You get out of something what you put into it. That message we likely heard as kids and now repeat to our own children is relevant beyond science fair projects and team sports. It is true of Association membership.

I offer this thought to you as an Association member who has in fact put time into membership and has seen our business made better by it. It is an especially important message now because the Association is offering opportunities that may take time, but the payoffs could be enormous.

The Association is announcing two new resources. Sentry has released a comprehensive safety toolkit for farm equipment manufacturers, and the insurer has made the generous decision to make it available to members regardless of whether they are policyholders.

A story in this issue explains the resource in more detail, but of course the best way to fully grasp what it offers is to go to the password-protected document online. It’s available at . If you need your username and password, call Tricia Kidd at (314) 878-2304, or send her an email at TKidd@FarmEquip.org.

I am also excited to tell you about a new cybersecurity benefit. The Association has invested in a three-year partnership with Enquiron to provide vast resources to companies seeking to mitigate their risk of a cyber attack and be prepared to respond to one. Through this web-based platform, you will be able to:

• Conduct a phishing campaign to assess employees’ vulnerability.
• Access an online training program that allows employees to choose courses and employers to monitor employees’ progress.
• Access webinars, cyber security news, and a depth of policy samples, including:
  • patch management
  • data breach response plan
  • end user encryption key protection

This much information would be overwhelming if not for the way it is structured. Members who use this resource will begin by answering 15 straightforward questions such as “How many critical records does your company have?” And, “Is data transmitted in a secure and encrypted fashion?”

Based on your responses, the platform recommends next steps.

This is again a resource that cannot be fully explained in this format. You need to log in and explore. If you have not yet received an email inviting you to activate the service, you will soon. It comes from an Enquiron email address. Search for it by “Shortline Cyber Resource Center.”

A quick note: Members who have insurance policies with Sentry have this service as part of your coverage. You will continue to access the resource through Sentry rather than the Association.

Will it take time to see what’s available through the safety toolkit created by Sentry? Yes. Will it take time to activate the cyber security resource at your facility? Not much, but yes. Will you regret not spending that time if indeed your data is compromised, or an accident happens?

The same is true of Association conventions. Everyone who was in Oklahoma City last week committed the time because they knew there would be a payoff. They gained insights from speakers and industry peers and tended to business with distributors and suppliers in a few fast-paced days.

There is much to be gained through Association membership if you take the time.

Matt Westendorf | retiring Association President
Westendorf Manufacturing

When Henry Ford optimized his assembly line some 100 years ago, the changes and advances he made quickly left the confines of the four walls of his factory and became the fuel for an industrial revolution we have been optimizing ever since.

Now we see changes driven by technology. Concepts that were dreams 10 years ago are part of our plant operations today. It’s hard to imagine that we live in a world with phones that have more computing power than an Apollo space capsule. We have available to us things that George Jetson wouldn’t believe. Technology moves at a speed that leaves most of us chasing rather than keeping pace.

Manufacturing is experiencing growing pains when it comes to technology. Factories that have operated the same way for 70 years are now forced to adapt to a world of customization and immediacy. It is a true industrial revolution, and if history has shown us anything, a next level of technology is about to make the leap from the big operations to small and medium-sized plants worldwide.

Here, we explore what some of these technologies are and how they are used.

Digital Operations

Although some companies still use ledgers and spreadsheets, the digital trend is to move to a robust ERP system that can help manage the operation of a company. Everything from raw materials to finished goods are organized with these systems, and they can even be used to find the true cost of a finished product.

Supply Chain

A person can now order an automobile online. They can enter the model and every option they want. They press the “buy” button and immediately the company system goes to work. Goodbye to the days of the scheduler, the buyer, the planner, and the paperwork. Now the data is immediately sent to the plant, as well as the first- and second-tier suppliers, and back to the customer. Production dates are quickly confirmed, the parts are ordered, and the customer knows exactly when their new vehicle will arrive. They can even go online and see precisely where in the production process the vehicle stands.

Engineering/Digital Plant Floor

The days of drawings are quickly fading. Now CAD models are created in the engineering department and those models are used to make parts. The files are sent to the mold maker—or the machining center or 3D printer—and the process begins. When the finished parts arrive, the same models are used for inspection (sometimes done with digital comparison lasers) and the assembler uses a screen at their station to see the same models to ensure the final parts are put together correctly.

