The technology itself is not the issue, the problem is that companies are at war with their customers. These companies will go to any length to extract as much revenue as possible. Milking your customers is not good for business, especially if you drive them into insolvency.
I hope in the future there are more companies that try to align incentives with their customers, such that their business practices help customers be more successful (although many of them preach this, very few actually do). Many businesses these days seem to be geared toward making a quick buck, rather than really providing any value.
> Milking your customers is not good for business, especially if you drive them into insolvency.
It clearly is good for business, even if it's bad for customers and society at large. Pretending it's bad for business just encourages complacency because it suggests that the natural discipline of the market will drive the milkers out of business and encourage good business practices. But that doesn't happen, and if we want that to change there needs to be some source of external regulations to prevent it from happening.
But it needs to be followed with observing that the market doesn't give two damns about long term, because anyone optimizing for long-term profitability eventually gets outcompeted by someone optimizing for shorter-term profitability.
These companies are losing customers. That is never good for business. Eventually, someone will take the matter into his own hand and start making 80s-like tractors, so these companies will lose even more customers. They could do the same, but at this point they lost the trust of their customers, so it will be very hard to gain them back.
>>Eventually, someone will take the matter into his own hand
I believe you. This is how Netflix got born. A customer was so embarrassed about how Blockbuster milked him with late fees that he decided to start his own business. We all know what happened to Blockbuster.
Maybe they are loosing a particular kind of customer they may want to loose anyway. Neither the number of acres to be farmed nor the number of mouths to feed decrease when a small farm goes under. The tractor has no long term concern of sitting idle and it may be giant non-corporeal people prefer doing business with their own kind.
Really? Which products are getting more repairable with time? Nobody is bringing back easily repairable washing machines or easily repairable automobiles.
Lots of products are more repairable now, by the owner, primarily due to the internet (YouTube specifically), along with websites dedicated to providing schematics and parts lists/ordering (Appliance Parts Pros, etc.).
I've personally repaired a broken dishwasher (temperature sensor's solder busted), the hot-surface ignitor of a gas-fired water heater, the water-filter socket of my frig, and helped a friend repair the ignitor in his gas-fired dryer.
All thanks to Youtube videos with instructions/tutorials, and the availability of parts.
Prior to these, I would have had to call a repairman, and then he'd probably say "you need a whole control board" or "the unit's dead."
Your argument is wholly incorrect, though. Manufacturers aren't making things easier to repair. Those things you repaired? They were already easily repaired. In the case of your argument, the only thing that has changed is whether or not people know how to repair things. And these days most people don't and most aren't willing to try without step by step instructions on how to.
That's partly because there's so much older stock. Also, the "easily-repairable" products of the past were not nearly as cheap! The closest comparison today would be "heavy-duty", "pro" models, often built by niche manufacturers, which do advertise ease of servicing as part of the value.
I don't know about cars, but I am typing this on a Thinkpad in which I can change the battery with no tools and can change most of the internal components without more than a screw-driver.
While true for my Thinkpad (T520), it no longer really holds for many of the latest models, with many of the T series having solderen on RAM or secondary batteries that are built-in a not easily servicable.
Being suddenly in the market for a new washing machine myself, I might argue that a large portion of the value of a washing machine is in its aesthetics. Same (probably more so) for cars. I'd probably need to put more thought into that, but I am fairly certain that aesthetics don't count for much in a tractor on a farm. It's possible that classic-styled tractors might even be mark in their favor.
If I could buy a washing machine with a 10 year warranty I would not care at all what it looked like.
My washing machine is leaking at the moment. I have to decide whether or not its worth my time pulling it outside and apart to see if it can be fixed, or if I should just go buy a new one for $750
Quality of materials [1], workmanship, capacity, ease of loading, max spin speed, gentle spin option, energy rating, water consumption, quietness, quick wash function, drums that reduce creasing and so on. Good quality washing machines are more expensive but not because of aesthetics.
It would drive out bad actors in the long run if there was proper competition in the market. Unfortunately short term gimmicks can give you the necessary capital to simply buy your competition and then you can milk your customers because they have no other option but not to play.
in the short term... and in the long term often enough, because those short term gains can be used for all kinds of naughtiness later on. monopoly, regulatory capture, rent-seeking, and so on.
It's good for the business in the short run, but not in any other sense. Reputation matters quite a bit when it comes to this sort of costly, mission-critical equipment, and any John Deere competitor now has an easy way of grabbing some of that market share.
