Bye, Bye Branson???

[arnoldziffel]

I've got the tractor bug bad.

Not long ago I "discovered" the Branson brand of compact tractors. A local lawn mower shop started to handle the line earlier this year.
Driving by their shop it appeared that their original stocking inventory never changed. Eventually, one or two machines sold but several more just sat there.

About two months ago I stopped on a Sunday out of curiosity and spent some time carefully looking over a 2400H model. What a well engineered little jewel of a tractor! The fit, finish and assembly reflected real manufacturer pride and attention to detail.
The dealer's local advertising indicated exceptional discounts -- perhaps the best pricing at any USA Branson dealer. I'm afraid I was being seduced.

I don't need another tractor but boy I thought it would be great to try one of these little Bransons. So, I set about selling some parts of my Wheel Horse collection to perhaps fund such a purchase. I had success and early last week had put together the dollars to buy the 2400H.
A quick business trip to Kentucky had to be accomplished late last week and I put-off making the Branson purchase until my return 2 days ago.

Yesterday I drove to the Branson dealer and was shocked to see NO tractors of any model on the lot. I was too surprised to go in and ask but I suspect that the dealer MAY (?) have given-up the Branson line.

I'm sitting here with mixed feelings. Did I miss a great opportunity to own a beautiful little tractor at a favorable price or did I dodge a bullet as the next nearest Branson dealer in my state is almost 4 hours away and any after the purchase warranty/service matters would have been difficult.

I hope Branson can get a solid dealer network established. It appears to me that they build great, HIGH VALUE machines with real pride.

 

[jeff9366]

The tractor market is tough, there are great rewards in scale and scale generates positive feedback on its own. Some companies decide to produce PRIVATE LABELS for other companies to achieve scale. (Cabella's tractors)

It is incredibly difficult to make any new brand viable. That is why large companies pay BILLIONS of dollars for niche brands you have never heard of which, despite the odds, have established a viable brand.
(Non-prescription AIRBORNE is one example.)

Then there are the large and random vagaries of currency foreign exchange rates.

HOPE doesn't cut it. It is deep pockets for the manufacturer, quality design, quality manufacturing and a sales force living on the road and working six days a week for years. Expanding overseas requires learning new cultures.

Many companies borrow money to expand. Often they operate OK until repayment is due, then choke.

 

[mkreitler]

I agree it seems that Branson has a very limited dealer network in my area only one dealer within 50 miles and it is a mom & pop store so it is just a matter of time before it disappears I suspect. When I spoke with them a few years back they said if it was not that he retired form FORD and received a pension they would starve to death.In there area of MISSOURI it's all about John Deere, New Holland,Kubota,and LS. Making it a tough sale. Also I have heard that PARTS can be a PROBLEM. This is also something you want to think about in the future before you spend your money. I also considered this before I made my decision on what BRAND to go with in the end I chose KUBOTA ORANGE!!! IF'S IT'S RED KEEP IT IN THE SHED!!!

 

[Clay45]

Its self fulfilling. You put off a purchase long enough and the dealers won't be there.

 

[k0ua]

Go get a Kioti CK2510. A much stronger dealer network. Of course there might not be much of a presence in your area.

https://www.youtube.com/watch?v=vJSytvhRQYs

 

[GManBart]

Keep in mind that Branson didn't make that machine....they're made by Kukje in Korea. There are lots of very nice machines in that size range, so I don't think you really missed out.

 

[arnoldziffel]

Kioti is well represented in our neighborhood and I already own a Kioti relative -- my Bobcat CT230. I agree that this is a very good product.

I also have a small Mahindra and New Holland so I really did not need the Branson I just was so impressed with the well designed Branson 2400H I was ready to buy "just one more".

 

[EddieWalker]

I bought a Century in 2003 from a local dealer who was selling them like crazy at the time. There where half a dozen Branson and Century dealers within an hours drive of me to choose from in all directions. The Branson dealers came and went, but over time, there where fewer and fewer of them. Then a couple years ago, Century ceased to exist and my dealer switched to TYM. Now the closest Branson dealer is over 2 hours away. I haven't been there yet since I can get parts from them online fairly quickly.

