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Of cial Magazine Of The Farm Equipment Manufacturers Association
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Supplier member Osmundson Mfg. built pioneering company on tradition
AFP Liquidity Survey fi nds businesses cautiously optimistic
ASABE standards program promotes ag industry safety
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Fall 2014 Volume 4 Issue 4
Follow Us On TwitterTwitter.com/Shortliner
6 Legal Focus
Significant Changes are Coming to Overtime Exemptions
by Joseph G. Schmitt and David A. James
4 Executive Vice Presidents Message
The Associations Board of Directors Keeps Us Moving Forward
by Vernon Schmidt
14 ASABE Standards Program
Promotes Ag Industry Safety
24 Member Focus
Osmundson Mfg. Co. A Pioneering Company Built on Traditional Principles
26 5 Trade Show Strategies to
Boost Your Sales to the Next Levelby Timothy Carter
8 What You Need to Know About FASBs
Proposed New Lease Accounting Standards by John E. Oeltjen, CPA
10 Liquidity Survey Finds Businesses
20 Fall Convention Special Presentation:
North American Ag Faces Challenges and Opportunities in 2015
AGI Executive Vice Presidents Message
4 Farm Equipment Manufacturers Association | Fall 2014
Almost every week, someone asks our Association to endorse a program they can offer our membership. Unfortunately, most offer no real benefit for our members or dont have the track record to earn our endorsement. I call it passing the Sentry test: Can we trust this partner to care about our members as much as we do?
In the early 1970s, shortline manufacturers had difficulty finding quality product liability insurance. Many insurance companies underwriters simply did not understand our members products and were unwilling to invest time and effort to provide the coverage needed.
In 1975, Sentry Insurance Co. and the Farm Equipment Manufacturers Association began a partnership to provide products liability coverage to our members. Working with our Risk Management Committee, Sentry developed loss-control programs and educational materials that have improved product safety, reduced liability and established a relationship that has served our members well for many years.
In the late 1990s, participants in our products liability program also qualified for Sentrys package policy program, which includes property, inland marine, crime, premises liability, auto, umbrella, Employment Practices Liability (EPLI) and workers compensation coverages. Currently, 251 Canadian and U.S. companies participate in the products liability program, and another 130 companies participate in the property and casualty program, which includes workers compensation insurance.
I recently announced that Sentry will pay an average dividend of 10% to product liability insurance participants whose policy expired in the 2014 calendar year. Those in their first year with their policy expiring in 2014 will receive 3.5% of their premium as a dividend. Those in the program for two years will receive a 7.1% dividend, and those in the program for three full years will receive a 10.6% dividend.
During our Fall Convention in Las Vegas in November, We will formally introduce our Associations exclusive endorsement of another Sentry program, this one offering employer-sponsored Retirement Plan & Employee Benefit Plan products and services. In the meantime, here are some of the features it will include.
401(k) Profit Sharing Plans Profit Sharing Only Plans Money Purchase Plans Investment Only Plans Retirement Plan Compliance and Administrative Service Group Life, Disability & Dental Plans
Todd Thompson, Director of Sales with Sentry Life, will join our long-time Sentry friends, Bob Bonifas and Greg Pellegrom at the Fall Convention and will also be available during the EMDA Showcase on Thursday afternoon. While you are there, please take the time to visit with Todd and the Sentry team. AGI
Association Board Of Directors
President: Marc McConnellArts Way Manufacturing Co.
1st Vice President: Mike KlosterWorksaver Inc.
2nd Vice President: Richard KirbyKirby Manufacturing Inc.
Treasurer: Robert AtkinsonW & A Manufacturing Co.
Secretary: Paul JeffreyMacDon, Inc.
Ex Officio: Andrew CummingsT. G. Schmeiser Company, Inc.
Tony BakkerMonosem Inc.
Nick JensenThurston Mfg. Co./Blu-Jet Products
Donny JonesBelltec Industries, Inc.
Mike LessiterFarm Equipment/Ag Equipment Intelligence
Stanley McFarlaneMcFarlane Manufacturing Co., Inc.
Arlon RahnA&R Marketing
Ron RoglisHCC, Inc.
Bob SonntagS3 Enterprises Inc.
Tom TaylorAlamo Group
Jacqueline VassarVassar Manufacturing Company
Ag Innovator Staff
Executive Vice PresidentVernon Schmidt
Publications EditorMarlene Weeks
Ag Innovator, a quarterly publication, is published, edited and copyrighted by the Farm Equipment
Manufacturers Association to serve and promote the interests of its members, who bring choice, value
and innovation to the worlds farmers.
Unsolicited manuscripts and photographs are welcome. The editor reserves the right to edit all items.
Address all mail to Ag Innovator, 1000 Executive Parkway, Suite 100, St. Louis, MO 63141-6369 and
emails to AgInnovator@FarmEquip.org.