To add some sources to this, the tractor companies have been milking farmers by forcing them to require subscriptions or use overpriced repair techs in order to get firmware updates/repairs.
This could be a business opportunity for another tractor manufacturer. You're not forced to buy a John Deere.
Boutique tractors, hand repairable, simple parts. If people are hoarding onto 40 year old tractors, then that's a market signal that people want those type of tractors.
Yes, lets keep hoping the Market will solve everything, and that somehow, the trend of consolidation will magically reverse itself on its own, despite how ever fewer companies control each market. Wouldn't want to realize people have more power than just what they buy.
The power to walk away and not buy is an almost ultimate power; and companies/everyone does respond aggressively to it.
It is extreme hubris to think you can use some other power to get consumers a product that they magically want more than the one they're going to choose to spend their own money on. People value their money; they'll try and get the best value they can for it.
Extreme hubris, like food safety regulations? Car safety regulations? Right to repair laws? Truth in advertising laws? Bans on toxic chemicals in paint and toys? Worker protection laws?
All of those things, people could have simply chosen not to buy, or not buy from companies employing those practices, yet it took laws (i.e. collective action and organization), to affect them. Telling people to limit themselves to "simply not buying", is telling them to only use forms of protest that have been repeatedly proven not to work.
Don't like companies hiring paramilitary squads to kill union members [1]? Just don't buy Coca-Cola! Spend hours or weeks of research for every minor purchase or risk funding something abhorrent - just God forbid you pass any laws!
When an industry is offered a technology-based productivity improvement by a vendor, the increased profit associated with that improvement can go to three places:
1. The technology vendor itself
2. The business purchasing the technology
3. The customer
When the business purchasing the technology is a commodity business (its product is undifferentiated from a large number of competitive producers, e.g. corn, soybeans), the value from the technology will generally either stay with the technology vendor or flow down to the consumer in the form of lower prices.
This is why technology investment in a commodity business is often about a need to keep up with your competitors and not about actually increasing your profit. To paraphrase Charlie Munger, the productivity improvement doesn't 'stick to your ribs' if you are the farmer.
I think any business sophisticated enough to build highly automated farm tractors is also going to be sophisticated enough to realize that it doesn't make sense for the farmers to own the value associated with those productivity improvements. That is the plight of a commodity producer in the supply chain, I don't think it's a moral failing of the technology vendor.
In a way, it is. There's no argument today's machines (including even consumer cars) are more technologically complicated than those of 40 years ago. There's more stuff (read features) that can break, and there's more microcontrollers and embedded computers that run software (read bugs) with sometimes intricate behavior.
Those 40-year old tractors are easier to maintain because everything is mechanical, so it's easier to diagnose and easier to fix.
Not long ago, it seems companies were still in the business of making tractors, or cars, or cakes, or something... Nowadays it seems every company is in the business of making money and paying bonuses for directors. The rest is an excuse.
Perhaps at the time people did not accept this concept? I mean, if people don't see a problem with switching terminal values (feeding people) and instrumental values (making money) around, then there's no hope for humanity anymore.
In other markets, customers could just switch to a new business that was less shady. In this particular case, it doesn't seem like there are many alternative suppliers, so farmers have no other options. If they did, they would've gone with them. Buying decades-old tractors suggested they somewhat already have tried to find alternatives.
Big AGG works the same way as any other industry: make enough money to grind your competition into the dust. If that means yanking features from a product so that you can sell it at multiple price points or if it means adding self destruct mechanizes that only you can fix then so be it. Obviously, not all entities work this way (bless their hearts) but I think it's fair to say most of the successful ones do.
Maybe that's true in high-choice, low-stakes consumer situations, like "where should I eat dinner tonight?", but is it true in industries with high barriers of entry?
If I decide I'm flying across the country to visit family, I'm going to buy a ticket from some airline that is in fact trying to extract as much revenue as possible from customers. And the airline business seems to be healthy.
If I need to buy a new car, I'm going to be presented with models and trim packages designed specifically to extract the most money from the customer. Honda doesn't offer DX, LX and EX trim packages to save you money - they bundle things together so that even if all you care about is a sunroof, you're also paying for alloy wheels, fog lights, etc.
I've never shopped for tractors, but I'd suspect that maybe the tractor companies that stay in business are in fact the ones which extract as much revenue as possible from customers.
>I hope in the future there are more companies that try to align incentives with their customers
Sometimes the invisible hand is invisible because it's not there. I don't understand how "fewer regulations" is supposed to address problems like these, or really any market failure state.