Cybersecurity

With all of this data, every company needs to be acutely aware of the threats facing their company. This is not about someone stealing your production data, but rather someone stealing the most valuable thing on your computer—your money.

Every company has a list of current (and some past) employees. They have that employee’s name, address, phone number, social security number and most likely their bank account number for direct deposit. Oh, what a treasure for a bad guy!

When was the last time you had a true cybersecurity test of your system? You may say you are okay because your computers have up-to-date antivirus software, but what about that computer on the plant floor that runs on Windows 95 because the machine it is hooked up to was never upgraded?

3d Printing/Additive Manufacturing

The technology for additive manufacturing (AM) has been around for a few decades but was only available to companies who had deep pockets and standing usage. Now, versions of this type of equipment are available in box stores or online. It has become so mainstream it is used in grade schools. Using it in manufacturing was rare even five years ago, but today it is the fastest growing technology upgrade in manufacturing operations. Here is why:

Cost reduction: Since part production using additive manufacturing does not require set-up and tooling costs, production costs are only incurred for the parts themselves at the time they are manufactured. Even small production runs and one-off pieces do not add cost. In addition, system parts designed for optimum function can often be realized as a single part, simplifying assembly and quality assurance.

Lightweight design: Intelligent manufactured parts using laser sintering processes combine high strength with a weight reduction of 40 to 60 percent. The material savings translate into more flexibility in design and engineering. As a result, cars or airplanes consume significantly less fuel and emit less carbon dioxide.

No Tooling: 3D printing technology enables maximum flexibility in production planning. In addition, production processes without tools require less energy and raw materials than conventional manufacturing operations. Modified parts, upgrades, and spare parts can be produced as needed, obviating the need for storage. Watch this industry closely. New materials such as metals, epoxies, plastics, ceramics and even food are now being printed. So, if your company passed on this technology in the past, you may want to see what has changed since you started reading this article!

Virtual Reality/Augmented Reality

Virtual reality (VR), sometimes referred to as augmented reality (AR), is quickly entering the manufacturing environment. This quick growth should cause more vendors to enter the field, hence reducing the cost and making the technology more accessible.

VR is defined as “a three-dimensional, computer-generated environment which can be explored and interacted with by a person. That person becomes part of this virtual world, or is immersed within this environment, and whilst there, is able to manipulate objects or perform a series of actions.”

So how is VR benefiting the manufacturing sector? By improving worker safety, creating better products, and saving manufacturers money. Here’s why:

Improving Worker Safety. While the manufacturing sector has dramatically improved its safety programs over the years, any injury or fatality is one too many. VR allows plant managers to simulate the production process and assembly line configurations, identifying potentially dangerous situations. Virtual reality can also immerse an employee in a future workstation, then capture the employee’s movement to evaluate task feasibility and proficiency. Using VR, automotive giant Ford has reduced the injury rate of employees by up to 70 percent.

Creating Better Products. VR is making near-perfect assembly a possibility. Using goggles that employ cameras, depth sensors, and motion sensors to place images onto a real working environment, workers and engineers can “see” the proper parts and instructions on how to assemble a component the correct way.

Saving Money. To get products that meet specifications, prototypes must be created, tested, and retested. This gets expensive. Using VR, manufacturers eliminate the need to build full-scale models. Using Microsoft’s VR technology, engineers can see each piece of equipment involved in the design of a product and put it together in the virtual world before constructing it for real. This will cut training time by 75 percent per person, saving millions.

Cobots

As the internet of things grows exponentially, collaborative robots become commonplace in the manufacturing cycle. Collaborative robots, or cobots for short, are robots that work in a shared physical space with humans, allowing humans and robots to work together. Cobots have risen in popularity since 2010 and are often preferred to traditional manufacturing robots designed to work in a segregated area with little or no interaction with people.

They are designed to stop moving when their human coworker, or anyone, touches them. The cobot market is expected to grow significantly in the next decade for several reasons. There is an increasing demand for automation across all industries, but particularly manufacturing where tasks are often repetitive, hence a risk for injury. Meanwhile, cobot technology is advancing every year. They are more widely available and less expensive, currently estimated to be an average of $24,000 each. These dropping prices and increased functionality are likely to encourage cobot adoption in small and medium-sized enterprises that may have overlooked the technology in the past.