Submit all advertising inquires for future publications to Ads@FarmEquip.org.
Vernon SchmidtExecutive Vice PresidentVernon@FarmEquip.org
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Legal Focus AGI
As we have discussed in recent articles, increasing wages is a priority of President Obamas agenda. Most recently, he has directed the Department of Labor (DOL) to
narrow the so-called white-collar exemptions to the Fair Labor Standards Act, which permit employers to pay certain employees on a salary basis without an overtime premium. While the details of the revisions are not yet known, they are likely to change the exemption landscape dramatically.
To be exempt from overtime, an employee must (1) meet a certain salary threshold, (2) be paid on a salary basis, and (3) perform exempt job duties. Since 2004, the salary threshold has been $455 per week or $23,660 annually. It is nearly certain that the DOL will raise this threshold; the only question is, by how much? Expectations are that the threshold will become something in the neighborhood of $30,000 annually. In this event, anyone currently paid under $30,000 will need to be paid overtime (and likely on an hourly basis to track overtime) or receive a raise to the new salary threshold to remain salaried.
It is not absurd to raise the salary threshold from time to time to keep up with inflation, and it could be argued that the current threshold is dated. However, the DOL is expected to compound the problem of raising the threshold by providing that the threshold will continue to rise on an annual basis consistent with the cost-of-living index or another inflation index. In this scenario, employers will need to adjust to the salary threshold annually or risk their employees vacillating from exempt to non-exempt.
For example, imagine that the salary threshold is raised to $30,000 in 2015. In an effort to keep a certain employee exemptand to continue paying her a salary, which almost all employees preferthe employer raises the employees salary
to $30,000. Toward the end of 2015, the DOL announces that the salary threshold will rise to $31,500 in 2016 to account for inflation. This leaves the employer two options. First, to keep the employee exempt and paid a salary, it could provide the employee a minimum $1,500 raise, regardless of the employees or the companys performance in 2015. Otherwise, the employer must treat the employee as non-exempt in 2016, paying her an hourly wage and overtime, to both the employers and the employees dismay. Neither option is especially palatable.
Beyond the salary threshold, the DOL likely will revise the job-duties test for the exemption. Currently, the exemption asks what is the primary duty of the job to determine whether it meets the executive, administrative or professional white-collar exemption. The DOL may require that the
employee spend more than 50% of her time performing exempt duties, raising the bar from the existing primary-duty test. This revision threatens to narrow the white-collar exemptions, regardless of how much the employee is paid.
Readers in California may be familiar with the 50% test, which is the state standard. Those outside of California likely recognize that any move toward California employment law standards is not good for business.
The Obama administration has asked the DOL to publish its proposed revisions to the Fair Labor Standards Act by this November. The proposal will be followed by a comment period and testimony, culminating in final rules. If the proposed rules meet the November deadline, implementation could occur as early as mid-2015.
Undoubtedly, the white-collar exemptions are going to shrink. We expect to know soon just how much, and will report back. AGI
David James and Joe Schmitt are shareholders in the labor and employment group at Nilan Johnson Lewis. Our members are entitled to 30 minutes of free advice from David or Joe regarding labor and employment issues as a benefit of their membership. For more information, call us at the Association office at 314-878-2304.
JOSEPH G. SCHMITT DAVID A. JAMES
Significant changes are coming to overtime exemptionsby Joseph G. Schmitt and David A. James
8 Farm Equipment Manufacturers Association | Fall 2014
What you need to know about FASBs proposed new lease accounting standards by John E. Oeltjen, CPA
Last spring, the Financial Accounting Standards Board (FASB) issued its proposed Accounting Standards Update (Revised), Leases (Topic 842), a revision of its 2010 proposal on lease accounting standards. The proposed model is the latest in what has been a lengthy attempt to address the current standards failing to
meet the needs of users of financial statements because they do not always provide a faithful representation of leasing transactions, according to FASB.
Whats different?For manufacturers and
distributors, many of whom have significant leasing arrangements, the proposed standards would force them to include leases on their balance sheets as part of their overall debt obligations. The following is a recap of what is proposed.
Currently, generally accepted accounting principles (GAAP) distinguish between two types of leases: capital leases and operating leases. With the former, assets and liabilities are recorded on the balance sheet and the asset is depreciated, while the lease obligation is amortized over time as debt. With the latter, assets and liabilities are not recorded on the balance sheet, but lease payments are expensed on a straight-line basis. In other words, operating leases treat assets and liabilities as off-balance-sheet items.
The proposed standards would dramatically change the way leases are handled for accounting purposes. The theory behind the change, according to FASB, is that a company should recognize assets and liabilities arising from a lease, which it deems an improvement over existing lease requirements. Under the new standards, a lessee would recognize the net present value of lease payments as a liability and also recognize a right to use asset representing the lease payments due over the term of the lease, and related value of having access to the underlying property.