I'm sort of looking for a cab tractor and I really like the Branson 60hp cab tractor, but wont buy one because I have so many doubts about how much longer they will be around and how hard it might become to get parts for it in the future.

Eddie

 

[300UGUY]

I bought a Kubota, and never looked back. Dealer is close, lots of support for Kubota, they are expanding in this country.

 

[bucktaker]

I bought a Kubota, and never looked back. Dealer is close, lots of support for Kubota, they are expanding in this country.

me too

 

[GManBart]

I thought the discussion was about Branson, not what brand you bought?

We have a Branson dealer just a couple of miles away...I've only seen one or two tractors on their lot in all the times I've gone by. I think they'll order one for you, but they don't seem to keep inventory, and they don't look much like a service shop.

 

[MinnesotaEric]

39% of boomers want to retire into a rural setting. Compared with a few years ago when the boomers where in their peak household spending (age 48) compact tractor sales are down by one third. Generation X, the latch-key kids, my generation, has just entered our peak spending years (ages 42 to 48), but we're a smaller generation and simply cannot maintain the level of consumerism of the larger boomer generation that proceeded us. The Echo Generation that follows Gen. X (the boomer's kids) is again a larger generation, but due to debt and average jobs paying 10% less than when Gen. X went to work, they are getting married and forming households later in life than either the Boomers or Gen. X generations did.

The engine that drives consumerism is marriage and family formation. Once married, young people suddenly realize that raising their kids in the city with all the action is a horrible place to raise kids, and so they become first time home buyers in the 'burbs. House purchases because a huge uptick in consumerism. Peak home spending is at age 42, and six years after that comes peak household spending as those couple fill up their 4,000 square foot house with junk.

Peak car buying is in the early sixties while peak net worth is one year after retirement. Peak drugstore spending takes place at age 73 end peak entry into assisted living is at age 82.

The single main driver of commodities is population growth but more and more western nations face a demographic cliff where there are more dyers than buyers. For this reason we've seen commodity prices generally fall as expanding demand has silently started to taper against rising production. Collapsing commodity prices hurt emerging nations first as emerging nations tend to be the largest exporters of commodities. Then we see producing nations economies become less robust as demand for their exported goods tapers off. We see this in Japan, Russia and now Germany today. China reports robust growth, but as their lagging stock market reveals, their growth has come from over-building their infrastructure, not from increased sales of goods and their own population is aging too.

Anyway, based on personal conjecture that peak compact tractor purchasing happens in people's 50s, all to say that I don't see room for expansion of total sales in the compact tractor market in the United States for another decade until the Echo Generation starts coming into their own.

 

[arnoldziffel]

Excellent points Eric!

 

[jix]

me too

me three

 

[jeff9366]

If I were going to have more than one tractor I would buy all in one brand from a local dealer. I appreciate the consideration "good customers" receive.

I have bought two Kubotas (plus several implements) from the same local dealer. He invites himself for coffee every month or two. Almost always adjusts something at NO CHARGE and catches infant problems before I do. He also follows my posts here, although I have only mentioned dealer's name twice in 2,578 post.

OP: You seem to have a penchant for orphans. And that is fine. It is your money. But do you have a long term plan?


ERIC: #12 here is your best ever post.

 

[oldballs]

Excellent points Eric!

And that's why Eric is called "The Oracle".....:laughing:

 

[rgr33]

holy crap Eric, you really are an oracle! that was one of the most well thought out posts I've ever read on this forum. Tractorbynet has so many interesting posters, exploring so many ideas that are so helpful in my every day life, it is now must reading for me every day. you just never know what the heck is going to come up for discussion each day. I often find myself saying " Hmm, I never though of that." Eric's take on shriinking compact tractor sales is a prime example.

 

[Dillier23]

The Oracle, you an I have a common fan in the Economic world. Harry Dent has put this well into perspective in "The Demographic Cliff", I agree with most of what he says. Some say this is a pessimistic approach to spending or investing in current markets, but what he has predicted is making it's way here although slower than anticipated. Think QE. Good points, the under 100hp market has maintained a good industry this year due to cattle and milk prices.