Robots working in tandem with employees can lead to a highly efficient, flexible, and reliable production process. Cobots can be used in product assembly, product pick-and-place processes, injection molding, placing of parts, and quality inspection.

They can be especially helpful in heavy lifting by improving efficiency in the production cycle and reducing the risk of injury. Some cobots are designed to work on repetitive heavy lifting jobs.

One outstanding example of how robots and humans can work together is a heavy-lifting task in which the human lines up the object to be lifted, and the cobot lifts.

The human reduces the risk of damage to items by positioning what it is to be lifted. The robot saves the human the fatigue and risk of injury by lifting. The combination reduces costs, improves the result through precision, and maintains a fast-paced schedule.

In Conclusion

All of these technologies were just a dream a few years ago. Today they are reality and changing the way manufacturing is done worldwide. With the expected continued shortage in labor, these advances allow a company to optimize production, increase quality, and save money while attracting a workforce that loves to solve problems with technology. They can only help to make your business stronger.

Bob Beckmann P.E., CEM is a project manager with Missouri Enterprise who helps solve technical challenges for companies across the state. Find out more at .

What makes a bullet fly toward its target?

The answer may seem easy: gunpowder. But there’s more to it than that. The gunpowder fuels the explosion that propels the bullet forward. But, in order to hit its target, the bullet needs to be aerodynamic to reduce the friction generated by wind resistance.

Kellogg professors Loran Nordgren and David Schonthal see this as the perfect analogy for how innovations do, or do not, hit their targets. There’s the fuel of the new product or idea—the compelling features meant to draw people in—but there are also frictions to be considered—the sticking points that make people less likely to adopt something new.

Yet, they say, most innovators think only about fuel and ignore friction.

“We instinctively believe that the way to get people to say yes to our ideas is to add value, to use fuel,” explains Nordgren, a professor of management and organizations. “We often neglect the other side of the equation: the friction that opposes change. Ignoring frictions when pursuing ideas would be like building an airplane and caring only about engines and not aerodynamics.”

Nordgren and Schonthal are authors of the forthcoming book The Human Element, which lays out a framework for how to identify and then tackle the frictions that may be hindering adoption of your innovations. They discussed their framework in a recent The Insightful Leader Live webinar.

There are four basic dimensions to a new idea—each of which has a corresponding friction. Innovators should consider all four of these frictions when launching something new. To explain them, the professors offered a case study of a home-building company.

The company built 1,000 homes for empty nesters who wanted to downsize. Lots of people came to tour the homes, with large percentages of visitors putting down five percent earnest money.

Great news, right? It sure seemed like a good idea with a compelling value proposition.

“And then something really weird happened,” explains Schonthal, a clinical professor of innovation and entrepreneurship. A large portion of the people who put money down “walked away from the deal, in some cases leaving their earnest money on the table.”

Why? Here’s where those four types of frictions come in.

1. Inertia: Does the idea represent a major change?

For these older customers, this new home definitely represented a major change. For example, they wouldn’t know their new neighbors or neighborhood well.

2. Effort: What is the cost of implementation?

The cost is likely pretty high. Customers need to spiff up their old home to get it ready to sell, hire movers, and maybe store some of their furniture that won’t fit in the new place.

3. Reactance: Does the audience feel pressured to change?

Maybe the potential buyers’ adult children are encouraging them to move, or they’ve had some medical problems that are making them consider leaving their long-time home earlier than expected.

4. Emotion: What negative feelings might the idea produce?

There are, of course, lots of emotions tied up in a home and in the realities of aging. Indeed, once the home builder started talking to potential customers, they realized just how emotional some aspects of the move really were.

“They just couldn’t figure out what to do with all their old stuff; in particular, what were they going to do with the dining room table?” Schonthal explains. “The dining-room table is a talisman. It is an artifact that embodies all of these good family memories.”

After identifying all of these frictions, the home builder made some changes. They offered help staging customers’ homes for sale, they included moving and storage services, and, to address the all-important issue of the dining-room table, they moved a wall to create a bigger room.

This increased the cost of the condos, but customers were happy to pay extra. The enlarged dining room alone increased sales by a significant amount.

The lesson: “Removing friction is often more powerful than increasing fuel,” Schonthal says.

The professors’ book offers techniques for digging into these four frictions to get beneath the surface and truly understand why your audience might be resistant.