Potential impactFor manufacturers and distributors, lease expenses are often
the largest operating cost other than materials and payroll. By forcing manufacturers and distributors to recognize future liabilities for operating lease payments in their financial statements, these proposals will have a major impact on the balance sheet.
It all comes down to leverage. The requirement to record lease liabilitiesand thus long-term payment obligationson the
balance sheet will result in substantially more leverage being added to the balance sheet. This could then impact a manufacturers or distributors ability to meet loan covenants and agreements with its bank, including debt service coverage and financial leverage ratios, and could also affect a banks calculation of tangible net worth.
Will the standards be adopted?
FASB has received hundreds of comment letters on the proposed new lease accounting standards from trade groups, companies and individuals all over the world. Many of the comments have been negative. During the first quarter of 2014, FASB and IASB once again began deliberating the 2013 proposal, but they have not made any firm decisions to date.
Since new lease accounting standards are not likely to go into effect before 2017, there is plenty of time for next steps to unfold. We will keep you updated on new developments. AGI
Mueller Prost and PKF North America provided this article to the Farm Equipment Manufacturers Association. For additional information on this topic, please contact John Oeltjen or Mike Devereux, both shareholders at Mueller Prost, a CPA and business advisory firm headquartered in St. Louis, MO. Their website is www.muellerprost.com.
JOHN E. OELTJEN
Full_GKN_FE_0913.indd 1 10/2/13 9:41 AM
10 Farm Equipment Manufacturers Association | Fall 2014
Companies face a number of challenges when deciding how to manage their cash holdings. The business and regulatory climate remains one of middling economic growth and uncertainty, yet the current ultra-low interest rate environment offers little opportunity to generate yield. Consequently, many organizations rely on Treasury functions to ensure the safety of their large cash and short-term investment holdings and to maintain corporate liquidity.
As the labor market regains its footing and inflation moves back towards long-term trends, the Federal Reserve has begun to gradually scale back its accommodative monetary policies. Organizations cash accumulation growth rate has slowed, reflecting U.S. businesses increasing confidence in their future prospects and their willingness to use their cash to make capital investments, hire workers, engage in mergers and acquisitions, pay out dividends, and repurchase company stock.
However, companies still tend to rely heavily on bank deposits as their investment vehicles of choice, and uncertainty continues to surround money market funds.
To gauge these and other trends in organizations cash and short-term investment holdings and their investment policies and strategies, the Association for Financial Professionals (AFP) conducted its ninth annual Liquidity Survey in May 2014. The survey generated 740 responses, and this article summarizes the AFPs report of its findings.
Key findingsCash balances Thirty-six percent of survey respondents
reported that their organizations held greater cash balances during the first quarter of 2014 than in the first quarter of 2013. Fewer than one in four indicated their organizations reduced cash and short-term investment balances during that same period, while 41% of respondent organizations saw no significant change.
A few factors account for much of the change in overall cash balances, with oneoperating cash flowparticularly important. Most organizations that increased their cash holdings during the previous 12 months did so by generating higher operating cash flow (73% of respondents), increasing debt outstanding or accessing debt markets (18%), or generating additional revenues by acquiring a company or launching new operations (16%).
Organizations with smaller cash holdings compared to a year earlier cited as the key reasons increased capital expenditures (43%), decreased operating cash flows (36%), paid back/retired debt (28%), acquisition of a company or launch of new operations (20%), and increased stock repurchases and/or dividends (20%).
Investment policy Three in four organizations (76%) have a written document defining their policies for short-term investments, and safety remains the driving principle of organizations investment strategies. Slightly more than two-thirds of respondents (68%) indicate that safety is the most important short-term investment objective for their organizations, while 28% report that their organizations most important cash investment policy objective is liquidity. As long as yield remains scarce in the marketplace, it remains a distant third.
Businesses continue to be quite conservative with their short-term investment portfolios. Beyond bank deposits, the most widely cited permissible investment vehicles are Treasury securities (63%), money market funds (47%) and commercial paper (45%). On average, organizations permit 4.4 investment vehicles beyond bank deposits for their short-term investment portfolio, a slight decrease from the average 4.6 vehicles reported in the 2013 survey.
Larger organizations tend to place their cash and short-term investment portfolios in a greater number of vehicles than do other organization. Those with at least $1 billion in revenues allocate more of their short-term investments to money market funds (MMFs) than do smaller organizations (20% of the portfolio versus 11%).
