The Farm Machinery and Equipment Industry: Its Changing Structure and Performance

The farm machinery and equipment industry diversified substantially between 1954 and 1966. Firms outside the industry acquired facilities within it, and firms within it acquired facilities outside. Establishments and companies with 500 or more employees greatly decreased in numbers. Expenditures for salaries, wages, fringe benefits, advertising, research and development, and State and local taxes increased significantly. Profits as a percentage of net worth fluctuated, ranging from 1.3 to 10.9 percent. These were lower than for most other industries. If present trends continue, most establishments within this industry will be member units within multiunit, and multiunit, multi-industry companies. While economies of scale of production appear achievable by relatively small firms, economies associated with such facilitating functions as large-scale advertising, research and development, and information retrieval via computers, appear beyond their reach. Such structural changes, when accompanied by expanding sales, encourage nonprice competition, and the "passing on" of costs to the dealer level. Changes in the structure of agriculture, as well as changes in dealer arrangements at the retail level, will largely determine the extent to which price changes for dealers can be passed on to farmers.