“You’re like a detective,” Nordgren says. “You’re analyzing the circumstances to understand the specific frictions operating against you. And once you identify those frictions, in many cases the solutions become self-evident.”

This approach works across cultures, they say. And it works for innovators of all types—whether you’re advocating for a new product, a departmental restructuring, or a social movement.

“The ideas here apply to change of really any form,” Schonthal says, “anyone who’s trying to bring something new into the world.”

This article originally appeared in , a publication of Northwestern University. It is used with permission.

Members of this Association represent success stories, many of which are also family stories. These stories include innovation, risk, sacrifice, and exhausting effort. They are stories with heart, and that sometimes makes it difficult to write the chapter in which the main character surrenders the lead role.

It can be tough to talk about succession, especially now, when there is little time to talk about anything. Yet the intensity and challenge facing the farm equipment industry may in fact serve as a catalyst for many leaders to consider now the right time to step aside and slow down.

When it is time to consider a transition in leadership and ownership, you should first define two terms that can create confusion: estate planning and succession planning.

Estate planning covers the transition of financial wealth or physical assets from one generation to the next. The process typically begins during one’s lifetime but often does not complete until after death. This hand-off process requires difficult decision-making and thoughtful planning.

Succession planning is based less on physical and more on psychological transitions. At the heart of succession planning is a person, or group of people, who have been in control of the day-to-day and strategic operations of a company. It represents what can be the emotional task of transitioning control to others. The process of co-creating psychological ownership of the vision, strategy, goals, decisions, performance, and results of the company is not easy.

Both types of planning are critically important.

I have advised companies that have had the management transition or succession ready but not the transition of physical assets. This created conflict, because although the business was able to run from a management perspective, conflict emerged, because those managing the business didn’t control the assets and were therefore unable to capitalize on the strategic plans set forth.

I have also seen the opposite happen in which a business owner puts all his or her focus on the estate plan to avoid the business being stressed from a cashflow perspective. This is absolutely an important piece. A problem arises though after the business owner passes away. If there is no plan related to who or how the business will continue, odds are the business won’t survive the generational loss. Even if management is more than capable to step in and continue the success of the company, without proper planning and strategy, it is a difficult road.

How do we smooth this road? Our clients follow these general guidelines.

1. Succession Planning cannot be done in a vacuum.

Succession planning is personal. This can sometimes cause business owners to want to tend to it alone. Fight this feeling! Working through a succession plan by yourself is a guaranteed way to miss major aspects that will lead to problems later. Consult professionals.

2. Succession Planning is not a static event.

Another common mistake is believing that once the preparation of a succession or estate plan is complete, the task is done. If only this were true. There is a reason that both estate and succession plans are defined as “plans” rather than “events.” You should occasionally reflect on, monitor and possibly adjust your plans.

3. A plan is not executed unless it is shared.

Ensure you have a viable succession plan by sharing it. This is probably one of the hardest aspects of enacting the plan because this is where some feathers can be ruffled. However, a few ruffled feathers is better than a future scenario in which management or family do not know your intentions for the business. These conversations also should not be conducted in a vacuum. Use professionals to help facilitate them. The goal here is to provide a shared understanding of how to move forward. It will simplify and expedite the transition.

Succession and estate planning can be uncomfortable, but they can become as much a part of a business owner’s legacy as every other chapter of their story. Ensure a successful future for your business by crafting this chapter the right way.

Justin Mentele, CPA, is a principal at KCoe Isom specializing in manufacturing services. He works across all financial spheres—audit, tax, and consulting—to help his clients understand their financial performance and make adjustments that dramatically impact profitability, efficiency, and employee retention.

If there was a silver lining to the quiet days of the pandemic, it may have been that folks checked off a few things that had been lingering on their to-do lists for years: reorganizing warehouse space, repaving the parking lot, creating a comprehensive, floor-to-ceiling safety toolkit for your manufacturing operation.

If the quiet days did not last long enough for you to create that safety document, we have good news. Sentry Insurance got it done.

The company has just released a 171-page safety toolkit and made it available to members of this Association regardless of your status as a policyholder at Sentry. While it is not intended to be an all-inclusive guide (each company will of course have to address issues specific to their business), it is a launch point that has no equal.