Banking on it Fifty-two percent of short-term investment balances are maintained in bank deposits, a slightly larger share than the 50% reported in the 2013 survey and the largest share reported since AFP began conducting the Liquidity Survey in 2006. Seventy-five percent of all cash balances are maintained in banks, money market funds and Treasury securities. (In 2006, the percentage of short-term investments holdings maintained in the same instruments was 56%.) Organizations invest in an average of 2.7 vehicles for their cash and short-term investment balances, matching the average reported in the 2013 survey.
Seventy percent of short-term investment portfolios are maintained in investments with maturities of 30 days or less. Four out of five financial professionals do not anticipate any change in the tenor of their organizations investment portfolios over the next year.
Sixty percent of organizations hold some amount of their cash outside of the U.S. The share increases to 75% for publicly owned organizations; one-third of these companies holds at least half of their cash outside of the U.S. Large organizations also are more likely than smaller ones to maintain cash in international investments. Two-thirds of those with at least $1 billion in annual revenues hold cash outside the U.S., versus just under half of organizations with annual revenues under $1 billion
Liquidity survey finds businesses cautiously optimistic
Fall 2014 | FarmEquip.org 11
12 Farm Equipment Manufacturers Association | Fall 2014
that do so. The difference may reflect what are typically more complex financial, tax and operational considerations of many large, public companies or those that see growth in emerging markets outside the U.S.
The take-awayManagement of corporate cash and short-term investment in
2014 has been relatively stable, compared to that in 2013. Still, a number of macroeconomic and regulatory shifts could alter the picture in the near future.
More than half of corporate cash sits in bank accounts, and signs indicate that organizations likely will continue to rely on bank deposits as their primary investment vehicles for the near future. Banks will remain an important repository for corporate cash and short-term investment holdings for a number of reasons, including safety (cited as the primary investment goal of two-thirds of organizations), the dearth of opportunities to earn significant yields from other investments, and the ability to generate earnings credit rates from bank deposits. For organizations with international operations, banks are even more important destinations for non-U.S. cash holdings.
SEC proposals, such as those that would float the net asset value for prime funds, could make MMFs ineligible for inclusion in many organizations investment portfolios. Anticipation of such changes has led to an orderly liquidation by a number of organizations. Corporate cash and short-term investment holdings maintained in MMFs dropped from 31% in 2007 to 16% in 2014, with much of this cash rolling into banks. If/when the SEC does take action, organizations may pull even more of their funds out of MMFs.
The health of the economic recovery will impact cash investment decisions during the remainder of 2014 and in the future. The AFP anticipates a gradual improvement in corporate confidence and a slower pace of cash accumulation. But in 2015, or perhaps later, as the central bank raises the fed funds target rate, short-term rates are expected to inch up. Whether the ability to generate yield is enough to pique corporate investor
interest in investment vehicles beyond those traditionally considered ultra-safebank deposits, MMFs and Treasury securitiesremains to be seen.
With the economic downturn that began in 2008 now in the rear-view mirror, respondents see signs of increased optimism ahead. U.S. businesses appear to be more confident and willing to put their cash to work by increasing capital expenditures, paying down debt, and entering into new mergers and acquisitionsall of which bode well for future economic growth. AGI
In May 2014, the Association of Financial Professionals (AFP) conducted a 29-question survey on strategies associated with the management of short-term investments and received 505 responses from its corporate practitioner members. An additional 335 responses were received from corporate practitioners who are not AFP members. The combined 740 responses are the basis for the report issued by the AFP and for this article. To read the full report, go to afponline.org/liquidity/.
The demographic profile of the survey respondents mirrors that of AFPs membership.
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14 Farm Equipment Manufacturers Association | Fall 2014
Anyone who reads our Shortliner newsletter may have observed that it often contains news items regarding ASABE standards. They include notices that ASABE seeks input regarding new standards it is developing, announcements about recently completed and adopted standards,
and reports that existing standards are being revised. But what is ASABE? What standards does it adopt? And why do we inform our members about its activities?
ASABE 101The American National Standards Institute (ANSI) is the
official national standards body for the U.S. The American Society of Agricultural and Biological Engineers (ASABE) is an ANSI member, and it uses ANSI-accredited procedures to develop standards for agricultural equipment and systems.
ASABE is also an educational and scientific organization dedicated to advancing engineering applicable to agricultural, food, and biological systems. Founded in 1907 and headquartered in St. Joseph, MI, it consists of 8,000 members (individuals) in more than 100 countries. A 15-member Board of Trustees guides it in fulfilling its missions.
ASABEs members develop efficient and environmentally sensitive methods of producing food, fiber, timber, and renewable energy. They ensure that we have safe and plentiful food, pure water, clean fuel and energy sources, and a safe, healthy living environment. Biological and agricultural engineers focus on processes associated with producing agriculturally based goods and managing our natural resources.
ASABE encourages its members to become or remain involved in its activities, which are carried out by its four councils:
Membership Development, Meetings, Publications, and Standards. Our Association deals most often with the Standards Council.