Perhaps if you consider "regulations" like the DMCAA, "intellectual copyright" laws, patent laws and a host of other laws and regulations that criminalize the repair or alteration of machinery or other items that have been purchased you might garner a better understanding. If farmers weren't prevented by law from repairing or altering the equipment they've purchased this problem largely would not exist.
Farmers are doing the same thing, especially big midwest grain operations.
The family farmers are dinosaurs that will be out of business anyway. The regulatory framework, market consolidation and finances work against them. The only way to thrive is to be really big or really small.
If you don't know the answer to that - you may have wanted to think it through a little more.
Manufacturing at scale is hard and expensive. John Deere has been doing it for years, creating the most reliable tractors in the world for decades and has only recently decided to bend customers over to give them the ol' in-out-in-out.
A new brand would need to start from almost smaller than scratch, and have tens of million dollars of investment to even get started producing their own tractors. Then they'd have the uphill battle of a set of people who are extremely reliant on these machines to trust a new company with no track record with highly mission-critical equipment.
It would be an incredibly high-risk investment, with little to no guarantee of success.
Instead, as the article says - these farmers are not buying new tractors from anyone at the moment.
In today's market, your argument doesn't hold water.
A new brand would need to start from smaller than scratch? So what? People start new companies every day.
It would require tens of millions of dollars of investment? So what? We keep being told how capital markets are just sloshing with cash looking for investment opportunities; that one of the reasons for rising inequality is due to the dearth of investment opportunities for the rich to use to seek returns.
They'd have trouble finding customers willing to give them a shot? So what? Every startup has this problem. You solve it by differentiating yourself from your incumbent competitor. When your competitor is so hated that they're getting negative press in national news outlets and state legislatures are being pressured to pass laws, your differentiation proposition is practically written for you.
I'm sure there are tractor upstarts out there trying to get funding. The question is, if they're not getting funding then why not, and why doesn't anybody know about them?
Capital markets are looking for worthwhile investment opportunities. An established ag-implements manufacturer can probably use that sort of risk capital to expand into making tractors, or something like that. Getting a large firm started "from scratch" is going to be less feasible. And these things also take their time to happen, of course.
The moment you started to see any real success with a company like this and become significant competition, John Deere would reverse their equipment-as-a-service DRM-based model, and you would be instantly crushed by their far more familiar and established brand with all the accumulated knowledge and trust people already have. It's so certain that you have essentially no chance of long-term success. John Deere can operate like this because there's no competition, but the second there is competition than can revert to how they were and you are dead, so there's no point even trying.
Brand isn't everything, it doesn't "crush" competitors in markets without winner-takes-all characteristics (i.e. network effects). People buy smartphones that aren't iPhones; people buy burgers not made by McDonald's; people rent hotel rooms not offered by Hilton or Marriott. By the time the upstarts get competitive enough to force the incumbent to act, the upstarts already have branding and market power of their own, and are not so easily crushed.
I think parts availability might be a problem with those, as well as a general lack of knowledge about them. Otherwise, yeah MTZs are simple and easy to fix.
It takes a LOT of capital to build a company capable of manufacturing something like a tractor. And nobody will buy it initially because it has an unknown reliability record.
Look at the article, the farmers all make predictions about exactly how long those John-Deere tractors will last because they have roughly 40 years of experience working with them.
Mahindra is selling small and medium tractors in the US now; I don't know for sure but I wouldn't be surprised if they were much more user-serviceable than the American brands people are complaining about.
Yeah, Mahindra has some reasonably large tractors on their website, but the really Big Tractors you'll find from say John Deere aren't available. According to Wikipedia they're the largest tractor seller in the world, so maybe they'll expand!
> If customers don’t want this stuff, why isn’t there a competing company offering non-DRM tractors?
Because modern capitalism is not a system that will magically fulfill customer needs, despite propaganda to the contrary. The way the system actually works is that the wants/needs of the capital-holders take priority over the wants/needs of other stakeholders (e.g. customers and workers). The other stakeholders are often forced to accept minimally acceptable deals, as long as the capital-holders are able to maintain barriers to entry (like large investments in capital).
A new market entrant will likely be tempted (eventually, if not immediately) to implement DRM just like Deere has. And Deere can always drop DRM temporarily if it will let them fend off a competitive threat.
> The way the system actually works is that the wants/needs of the capital-holders take priority over the wants/needs of other stakeholders (e.g. customers and workers).