“I know of no other insurance carrier that offers anything close to this,” said John Tye, chairman of the Association’s Risk Management Committee. “To call it comprehensive is an understatement. The substance of the document shows Sentry’s extraordinary expertise in the shortline industry. The company’s willingness to share the work with our members shows that it cares about the safety of the people who make and use our products.”

The document is the result of an ongoing conversation between the Risk Management Committee and Sentry Insurance. It is the newest and most expansive version of a resource that began in 2007 and was last updated in 2012.

“The content is designed to provide more than just lists of what manufacturers need to do,” said Bryant Hintz, Sentry safety consultant. “It is designed to give manufacturers examples and resources to help build their safety programs. It is a one-stop shop for everything related to workplace safety and product safety.”

The kit includes the latest ASABE, ANSI and ISO standards for farm equipment manufacturers. It also covers:

• Loss control (accident investigation report, general inspection checklist, equipment safety checklist, new employee safety orientation, and more)
• Product safety (hazard analysis, quality assurance, machine guarding, safety messages and labels, operator’s manuals, and again, much more)
• Document management (document retention, electronic documents, etc.)
• Incident and claim reporting, and
• About a dozen common exposures such as hazardous materials, mechanical material-handling, fire hazards, and emergency preparedness.

Even for companies with established safety programs, the litigation landscape may make this the right time for a review.

“During recent years, there have been changes in the concept of liability, what constitutes negligence, and the size of verdicts,” the company says. “It’s important to take these changes into consideration when you review existing or proposed product safety processes.”

Hintz said Sentry seeks to “ignite that fire in our customers” to keep safety at the center of plant operations. “We also want relationships with our customers, so they know they are not alone. We are here to help.”

Hintz will visit Sentry policyholder facilities for safety consultations. The visits are not intended to be punitive. Consultations are not tied to rate increases except when egregious risks persist for repeated visits.

“We see it as favorable that companies want to bring us onsite,” he said. “If we do an in-depth mock OSHA inspection, for example, and see something, we will address it, but will we raise their rates? No. If we go in the next year and see that none of our recommendations have been addressed, it might raise a red flag.”

To see the safety toolkit, go to . The document is password-protected.

Members who are policyholders and want a safety consultation should contact Hintz at (715) 412-1640 or Bryant.Hintz@Sentry.com.

Carnack the Magnificent—Johnny Carson’s psychic persona on “The Tonight Show”—would pull an envelope from a jar, hold it to his forehead and answer the question sealed inside. Then he would open the envelope and read the question.

Unfortunately, implementing lean is often done the same way—a solution searching for the right problem to solve. It was funny on “The Tonight Show.” It isn’t funny when it leads your organization to failure.

The underlying problem is that we dramatically under appreciate the importance of deeply understanding our reality. Whether changing a process or your entire business, it is not possible to overemphasize the importance of fully knowing the truth of your current state. In fact, Max DePree, former CEO of Herman Miller Inc. in Michigan, said defining current reality is “the first responsibility of a leader.”

Unfortunately, we tend not to do this well. You’ve heard examples of surveys, regardless of the topic, in which 90 percent of people believe they are above average. This highlights our lack of skill in defining current reality.

Because of this, the first answer to a problem is most often not the right one. If it were, then we’d get better results from our daily struggles on the assembly line. The so-called “little fires” we extinguish throughout the day typically start when someone approaches us with a “situation.” We observe the “situation,” categorize what we see and hear, sort through our enormous mental database of experience for the right solution, then implement that solution—typically within difficult time constraints. The problem is that the mental database solution is often wrong when compared to what we learn from deep observation of the problem.

Being a visionary is an important trait near the top of any leadership list.

But vision has no value if you don’t understand current reality. Imagine if your vision is to get home, but your current reality is that you don’t know where you are. Once you understand where you are, plotting a course home is relatively easy. A vision by itself provides no clear direction or lasting excitement, no matter how compelling, if it isn’t coupled with a clear, unambiguous understanding of current reality.

If you start making improvements without understanding the reality, two things are bound to happen. First, you will repeat mistakes that you have already committed. This makes learning dreadfully expensive. Second, you will discard the good things you are already doing. If you don’t understand what’s working, and more importantly, why it’s working, you are likely to slide backward as you try to make improvements.