Standards normally are generated for one or more of the following reasons:
To provide interchangeability between similarly functional products and systems manufactured by two or more organizations, thus improving compatibility, safety and performance for users;
To reduce the variety of components required to serve an industry, thus improving availability and economy;
To improve personal safety during operation of equipment and application of products and materials;
To establish performance criteria for products, materials, or systems;
To provide a common basis for testing, analyzing, describing, or informing regarding the performance and characteristics of products, methods, materials, or systems;
To provide design data in readily available form;
To develop a sound basis for codes, education, and legislation; and to promote uniformity of practice;
To provide a technical basis for international standardization;
To increase efficiency of engineering effort in design, development, and production.
ASABE develops and publishes standards designed to improve safety for users of agricultural and similar equipment. For example, they might address providing anchor points, meaningful signage, and entry/access openings and platforms. (The red and orange triangular Slow Moving Vehicle Emblem
ASABE standardsprogram promotesad industry safety
ag industry safety
Fall 2014 | FarmEquip.org 15
arose from one of the Societys standards.) Consistency in the marketplace for addressing such topics benefits the users, the manufacturers, the construction crews, the legal system, and those who develop new equipment.
Standards are dynamic. Once a standard is published, it must be systematically reviewed for applicability at least every five years. Any that no longer meet the industrys needs are withdrawn. Revisions to existing standards and projects for new standards are introduced on an ongoing basis.
ASABE publishes over 250 standards that cover diverse topics such as engineering design properties of grain bins, safety for equipment such as portable augers, mechanized handling of cotton, and much more. Developing standards is an open process that requires a committee of experts to reach consensus on the content following tried-and-true procedures. (To learn more about this process, visit the ASABE website: asabe.org/standards.aspx.)
Conformance to ASABE standards is voluntary, except where required by state, provincial, or other governmental requirements, and the documents are developed by consensus in accordance with ANSI-approved procedures. While the
Association does not officially support or oppose any standard, we do encourage member involvement in the standards program.
Separate entities with a common goal
Although the Farm Equipment Manufacturers Association and ASABE are separate entities, we enjoy a positive and productive relationship. The Association supports ASABEs standards program because it benefits our members. When ASABE develops standards for agricultural and other equipment that Association members design, produce, market and sell, ASABE invites our members with related experiences and expertise to offer their input. This presents a great opportunity for manufacturers and their engineers to share their perspective, recommend safety features and measures, and help ensure that optimum standards are adopted and implemented.
Jim Hellbusch, President and CEO of Duo Lift Manufacturing Co. Inc., stated that his exposure to ASABE and its standards program, through Association membership, was invaluable to his companys growth.
When I joined FEMA in the early 1980s I had 3 employees and a 3200-square-foot shop, said Hellbusch. Today, we have 75 to
ASABE standardsprogram promotesad industry safety
16 Farm Equipment Manufacturers Association | Fall 2014
100 employees and over 100,000 square feet, and sell throughout North America, with some exporting. When I first heard of safety standards, I wanted to learn as much as I could.
I joined ASABE and became a member of some of their safety standards committees. I not only learned valuable information but also contributed to the development of various standards. Now our engineering department constantly refers to the volumes of ASABE standards when designing new equipment and auditing existing products. We also use standards to educate our engineering and sales staff.
I strongly encourage anyone who is developing new products to investigate the benefits of ASABE standards, Hellbusch added.
As chair of the Post Hole Digger Council, I found ASABE staff extremely valuable when we were writing our post hole digger
safety standard, said Donny Jones, Vice President of Belltec Industries, Inc. As a matter of fact, I dont know how we could have done it without them.
Association members interested in participating in the standards development process should watch for these notices in the electronic and print editions of Shortliner or visit asabe.org/projects to see a list of current standards projects under development and those under revision.
Our Association provides copies of the ASABE Standards CD-ROM publication to regular members, free of charge. The 2014 CD contains 255 current ASAE/ASABE standards, engineering practices, and other data applicable to agricultural equipment and systems, irrigation and draining, structures, turf and landscape equipment, food engineering, and electrical power applications. It also includes
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18 Farm Equipment Manufacturers Association | Fall 2014
a keyword and numerical standards index, a list of active standards development projects, and an index of related ISO (International) Standards Committees. Regular members (prime contacts) who would like a copy but have not yet received one can call the Association office at 314-878-2304 or email Elaina@FarmEquip.org to request one.
Sharing knowledge, recognizing excellenceIn addition to a membership magazine, ASABE publishes
over 1,500 information resources each year, including technical papers, peer-reviewed journal articles, textbooks, reference books, and standards. These are available in electronic format in ASABEs Online Technical Library, and most are also available in print form. Access to the full text is a benefit of ASABE membership, but searches and viewing abstracts are open to all.