 

[MinnesotaEric]

The Oracle, you an I have a common fan in the Economic world. Harry Dent has put this well into perspective in "The Demographic Cliff", I agree with most of what he says. Some say this is a pessimistic approach to spending or investing in current markets, but what he has predicted is making it's way here although slower than anticipated. Think QE. Good points, the under 100hp market has maintained a good industry this year due to cattle and milk prices.

Dent's last book is fascinating, but clearly his timing is off for a pullback. Even so, at this moment only one major bank (French monster So-Gen) thinks that 2015 will see a major pullback in our markets and their reason is that Wall Street has never seen an eight-year bull run. That said, the trouble with being a bear is that it becomes silly expensive rolling over non-performing options if one is too early, not to mention the missed opportunity costs of remaining long! For me I look at trajectories and value while actively managing those assets, and so Dent's line of thinking becomes very interesting. One thing that most bears don't get is the ability of a large trading country that uses fractional reserve currency, is their central banks ability to manage interest rates well below expectations. Japan's interest rates have yet to pop. Our interest rates where supposed to pop, yet they did not which caused precious metals to crash in the last quarter of 2011.

Business Insider published Minack's work noting that it is increasingly hard to allow higher interest rates without the market crashing forcing the Fed to ease. While Deutsche bank has noted over the last few years everybody has over-estimated the interest rate.

Anyway, the crowd thinks we'll see increasing interest rates, but I don't think we will see anything very high. Which is too bad because I own banks and REITs that would benefit from higher interest rates (counter-intuitively, banks make more money the higher the interest rate goes).

At this point I need to explain something that is not taught in schools, namely that the trajectory of markets is largely set by bond pricing which in turn effects the value of currency which is what everything gets priced in. Stick with me because I'm diving into the deep end:

1) Interest rates are a way of measuring the demand for money.

Low interest rates mean demand for money is low and demand for debt is high.
High interest rates mean that demand for money is high and demand for debt is low. For example: If my demand for your debt is low, you will need to pay me more to hold your debt in the form of higher interest rates. And why would you be willing to do so? Because demand for my money is high.

Hence,

High interest rates mean that demand for money is high and demand for debt is low.​

In other words, raising interest rates means that a currency is becoming more valuable and falling interest rates mean that a currency is becoming less valuable.

2) Devaluing a currency makes domestic goods and services produced or offered less expensive relative to other currencies.

We know a currency is devaluing when interest rates trend downward.
When currency is cheap relative to foreign currencies, our local economy tends to strengthen on increased exports and bolster domestic employment.​

In other words, during periods of economic weakness, a central bank will try to devalue its currency as a way to increase employment and increase domestic commerce.

3) When interest rates are zero, central bankers have few tools to effectively lower interest rates.

They can print money. Printing money can be literal printing of money which isn稚 very effective because less than 5% of our currency is in paper form.
They can lower the reserve capital requirements of banks, thereby multiplying the money supply available for lending.
Or they can devalue to money by purchasing debt in the currency they issue thereby effectively diluting money.​

Those central banks that have the ability to do so have all sought to devalue their currency. But devaluation is relative and as one central bank devalued its currency, that provided motivation for another central bank to devalue its currency. This has resulted in seven year boom of increased costs of commodities which are often priced in dollars. But the increased price in commodities isn't true inflation because people's incomes have not inflated. As a result, when commodity prices increased, there was demand destruction and commodities pricing was expected to fall unless demand remains elevated. Central bankers realized this and for this reason they never grew concerned about the increase in commodity pricing because they expected demand destruction and they were right.

 

[tooln]

I looked at a Branson a few months ago and really liked the way it was built. I started to dig into them and found the dealer net work sucks. From what I found just about anyone who puts up the cash can become a dealer. No need to have any certified tech or just plain techs or have any kind of tractor background. Not the type of dealer I'd want to have to deal with. Granted they are not all this way but why would any company allow this type of dealer to sell their product is beyond me.