I once visited a company celebrating an all-time record of daily production. When I asked if they were planning to determine why that day was so successful, silence fell over the room. Even if it was mostly luck, valuable lessons were there to be learned. Only by a deep understanding of current reality can you ensure that success builds on success, and failure is never repeated.

In 1982, the book In Search of Excellence popularized the concept of MBWA: Management by Wandering Around. The idea is simple: Get out and mingle, but realize that collecting loose bits of information does not lead to the clear understanding that only comes from direct and deep observation and study. The concept of MBWA is not flawed, but it requires observation and analysis to make it effective.

Here’s a quick test. Examine everything you do to understand the current reality. Include everything from conversations to site visits. What percent of your time is spent in deep observation? If it isn’t at least 50 percent, then it is time to take a look at observing yourself. Think about it. You aren’t psychic like Carnack the Magnificent.

Jamie Flinchbaugh is a thought leader on lean principles. He runs JFlinch, a firm that helps teams accelerate by solving the most challenging problems. Learn more at jflinch.com. Flinchbaugh spoke at the 2019 Supply Summit in Myrtle Beach.

The Purdue University-CME Group published results of its 72nd monthly survey in October, which marked the sixth anniversary of a data source that gives farm equipment manufacturers a window into the thoughts that drive farmers’ buying choices.

In this issue of Ag Innovator, we look at the evolution of the survey and the insights the data offer.

There is a relatively long history of sentiment surveys on the U.S. economy. The oldest and best known is the University of Michigan’s Survey of Consumers. It originated in the post-World War II era and appeared in its current form in the 1950s. The early surveys focused on learning more about household assets and debts, but over time, the value of ancillary information regarding consumer sentiment became clear in the pursuit of anticipating consumer behavior.

Survey responses were eventually condensed into the Index of Consumer Sentiment as well as the Current Index, which focuses on current economic conditions, and the Expected Index, which focuses on consumers’ expectations for the future. Results from the monthly Survey of Consumers are widely disseminated and are now a component of the Department of Commerce’s Index of Leading Economic Indicators.

In the decades since, sentiment surveys proliferated. Many sought to understand the sentiments of purchasing managers and corporate executives, but none focused on the agricultural sector and, more specifically, on agricultural producers.

The Ag Economy Barometer survey was designed to fill this void, using methodology adapted from Michigan’s Survey of Consumers to launch a monthly national survey of commercial-scale agricultural producers.

Sentiment Drivers

Agricultural producers’ sentiment is quite volatile. Comparing month-to-month percentage changes in the Index of Consumer Sentiment to those of the Ag Economy Barometer reveals that agricultural producers’ sentiment is nearly three times as volatile as consumer sentiment.

The percentage change in the Ag Economy Barometer each month from its inception in fall 2015 to recent data shows an average of 9.4 percent compared to a 3.3 percent monthly average change for the Index of Consumer Sentiment.

Differences in the volatility of these two sentiment measures reflect the stark differences in the two survey populations. The Survey of Consumers samples opinions from a broad spectrum of consumers that, by design, covers all segments of the U.S. economy. Broad coverage of the U.S. economy implicit in the Survey of Consumers tends to smooth responses over time as positive/negative developments in one area of the economy are often partially offset by opposing developments in other segments.

The Ag Economy Barometer survey covers just one relatively narrow segment of the U.S. economy: the agricultural production sector. Moreover, the agricultural production sector is characterized by inelastic supply-and-demand conditions leading to a high degree of income variability. Differences in these two survey populations account for much of the observed volatility differences.

Second, although changes in commodity prices can and do affect farmers’ sentiment, changes in the Ag Economy Barometer are not simply a function of shifts in key commodity prices. For example, monthly average U.S. corn prices explain less than 20 percent of the month-to-month variation in the barometer. Instead, it turns out that agricultural producer sentiment is affected not just by commodity prices and the resultant income changes but also by a host of events and concerns.

What are some of these other events and concerns?

First, a change in the political winds can influence attitudes. Producer sentiment improved markedly after the 2016 election; the barometer rose from a reading of 92 in October 2016 to a peak of 153 in January 2017—a 66 percent increase.

Producers felt better about both their current situation and the future, but the biggest driver of sentiment was in the Index of Future Expectations, which saw a 78 percent improvement from January to October.