ASABE also sponsors the AE50, an annual awards program that celebrates product innovations in the areas of agricultural, food, and biological systems. From the entries submitted, an expert panel of engineers selects up to 50 products for recognition. The winning products are those ranked highest in innovation, significant engineering advancement, and impact on the market served.
The AE50 Awards are presented at ASABEs annual Agricultural Equipment Technology Conference (AETC), and a special issue of ASABEs Resource magazine highlights the award-winning products.
The nomination guidelines and entry form are available for review and download at asabe.org/media. AGI
Scott Cedarquist, ASABEs Director of Standards and Technical Activities, will address the Tillage & Ground Engaging Equipment Council on Nov. 4, during the Associations Fall Convention in Las Vegas. For complete information about the Fall Convention, including the Executive Program and speaker credentials, visit FarmEquip.org/FC.
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FEMA publishes Ag Innovator as a service to its members and constituencies. FEMA, its editors and staff are not responsible for the content, opinions and information contained in Ag Innovator. FEMA, its editors and staff disclaim all warranties with regard to such content, opinions and information published in Ag Innovator by any individual or organization. This disclaimer includes all implied warranties of merchantability and fitness. In no event shall FEMA, its editors and staff be liable for any special, indirect, or consequential damages or any damages resulting from loss of use, data or profits arising out of, or in connection with, the use or performance of any content, opinions or information included in Ag Innovator.
Fall 2014 | FarmEquip.org 19
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Around the country, Americas farmers and ranchers are dealing with challenges this fall; corn and soybeans at or below the cost of production, railcar shortages causing grain to pile up in the northern Corn Belt, China changing its import quotas on cotton and the ongoing drought in the West. These issues are changing the mindset of the nations farmers from one of optimism and growth to one of caution and concern, and they do not have quick and simple solutions. The question, then, is How do we move our businesses successfully through this time, and what opportunities are hidden amongst the challenges?
Mike Pearson, host of the nationwide agri-business program Market to Market, and Darin Newsom, Senior Market Analyst with DTN, will be on-hand Nov. 4 in Las Vegas at the Associations 2014 Fall Convention to discuss these issues with attendees. Pearson and Newsom will discuss changes in farm income and farm policy, and will lead a discussion on the market outlook for the remainder of 2014 and for 2015.
As Association members no doubt are aware, America is set to harvest record amounts of both corn and soybeans this year, and the market has responded by pushing prices down to levels not seen for five or more years. Because of the larger-than-anticipated yields, many producers are coming in to harvest with smaller percentages of their crops pre-sold, and they seem to be planning to store those bushels until the market regains some strength. Newsom will discuss this strategy, and how it could affect farm incomes and spending patterns in the coming year,
while the market discovers what demand is out there with widely available and affordable grains. This year has shown the honesty of the old statement that the cure for high prices is high prices, and the next few years might prove that the best cure for low prices is low prices.
On the demand side of the grain ledger, 2014 has been a profitable year for livestock producers, ethanol distillers and soybean crushers. With lower grain prices, this trend looks set to continue for 2015 and represents an enormous opportunity for those sectors to invest in their operations and increase efficiency. For the better part of the last decade, the large profit margins in agriculture have occurred in row-crop operations, largely in the Corn Belt. Producers have used those margins to upgrade machinery, try new products, and improve fertility on their land. As the next few years unfold, they might reveal some of the same improvements on the protein production side. Producers in the beef, pork, and poultry industries would presumably look to improve their herds genetic make-up, reduce labor in the operation, improve biosecurity procedures, and handle waste more efficiently.
The demand for American protein is based on several overlapping and complimentary factors, with stronger household economics and changing global demographics being two of the largest. Pearson and Newsom will spend time during the discussion addressing these issues, as this demand growth represents an option for chewing through the large piles of corn and beans throughout the country.
22 Farm Equipment Manufacturers Association | Fall 2014
And if the agricultural outlook was all simply supply and demand, that would be the end of it. But, as the manufacturing sector knows well, government policy can have just as much impact on profit as does basic economics. On the policy front, the agriculture industry must confront an America where fewer and fewer people have any connection to the ground. Some estimates are that
fewer than 2% of Americans are involved in agriculture,
creating a PR issue as producers try to explain what happens on a modern farm. Thats an incredible example of how efficient modern agriculture is, but it also means that fewer policymakers and regulators will have dirt under their fingernails when writing the rules that influence the industry going forward. In 2014 there were several policy changes, and attempted policy changes, from the new Farm Bill to the Renewable Fuel Standard, and most recently the EPAs proposed clarification
of the Clean Water Acts Waters of the United States definition. All of these movements in regulation shape the way producers behave, and understanding them will be more essential each and every year.
