2015

Percent Change

October 2016 Field Inventory

Farm Wheel Tractors-2WD

Under 40 HP 6,442 5,254 22.6 123,891 110,909 11.7 69,457

40-100 HP 2,974 3,131 –5.0 51,422 53,685 –4.2 34,758

100 HP Plus 663 909 –27.1 16,791 21,727 –22.7 9,207

Total-2WD 10,079 9,294 8.4 192,104 186,321 3.1 113,422

Total-4WD 137 143 –4.2 2,074 2,703 –23.3 755

Total Tractors 10,216 9,437 8.3 194,178 189,024 2.7 114,177

Combines 142 203 –30.0 3,485 4,690 –25.7 750

NOVEMBER CANADIAN UNIT RETAIL SALES

Equipment November 2016

November2015

Percent Change

YTD 2016

YTD 2015

Percent Change

October 2016 Field Inventory

Farm Wheel Tractors-2WD

Under 40 HP 940 858 9.6 10,844 11,983 –9.5 8,152

40-100 HP 682 597 14.2 5,246 5,439 –3.5 4,330

100 HP Plus 244 250 –2.4 3,347 4,014 –16.6 2,210

Total-2WD 1,866 1,705 9.4 19,437 21,436 –9.3 14,692

Total-4WD 68 79 –13.9 736 773 –4.8 258

Total Tractors 1,934 1,784 8.4 20,173 22,209 –9.2 14,950

Combines 152 140 8.6 1,592 1,749 –9.0 368

— Assn. of Equipment Manufacturers

U.S. UNIT RETAIL SALES OF2-4 WHEEL DRIVE TRACTORS & COMBINES

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

30,000

28,000

26,000

24,000

22,000

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

2016 5 year average

pressure still on, But Titan machinery makes progress on Equipment inventories While acknowledging that low commodity prices continue to dampen demand for new farm machinery, David Meyer, Titan Machinery’s chairman and CEO, noted that high crop yields had improved sentiment among the dealership group’s farm customer base in the third quarter. He added the company took advantage of the more upbeat attitude to “aggressively retail” and accelerate its used equipment reduction efforts. The Fargo, ND-based firm, the world’s largest farm equipment dealer group, said in its third-quarter earnings release on Nov. 30, that it had reduced its used equipment inventory by $86 million, or 32%, through the first 9 months of its fiscal year ended Oct. 31. “We think the company is taking the right steps to combat industry challenges. After 3 years of sales downturn we look for declines to narrow in F17 but acknowledge there is no evidence the operating environment may be stabilizing or bottoming,” said Nelson. Margins in 2017 are expected to be 6.2-6.8% (7.2-7.8% previously).

~ AEI


EQUIPMENT INDUSTRY NEWS EQUIPMENT INDUSTRY NEWS

claas + Kubota: What if? This is pure speculation, but think about what a powerhouse would emerge if Claas and Kubota decided to get together? “When taking a closer look at relative size and market share, it is noteworthy to mention that Deere is similar in size measured by total revenue to CNH; however, its agriculture equipment business is 40% larger. Deere is more than 2.5 times larger than Kubota and AGCO, the next leading producers of farm tractors and combines. It seems logical that a strategic transaction among this peer group could occur in order to create a more formidable challenger to the market leader,” said the analysts. A partnership of Claas and Kubota would appear to be complementary. The Claas part of the equation would give Kubota the high horsepower tractors and combines it needs to meet its goal of taking on the industry’s biggest players. Kubota, on the other hand, has far more North American dealers than Claas.

~ AEI

A ‘Turning point’ in 2017? According to a Dec. 13 report in Agrimoney.com, MetLife thinks the official estimates for this year’s U.S. harvest may be too large and that there will be a global production “pullback,” that could result in the new year being a “turning point” for grain prices. “The insurance giant, whose agriculture division is one of North America’s top farm mortgage lenders, said that market ideas of this year’s record corn and soybean harvests appear ‘too high,’” and questions USDA assumptions. The Ag agency estimated this year’s corn yield at a record 175.3 bushels per acre, and soybeans at a record 52.5 bushels per acre, “We view that smaller-sized ears and pods could trim final yields,” MetLife said. Downgrades could “bring the size of the 2016 harvest only slightly above the 2015 record.” MetLife also sees lower acreage as playing a part in higher grain prices, forecasting the U.S. plantings “should pull back in 2017 leading to lower excess supplies of major crops.” The Agrimoney.com report says MetLife is forecasting corn acreage to decline by 3.5 million acres next year after rising to 94.5 million acres in 2016, according to USDA estimates. MetLife added that an acreage pullback is unlikely to be an isolated U.S. event. “Other major crop producing countries … are also likely to pull back on planted acres … after 4 successive years of supply increases, next year could prove to be the turning point with a global supply pullback leading to improved pricing.” Agrimoney.com said, “The group forecast that grain and oilseed [prices] will start to recover in 2017.”

~ AEI

Use of all articles in the Equipment Industry News pages are used with permission of Lessiter Media (LM), Ag Equipment Intelligence issue of Dec. 15, 2016, Vol. 22, Issue 12. Use of any of the articles and information contained in Ag Equipment Intelligence, Rural Lifestyle Dealer or any other Lessiter Publication Media Brands requires permission of the publisher.

