Original equipment manufacturers (OEMs) like Caterpillar, Komatsu, and John Deere all enjoyed soaring revenue in the past year thanks to constraining supply factors and expanded demand for their products.
Sales were up sharply across sectors. In fact, used equipment and truck prices reached unprecedented levels in 2021. Our January Market Trends Report looked closely at equipment sales last year, with in-depth charts outlining volumes, median pricing, and more by asset category.
But it wasn’t all good news for these manufacturers. OEMs are facing headwinds in the coming year for various reasons – from a COVID-related economic slowdown in China and increased labor costs, to customer lawsuits facing John Deere, the largest ag equipment producer in the world.
As one of the largest sellers of used heavy equipment, Ritchie Bros. has its finger on the pulse of multiple equipment industries – construction, transportation, and agriculture, just to name a few. Here’s a roundup of recent news from the OEMs.
Caterpillar warns of rising costs after banner year
Caterpillar Inc, the world’s largest construction OEM, says the company is expecting to be hit with higher production and labor costs this year. Factory shutdowns, clogged ports and labor shortages triggered by the pandemic have caused manufacturing costs to soar and production lines to freeze. Despite the headwinds, Cat enjoyed a terrific 2021 for sales, with revenue up over 20% (US$51.0 billion) compared to the previous year.
Construction slowdown in China could hit Caterpillar’s bottom line
Construction sales in China slumped in 2021, according to Caterpillar’s recent earnings report. Chief Financial Officer Andrew Bonfield told media that China is experiencing a slowdown in the nation’s construction market, which could see benchmark sales of 10-ton-and-above excavators tumble 10% to 50%.
Komatsu reports sales up 33% in 2021
Japanese equipment manufacturing giant, Komatsu, says demand for both construction and mining equipment was strong around the world, except for China, in 2021. That led to a 33% increase in sales thanks to demand for new equipment and the company’s ability to capitalize on cross-sourcing. The tight market of marine transportation and semiconductor shortage led to increased parts sales and service revenues as well.
John Deere faces farmer revolt over repairs
Fresh from a fight with workers over fair wages, ag equipment giant John Deere is facing another challenge to its business. Farmers are revolting against restrictions on how they repair increasingly complex John Deere ag equipment. Lawsuits and legislation may soon threaten this key revenue stream for John Deere, according to a Bloomberg report.
John Deere readies its robot tractors
John Deere says its self-driving 8R tractor goes on sale later this year. That timeline makes it possible that farmers could be letting a robot plow their fields this harvest season. The 8R has six pairs of stereo cameras that use artificial intelligence to scan the surroundings and maneuver accordingly. Everything can be controlled from a smart phone, according to profile in Vox’s Recode.
Hitachi sells controlling interest of construction business
Hitachi Construction Machinery sold a controlling interest to Japanese trading company Itochu and private equity firm Japan International Partners. The deal – valued at US$1.6 billion – was motived by Hitachi’s struggling Construction Machinery business in North America, according to International Construction. Hitachi Construction Machinery is the world’s seventh largest construction equipment manufacturer, based on annual revenues.
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