Have you ever looked back at your high school yearbook? Look at yourself, all young and full of hope, maybe a little naïve about life. Look at that hair! Look at what you were wearing! What were you thinking?
Don’t worry. I’m not singling you out. We were all there with you. In the ’70s, it was bell-bottoms and wide collar shirts. In the ’80s, it was leather jackets to grunge. I won’t even start in on ’90s fashion.
But this isn’t about what you wore in high school. When you look back to that younger version of yourself, don’t you wish you could pass along a little bit of wisdom that you might have learned the hard way? Like when you meet Susan, Run! Or don’t sell the Chevelle! As they say, hindsight is 20/20.
When we look back 20 years from now on the world of agriculture and ag tires, what are the things we wish we could tell ourselves today? What wisdom will the industry and technology teach us during the next two decades?
Walk with me, if you will, to the year 2036. What do we know to be a fact today that we simply didn’t know back in the good old days of 2016?
In 1989, Stephen Covey penned the now timeless “7 Habits of Highly Effective People” in which he guided us through the mindset of the uber-successful. Of the seven habits, perhaps one of the most enduring is Habit #1: Begin with the end in mind.
So with our end in mind, let’s look ahead to what the future of agriculture and ag tires may very well look like 20 years from now.
The funny thing about free markets is that they work. Commodities are now global and that means farmers all over the world are and will continue to grow crops to feed our expanding global population. That also means growing crops in places that are and will be punished by arid droughts or deadly flooding, sometimes a little bit of both at different times. Despite some seriously impressive advancements in crop science, crops of the future will endure not only natural disasters but also diseases.
That of course means more resilient stalks, posing an exponentially difficult challenge for farm tires. Today, some corn stalks are pound for pound stronger than steel. Meanwhile, big iron across the world will traverse fields of corn and beans and sugarcane during harvest, standing tall in the face of punishing field conditions. Rest assured, farm tire manufacturers are already busy reinvesting in R&D to improve compounding that will resist in-field punctures, chipping and chunking. Keeping farmers profitable in the field begins with lab coats, science and technology.
Highly Engineered Big Iron
This morning you probably hopped in your car or truck like you normally do. If you’re extra tech savvy, maybe you hailed a private car on your Uber or Lyft mobile app. On the surface, it’s a clean and user-friendly process. But behind the scenes, hundreds of millions of lines of computer code took your command or started the ignition. Later, that same software guided your Uber driver’s GPS or accelerated your F-150 toward your destination. We’re talking about a mode of transportation with a curb weight of around 5,000 pounds.
Have you ever stopped to think what’s going on under the hood of a 25,000-pound John Deere 7R series tractor in the field? That big hunk of iron is in reality a highly engineered piece of agricultural equipment. What will tractors look like in 2036? It’s not difficult to imagine a future where machinery is even larger and more specialized than today’s equipment. For us tire dealers, that means more tire opportunities. For farm tire manufacturers, that means more engineering and higher dollar rubber.
SKU Proliferation and Distribution Difficulties
More specialized equipment in the future means more complexity. And more complexity means more SKUs. If you’re a real farm tire dealer or distributor, you already know what I’m talking about, and it’s already becoming a major challenge.
Even tire manufacturers aren’t immune to the complexities of more SKUs, the result of which is smaller production runs, lower manufacturing efficiency, and yes – more costs. No, this is not a challenge driven by the likes of Firestone Ag, Michelin or BKT. This is the natural evolution of agriculture.
In the 1980s, a tire dealer could stock roughly 20 tire sizes and comfortably cover about 80% of all passenger and light truck vehicles on the road. By the early 2010s, that number had ballooned to well over 400 sizes. Driven by highly engineered vehicles with tight performance specifications, tire manufacturers have been forced to build new tire sizes with new compounds and new technology. Could this same trend impact the agricultural tire segment? You bet – and it’s already starting.
For decades, the largest and most successful ag tire dealers meticulously planned their spring tire orders and ruthlessly negotiated the best pricing and terms with their suppliers. That works well until the equipment in the fields becomes too specialized and the tire sizes between the crop rows become too many. Certainly tire procurement will be much different in 2036 as it is today as greater demands on farmers will place greater demands on equipment that will grow larger, heavier, more capable and more highly engineered.
Agriculture 3.0: Machine Learning and Automation
Look up, high above you. You hear that whirring sound? That’s the latest ag drone and it’s scanning the field for signs of disease, crop condition and running a proprietary algorithm to maximize crop yield through water optimization.
Look to your left. That big iron tumbling through the fields is equipped with enough sensors to spot you from a mile away. No operator to be seen, this late model Case IH is fully autonomous. Driven by technological advancements and financial pressure to improve farm income, more processes have been automated by equipment and algorithms. If a computer can replace a farm hand, perhaps that’s an inevitable step toward Agriculture 3.0.
The Ever-Evolving Competitive Landscape
Earlier this year, Yokohama announced its now-completed acquisition of Alliance Tire Group. Of course, that preceded Trelleborg’s announcing the purchase of CGS Holding, parent company of Mitas. This M&A madness can’t possibly continue, right?
It’s a powerful elixir. Mix historically low interest rates (cheap capital) with a dash of short-termism among investors. Now mix in two shots of stagnant corporate earnings and top with a little bit of greed.
Let’s be honest with ourselves. Titan has been in trouble for years. Will a steadily declining operating income, no top-line growth and a questionable debt load lead to the demise of Morry Taylor’s Titan International?
Meanwhile, BKT has invested heavily in R&D and product development to become a major player, stealing market share from industry stalwarts like Firestone and Michelin. Trelleborg and Yokohama are now firmly among ag tire industry leaders, and not even a witch hunt led by the USW could stop leading Indian manufacturers from staking their claim to the U.S. market. Like I said, that’s the funny thing about free markets. They work.
Elsewhere are there other intrinsically qualified tire manufacturers looking to enter the agricultural segment? I see you, Cooper Tire.
Change is inevitable and evolution is natural. Tire manufacturers carelessly throw around words like “innovation” and “disruption.” Ours is an industry that’s nearing its bicentennial. And if we’re really honest with ourselves, VF and LSW technology is as close to innovation as the ag tire industry gets. With all due respect to the brilliant engineers at Firestone, Michelin and BKT, there’s a very distinct difference between innovation and evolution.
One thing we know is true: The future of agriculture will undoubtedly look much different than the reality we know today. If you’re entering the twilight of your career, it’s natural to look at some of these changes as unnecessary or even dangerous. Are our best days really behind us?
For still others, change is exciting, an opportunity to work toward a brighter and more sustainable future. With a nod to the heritage of our past, we bravely march toward the future.