Although there likely was a myriad of reasons for the sentiment shift, subsequent surveys revealed that producers expected a more favorable regulatory environment and tax policy for agriculture as well as a better outlook for ag trade.

Following the 2020 presidential election, the sentiment shift was not nearly as pronounced as 2016, but there was a dip in sentiment as the barometer declined 9 percent following the election. The sentiment shift was entirely attributable to weaker expectations about the future. The Index of Future Expectations fell 16 percent from October 2020 to November 2020 while the Index of Current Conditions, riding the wave of strengthening commodity prices in late 2020, rose by 5 percent.

A series of questions posed just prior to the 2020 election and repeated after it revealed some of the reasons for the decline in future expectations. Producers after the election were more concerned about the agricultural sector facing more restrictive environmental regulations, higher estate taxes, and higher income taxes than they were before the election.

Producers also expressed concerns that the farm income safety net would be weaker in the future and that support for the ethanol industry would decline.

Farm Capital Investment Index

Like the Survey of Consumers, the Ag Economy Barometer seeks to build data that offers insight into producers’ investment decisions.

The Farm Capital Investment Index is based on a question posed each month that asks producers whether now is a good or bad time to make large investments in things like buildings and machinery for their farm.

The index often fluctuates in a band between 40 and 70, but in 2020, it dipped to a near-record low of 38 in April. This coincided with the start of the pandemic. The investment index recovered rapidly during the summer and the fall as commodity prices strengthened, peaking at a record 93 in December 2020 and again in January 2021. The strengthening in the investment index coincided with strong U.S. farm equipment sales.

One of the challenges in interpreting the Farm Capital Investment Index is differentiating between producers’ perspectives on purchasing machinery vs. investing in buildings and grain bins. To explore this question, the survey expanded.

In March 2020, farmers began to answer a question specific to their plans for buying farm equipment, and in May, they started to answer a question about their plans for constructing new farm buildings and/or grain bins in the upcoming year.

Although we don’t have extensive history for these new questions, early results are insightful.

After peaking this past winter, the Farm Capital Investment Index began to weaken, dropping 43 points from January to July, which left the index 10 points below its July 2020 reading. Within that index though, the data told a more nuanced story.

The percentage of producers planning to reduce purchases compared to a year earlier increased from 36 percent in the first three months of this year to 48 percent in July. At the same time, the percentage of producers planning to hold their machinery purchases constant declined from an average of 52 percent in January, February and March to 42 percent in July.

It’s obvious that some of the investment index’s weakness was attributable to producers shifting from the “about the same” purchases category to the “lower” purchases category, but that doesn’t completely explain the decline.

Early responses to the farm building and grain bin construction question indicate that perspectives on new construction vs. farm machinery purchases differ. In May, most producers said construction plans for the upcoming year were lower than a year earlier. That percentage rose in June, and in July, two-thirds of survey respondents said their construction plans for the upcoming year are lower than a year earlier. This perspective is significantly more negative than the outlook provided by producers regarding their farm machinery purchase plans, which gives important context to the investment index.

But does this additional information complete the story? Perhaps not.

The investment index results in 2021 are further clouded by widespread supply chain problems leading to long lead times and rising costs. What we don’t know is how much impact these factors had on farmers’ machinery purchases and new construction plans in 2021.

We are sure though farmers are concerned about rising input prices. Thirty percent of respondents on our July 2021 survey said they expect farm input prices to rise eight percent or more in the upcoming year. That’s more than four times the average annual farm input price rise of the last decade.

We will learn more in coming months as the picture becomes clearer around supply chain dynamics, and we hope to offer insights to the farm equipment manufacturing industry.

James Mintert is professor of agricultural economics and director of the Center for Commercial Agriculture at Purdue University. Visit the Ag Economy Barometer website at . You can subscribe to receive the monthly report, which is published the first Tuesday of every month.

In the early years of Ritchie Industries, owner C.D. Wilson built most of the manufacturing equipment. Among stories about Wilson that have circulated long past his lifetime is one in which he took a transmission from a Model T Ford and turned it into a lathe. This was during a routine Saturday visit to the plant to repair and maintain equipment.

As the company marks its 100th anniversary, it sustains Wilson’s spirit of innovation. Today, that spirit manifests itself in a company culture born of ownership—literally.