The capital-holders did not (in most cases) get a "you are now free to hose your customers" card. The cases where they are free to do so are cases where there is a lack of competition. So "modern capitalism is not a system that will magically fulfill customer needs in the absence of competition". But if there is actual competition, and the wants of the capital-holders take priority over the wants of the customers, that's not going to work out well for the capital-holders.
> So "modern capitalism is not a system that will magically fulfill customer needs in the absence of competition".
But modern capitalism, at least in the American context, is a system being drained of competition. Competitors conspire to destroy it by merging and acquiring each other, and the deregulatory economic zeitgeist that's been in force for 40 years means the government has done little to foster it.
Markets tend towards equilibrium, and bitter competition is a kind of disequilibrium.
> But modern capitalism, at least in the American context, is a system being drained of competition.
I agree, and I agree that it's a problem. But it's the "being drained of competition" that's the problem, not capitalism itself. (Well, capitalism itself is something that would prefer to drain itself of competition - even Adam Smith knew that - but for capitalism to work properly, there has to be competition.)
There seem to be two kinds of "draining of competition". First, there's the "just too good" kind. Microsoft, Google, Amazon, and (the subject at hand) John Deere may all be of this kind (though Microsoft did plenty of dirty tricks to get there). Economics of scale and network effects create positive feedback loops where one competitor can win it all. I don't really know what to do about that.
The second kind is government-caused (or at least -allowed) monopoly. There's only one electric company here, because the government thought it made sense for there to be. Some other monopolies are less directly government caused, but heavy regulations can make it so that only the largest firms have the resources to comply, and all the smaller firms die.
Government-allowed is when the government approves a merger of firms that are big enough that the merger significantly decreases (or eliminates) competition.
With the government we've had for the last 40 years, I don't know what to do about this kind, either.
Because it would be really expensive to start a new tractor manufacturing business; it would take years to even get prototypes up and running; you'd still have to prove that your tractors were as good as or better than these 40 year old antiques (which they probably wouldn't be at first); you'd have to be able to make something that could meet safety and efficiency standards of today while giving up the advantages of tight control over maintenance; you'd have to figure out how to compete with the dealer, mechanic, and parts networks that represent a huge advantage of the existing players; and you'd have to figure out how to do all of that without running out of money. It's probably a twenty-year project. You up for it?
Nope. If you did, I'm pretty sure the EPA would shut you down. Emissions regulations aren't quite as strict for tractors as for cars and trucks, but they are headed in the same direction. I don't think it's possible to meet emissions without computerized controls. And once you've put hundreds or thousands of dollars worth of electronics on the tractor, it's hard to resist the temptation to add DRM.
I think that you would have a hard time getting EPA approval if you starting making brand new copies of legacy engine designs. A new diesel tractor engine has to meet EPA Final Tier 4/ Stage IV standards. I don't know what would stand in the way of making a knock off of the 4440 chassis and transmission that uses a new Cummins or other crate engine though.
This problem was created by regulation. It's not clear that markets can work when governments grant monopolies, and don't restrict the ensuing vertical integration. The only solution is to grant weaker monopolies.
Punjab state of India is pretty much Agriculture based, & have options of Ford, FarmTrac tractors as well as John Deere, Scot, this year models as well as from 1970s; along with local Indian Brands like Sonalika, Preet, Mahindra being equally good or better.
Mahindra tractors are based on the old International Harvester models I think. They sell them in the US also.
They look pretty cool, simple and repairable, but I don't know if they make ones the size of commercial John Deere tractors. All the Mahnindra tractors I've looked at were small.
Living in a rural, Norwegian area, I can remember seeing the following brands of tractors recently - Fiat, Zetor, Case, John Deere, New Holland and Massey Ferguson. I've probably not paid attention to at least a couple more - I am not a tractor aficionado...
>I hope in the future there are more companies that try to align incentives with their customers, such that their business practices help customers be more successful (although many of them preach this, very few actually do). Many businesses these days seem to be geared toward making a quick buck, rather than really providing any value.
You're probably gonna need to wait until the current generation of MBAs retires for that.
This is an educational issue to some extent. All the problems that are now coming home to roost are the result of things business schools have been preaching as gospel from the 80s to present. New ideas are going to need to come along and all those people trained in the old ways are going to need to cycle out before we see meaningful change.
I hope in the future there are more companies that try to align incentives with their customers, such that their business practices help customers be more successful (although many of them preach this, very few actually do). Many businesses these days seem to be geared toward making a quick buck, rather than really providing any value.