CNH Industrial, makers of New Holland and Case, and Agco, who make Massey Ferguson, Challenger and Fendt said they had been building inventories in the UK
Tractors were being stockpiling in Britain in case of a no-deal Brexit as manufacturers raise concerns of complications at customs.
CNH Industrial, the maker of Case and New Holland machinery, in explaining a 27 per cent jump year on year its tractor inventory, highlighted the ‘potential risk of Brexit’ without an exit deal as a key cause.
“We are kind of putting together countermeasures to protect our businesses in case of a no-deal situation,” said Massimiliano Chiara, the CNH finance director.
“We are kind of affecting our inventory right now with some buffer to protect the market uncertainties.”
The group estimated at $500m (£390m) the extra cash being swallowed up in extra inventories, for which a ‘solid order book’ in North America was another driver.
Rival Agco, the maker of Challenger, Fendt, Massey Ferguson and Valtra equipment, also said it had raised inventories in the UK over worries over Brexit which, in a no-deal scenario, is seen as threatening trade disruptions, as hard borders between the EU and UK are abruptly reinstated.
Martin Richenhagen, Agco’s chief executive, said ‘everybody is predicting complications at customs’.
“And so we make sure that we have enough tractors [in the UK] a little earlier than normal, so have a little buffer inventory, in case,” he said.
When asked specifically if the group was building stocks, he added “it is already happening now.
“We are just trying to do it now, in order to make sure that we don’t have a problem.”
Furthermore, even though Agco does not manufacture in the UK, he highlighted a potential threat to the group’s manufacturing from Brexit, with GKN, based in central England, an ‘important supplier’.
With GKN making rims ‘which basically go on our tractors, also on our Fendt products’, the maintenance of supplies ‘is something which has to be organised very carefully because we are very busy in Fendt’.
“We have a very tight schedule, at capacity, and of course, any disruption caused by some simple components like rims… or wheels would be very, very bad,” Mr Richenhagen told investors.
And the preparations may be worth it, given that one segment of the UK apparently not worrying about Brexit appear to be Agco and CNH customers, UK farmers themselves.
“When it comes to the market as such, we believe that it will be more stable than maybe people assume, because a lot of farmers are still optimistic.
“The pro-Brexit portion of farmers may be higher than the guys who like to stay in the EU,” Mr Richenhagen said.
“I am not sure whether that’s true, but that is what we hear.”