To that end, Newsom will analyze how the market is reacting to the new Farm Bill and will also share his thoughts on how additional regulations could shape pricing in the year to come.
Plan now to attend the Associations 2014 Fall Convention, and be sure to attend Mike Pearsons and Darin Newsoms presentation. It will be a frank and open conversation about how the next year could look for your customers, dealers, and yousomething definitely not to be missed. AGI
For more information about the Fall Convention, including the executive program, speaker credentials, registration, lodging and exhibiting in the EMDA Showcase, visit FarmEquip.org/FC.
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Member Focus AGI
24 Farm Equipment Manufacturers Association | Fall 2014
Osmundson Mfg. Co. A pioneering company built on traditional principles
In the farm equipment world, Osmundson Mfg. Co. is something of a paradoxa 113-year-old company that remains on the leading edge of the tillage tools industry. By combining old-fashioned values such as devotion to customer service and adherence to quality with vision and innovation, its founder and his successors turned a small Midwestern forge shop into a 21st-Century enterprise with a global reach.
It all began in 1903, when Norwegian immigrant Henry Osmundson founded a company in Perry, Iowa, to make tiling spades and other forged products. Henry and his son Howard worked there together. Later, Howard and his wife Rose bought half the factory, and Henry gifted them the other half. Howard and Rose had two daughters, and one of them, Ruie Jean, married Donald Bruce, who went to work for Howard after serving in World War II.
As times and farming practices changed, so did the company. Guided by Don Bruce, Osmundson expanded its product line over the next three decades, manufacturing plowshares, disc blades and other tillage equipment, incorporating the latest technology, inventing new products and developing new methods. In 1974, the growing company constructed and relocated to a new facility on the outskirts of Perry. Today, it employs approximately 110 people at its headquarters and 142,000-square-foot facility, and sells parts to original equipment manufacturers, farm stores and other distributors throughout the United States and the world.
Douglas Bruce, owner/president, bought the company in the early 1980s and carries on Osmundsons four-generation tradition of innovation and dedication to quality. Doug and his staff travel the world, listen to customers feedback, and respond by delivering solutions that usually require designing, creating, testing and patenting new products.
The company is now implementing an ISO 9001 quality management system and will receive ISO certification in March 2015.
Product innovationOsmundson produces a wide range of ground-engaging
products, including disc blades, coulter blades, planter/seeder
and grain drill blades, sweeps, plow parts, and spikes. Many of them resulted from extensive research and development; some offer features developed by the company specifically for a particular application; and some incorporate materials introduced to enhance the products strength, durability or performance. Since the 1990s, Osmundson has applied for, received and renewed a number of U.S. and foreign patents, as well as trademarks.
Research and development are top priorities, said Joe Sampson, sales manager. We are constantly coming up with new ideas for the ag world, especially for tillage. Weve introduced vertical tillage blades, strip-till blades and no-till products. The Turbo blade put us on the map. Now, Joe is optimistic about the future of the Samurai Edge, the next Osmundson innovation.
In farming, dealing with crop residue from the previous harvest is critical, Sampson explained. The Samurai is designed to quickly and efficiently size residue back into the soil. Its composition and design make it a versatile and durable product, and
its patented edge stays sharper longer than traditional blades.
MaterialsEveryone is looking for technology that will make farming
more profitable, Sampson noted. As commodity prices drop, efficiency and precision become more important. You have to carefully consider what you put into each applicationtilling, planting, spraying, etc.
Accordingly, Osmundson uses steel that is designed and manufactured specifically for their products. It incorporates elements chosen to make blades that last, are impact-resistant, and are suitable for any soil conditions throughout the world. Various grades can be produced for specific purposes and modified for such qualities as better wear or greater flexibility, for slicing quickly through hard, dry soil, or for handling rocks, tough roots and other obstacles.
The company applies the same level of care to heat treating the materials it uses.
Heat treating is an art, and vitally important, stated Sampson.
President Douglas Bruce represents the fourth generation of Osmundson family leadership.
AGI Feature AGI Member Focus
Fall 2014 | FarmEquip.org 25
You have to find the perfect balance between the time materials spend in and out of heat treating. We employ a variety of methods, tailoring them according to how and where products will be used.
Quality assurance is ongoing, and Osmundson personnel conduct tests and sampling throughout the production process, from heat treatment of metals until finished products are shipped. Along with visual inspection, the manufacturer relies on various methods to measure thickness, hardness, strength, flexibility, ductility, durability and any other attributes required or desired.
Green footprintWhile its primary goal is to ensure the superior quality of
its products, Osmundson also meticulously manages the environmental impact of its activities.
Farmers were the original environmentalists, Sampson observes, and today, most still believe its important to take good care of the soil and water. One component of our success is ensuring that what we put back into the earth is safe, and our footprint is as small as possible.