2 Ag Equipment Intelligence/December/2016

A long time farm equipment indus-try executive, who did not wish to be identified, shared his take on some of the stories that are being bandied about at industry events with Ag Equipment Intelligence.

He pointed out that in almost all cases, the biggest challenge confront-ing equipment manufacturers that want to expand is distribution. There just aren’t enough well capitalized and qualified dealers to go around. Often times, a merger or acquisition is the only way around the problem. A manufacturer with established dis-tribution/dealer channels can make it an attractive takeover target.

Kuhn. The executive said Kuhn is one of the more interesting com-panies. “There are some strong inde-pendent companies in Europe (cit-ing Lemken in the tillage sector) but no one is as strong in the breadth of implements as Kuhn — with hay

tools, planters and tillage. The only thing missing is a tractor and harvest-ing equipment.

“Kuhn wants to be in a leadership role. They don’t have Kubota-like aspi-rations to be bigger than Deere but want to make moves so that they can control their own destiny — and that requires distribution.” He notes that the acquisition in 2014 of Brazilian-based self-propelled sprayer manufac-turer Montana showed that Kuhn is open to entering new markets. “They have plenty of capital to think big.”

Claas. The number one problem for Claas North America is distribu-tion. “They’d love to bring tractors (Claas announced a limited introduc-tion to North America in 2014 with its Xerion) here, but their biggest dealers are CAT dealers, and they don’t want to bring a tractor to deal-ers that would have to compete with their AGCO mainline. The current dis-

tribution situation is going to limit Claas’ growth potential — big-time.”

An interesting scenario for Kubota would be the acquisition of Claas, he says. “Kubota is still missing the big harvesting sector, so Claas would be a natural place to look. Again, for Claas North America, their biggest hurdle is distribution. They tried Caterpillar but that didn’t work out. Now they’re having to put in company stores in order to find distribution.”

In the past year, Claas stepped outs ide o f t rad i t iona l Nor th American dealer channels and signed agreements with BayWa Ag of Munich, Germany, and MirTech (Mirovaya Technika) of Russia for sales and service support. BayWa will service the province of Alberta. MirTech will establish itself in the Western Delta region, where Holt CAT had withdrawn its Holt

Manufacturer M&A: Possibilities to Ponder...Continued from page 1

AG EQUIPMENT INTELLIGENCE is published monthly for the farm equipment industry by Lessiter Media, 16655 W. Wisconsin Ave., Brookfield, WI 53005. © 2016 by Lessiter Media. All rights reserved. Reproduction in any form of this newsletter content is strictly forbidden without the prior written consent of the pub-lisher. Please send any address changes as soon as possible

to the address shown above. U.S., Canada and Mexico print subscriptions are $499 per year. International print subscriptions are $599 per year. Send subscription orders to: Ag Equipment Intelligence, P.O. Box 624, Brookfield, WI 53008-0624. Fax: 262/786-5564. Phone: 262/782-4480 or 866/839-8455 (U.S. only). E-mail: [email protected].

Claas + Kubota: What If?

This is pure speculation, but think about what a powerhouse would emerge if Claas and Kubota decided to get together?

In its September 2015 repor t, “Contraction Today, Consolidation Tomorrow?” Rabobank analysts Ken Zuckerberg and Harry Smit, discussed the possibilities and opportunities that could come from the current ag downturn.

The report authors note that during the past 25 years, con-solidation of manufacturing and sales of high value-added, self-propelled farm field equipment manufacturers has resulted in six large global players based on 2014 ag equipment rev-enue. These include Deere & Co., CNH Industrial and AGCO, followed by Kubota Claas and Mahindra & Mahindra.

“When taking a closer look at relative size and market share, it is noteworthy to mention that Deere is similar in size measured by total revenue to CNH; however, its agriculture equipment business is 40% larger. Deere is more than 2.5 times larger than Kubota and AGCO, the next leading produc-ers of farm tractors and combines. It seems logical that a stra-tegic transaction among this peer group could occur in order to create a more formidable challenger to the market leader,” said the analysts.

A partnership of Claas and Kubota would appear to be complementary. The Claas part of the equation would give Kubota the high horsepower tractors and combines it needs to meet its goal of taking on the industry’s biggest players. Kubota, on the other hand, has far more North American deal-ers than Claas.

Using 2014 revenue numbers, the combination of Kubota and Claas were very close to CNH Industrial’s total ag revenue of about $14 billion. Together, the two would, in all likelihood,

still need to build a bigger, more encompassing distribution network to compete with Deere and CNH Industrial.

If you want to take such a scenario even further, bring AGCO into the Kubota and Claas deal. The new group would have ag revenues of $20 billion-plus, making it larger than those of CNH Industrial and approaching that of Deere. It would also go a long way in providing the new ag juggernaut a more complete North American distribution channel.

Tier 1 Ag OEMs Ranked by 2014 Revenue

Revenue wise, it would take a combination AGCO, Kubota and Claas to rival Deere and surpass CNH Industrial.

Source: Bloomberg, Rabobank, Company Reports, 2015

Continued on page 3

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