C.D. sold the business to son Cliff Wilson, and when Cliff Wilson sold it, employees bought it, and it became an ESOP (employee stock ownership program). This assured the company remained in Conrad, Iowa, a community of 900 people.

“This company has put food on the table for a lot of families in this community,” said Carla Skramovsky, who joined the company in 1975 and climbed the ranks. Today she serves as corporate treasurer and purchasing manager.

In turn, the employees of Ritchie Industries have taken great pride in producing livestock waterers that are sold around the world.

“Statistically, less than one half of one percent of companies thrive well enough to last 100 years,” CEO and President Robert Amundson said in recent comments to employees celebrating the milestone. “The success of our 100-year story is rooted in the simple but essential core values of our employees: always doing the right thing, having passion for the brand, innovating at every turn, showing humble confidence, and always walking the talk. These values describe a part of each and every one of you.”

Amundson has been CEO since January 2019. The business he leads began in a town about 75 miles south of where it is today when the Great Depression was eight years into the future.

Ritchie’s History

Thomas Ritchie founded the company in 1921 in Oskaloosa, Iowa. He filed his first patent that same year. Ritchie sold it to Wilson in the 1940s, and Wilson moved it north to Conrad. The facility has grown to 140,000 square feet. It takes up a “big chunk of real estate right in the middle of town,” Amundson said. The blacksmith shop where Wilson worked still anchors a corner of the facility and today serves as warehouse space.

Ritchie Industries has from the beginning produced waterers. In the 40s, 50s, 60s, and even 70s, about 80 percent of its business was the hog market. When hog farming transitioned to confinement and nipples, it created a seismic shift in market demand. As business waned in that sector, Ritchie pivoted and began to manufacture waterers for dairy, beef, equine, and other livestock.

In 2004, Wilson sold the business to his son. The elder Wilson had focused on building a great product. The younger Wilson focused on sales. The combination set the business on a trajectory of success.

Amundson joined the company as a design engineer in 2006, when it was phasing out its steel waterers and replacing them with plastic units. He had most recently worked at a vinyl siding company and was central to the work at Ritchie of designing the molds for production of plastic waterers.

Ritchie Today

Today, the company produces more than 45 types and styles of waterers.

“If there is an animal out there who needs a waterer,” Amundson said, “we probably make it.”

Twenty percent of its product sales go beyond U.S. borders. In the U.S., its busiest market is the Midwest.

“Our focus right now is the Southwest, with what is going on down there with the drought,” Amundson said. “As we expand there, it will fill out our footprint in the U.S. Next, we plan to move into South America.”

Ritchie Industries is not immune to the labor and supply chain challenges affecting the farm equipment industry, but they are faring well. The business makes its own tools and molds and buys virtually all its supplies from other Iowa businesses.

“We have some electronic parts that we had to go outside of Iowa to buy,” Amundson said, “but if it is not made in Iowa, we get it from elsewhere in the United States.”

A bigger challenge, the CEO says, is people.

The company has been “running on overtime” since a month-long furlough in the early days of the pandemic. It has built its workforce by 20 percent this year, which translates to about a dozen employees, but it could put more people to work today.

Conrad is a mere 48 miles from Waterloo, Iowa, where Deere operates a manufacturing plant. “We have to compete with them for people,” Amundson said, “and we are glad to do it.”

There are no Ritchies or Wilsons still associated with the business. (Son Cliff Wilson died in late 2018.) Amundson, however, believes that the principles upon which the early owners built the business are what continues to propel it forward.

As part of its century celebration, Ritchie Industries defined the five core values that Amundson articulated in his remarks to employees.
“What is behind these values is character and quality,” Amundson said. “They are the basis for outstanding customer service, process improvement, creative problem-solving, and an unwavering commitment to quality.”

Skramovsky agrees. When she started at Ritchie Industries in 1975, she did not intend to be there 46 years later.

“The product is as good as the people who put their hearts and souls into building it,” she said, “and the people here, in management and on the shop floor, take great pride in what we build and care about putting out a quality product.”

Ritchie Industries is a new member company. Amundson and Jeff Miller, sales and marketing manager, will be in Oklahoma City for the Marketing & Distribution Convention. Of the resources available to them through membership, Amundson said they are most eager to connect with other members.

“Jeff identified this organization as a great fit for us,” Amundson said. “I think we have a lot we can learn from other members and hopefully a few things we can contribute, as well.”