Osmundson has embarked on a green movement that includes a number of eco-friendly initiatives. For example, the company uses variable frequency drives on all its motors and pumps, so they idle or turn off completely when not in use, thereby conserving energy. It also captures the heat generated during the manufacturing process and reuses it to heat the facility, and strategically places its buildings doors and windows to facilitate air flow for efficient cooling.
The company obtains raw materials from one of the worlds largest electric re-melt steel mills, which uses 100% scrap
materials. In addition, its water-containment system captures rainfall and runoff and uses that water, rather than fresh ground water, for heat treating and cooling. Finished goods are coated with water-based paints, derived from renewable sources, that contain no harmful chemicals or metals that might contaminate soil. The office recycles paper, aluminum and cardboard, and employs an electronic system for submitting and receiving documents and managing
shipments, thereby reducing paper consumption.
With its solid foundation and pioneering spirit, Osmundson is on track to continue producing tillage products to help farmers sustain the worlds population for generations to come. AGI
Pallets of finished products await shipping in Osmundsons expansive warehouse, ready to supply the market.
The companys patented Samurai Edge blades are designed to stay sharp longer than did traditional blades.
A worker fine-tunes a part, adhering to stringent standards to ensure consistent quality.
A member in good standingOsmundson has been an Association member since
1977, and its personnel have been actively involved, in some cases stepping up to take on leadership roles. Last year, Jim Tibbles, the companys Executive Vice President, served as chairman of the Supplier Section. President Doug Bruce currently chairs the Tillage and Ground Engaging Equipment Product Council, and Joe Sampson serves on the Supplier Section Board.
Doug has built many strong personal connections within the industry, and these contacts have proved valuable not only to his company, but also to the Association. For instance, his relationship with Ron Heck, former president of the American Soybean Association, helped us secure Mr. Heck as a speaker at our 2014 Spring Conference.
26 Farm Equipment Manufacturers Association | Fall 2014
Five trade show strategies to boost your sales to the next level by Timothy Carter
If youre attending the Associations Fall Convention in Las Vegas next month and hope to make some useful connections that can help you increase or improve your business, thats great! But you know what they say about good intentions and the road to....well...
According to trade show industry experts, 80% of the leads generated during trade
shows are never followed up on. Attending trade shows is a considerable financial investment for most small businessesnot to mention the time, energy and other resources it takes.
Dont let those valuable leads go cold! Have a follow-up plan in place before the show, and use the post-trade show momentum to catapult you through turning those valuable leads into valued customers.
These five steps can help you get the most out of the leads you generate:
1. Begin follow-up preparation before the trade show
Arrive at the trade show with everything you need to capture good leads, such as plenty of pens, paper, forms for lead notes and lots of your own business cards.
Assemble a team to track leads when the show is over. Develop a system for classifying leads, such as:
A for very important
B for moderately important
C for less important
Having a system in place for capturing leads makes it easier during the busy event.
2. Keep leads organized throughout the trade show
Having an organized plan before the trade show lets you categorize and notate important leads during the event. Bring a notebook or a stack of well-designed lead forms to use during the show. As you meet people, staple their business cards or brochures onto a page in the notebook or one of the lead forms.
Fill out the forms or flesh out your notes as fully as possible and as soon after the conversation as you can. Note why this lead is important so that later youll be able to recall more details about the person or business.
3. Hold a planning meeting right after the trade show
As soon as the show ends, assemble your follow-up team and have everyone review your lead notes. Identify the most important ones for immediate follow-up, and create a schedule for following up on all leads within a reasonable length of time.
Its a good goal to shoot for contacting all leads within 48 hours. If you act quickly, you wont forget peoples names and faces, and theyre less likely to have forgotten you.
4. Add new leads to existing contact listsYou probably already have a contact list of customers or
interested parties, as well as a newsletter. Make sure your follow-up team enters each of the new leads into these lists, so that they get important notices, new product releases, and special sales notifications along with the rest of your contacts.
5. Use social media outletsDont underestimate the power of social media for building
business relationships from trade shows. Add as many of your new leads as possible to your LinkedIn, Twitter, Pinterest or Google Plus friends lists. Even people who arent necessarily interested in buying from you now might be converted to customers if you stay in contact with them.
Developing relationships is one of the most important aspects of building a successful business.
Make sure you keep any promises you made during the trade show, such as sending someone a brochure or a product sample. During the show, make notes on promises you make, and ensure that your follow-up team follows through with all the leads on whatever you promised them. This will establish you as a dependable, trustworthy person with whom to do business. AGI
Timothy Carter is the Digital Marketing Manager for the trade show display exhibit company Nimlok, a division of Orbus Exhibit & Display Group. Its website is nimlok.com. You can reach Timothy at firstname.lastname@example.org.
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