LOUISVILLE, Ky. — Tight lending standards, lingering supply chain issues and a lack of skilled operators are challenging lenders and dealers in the heavy-equipment industry.
Financing hurdles continue to be an issue despite equipment lender confidence reaching a 32-month high in the wake of the Federal Reserve’s federal funds rate cut last month.
Navigating a high-interest-rate environment is “top of mind” for some of the industry’s OEM captives, Cameron Stull, finance integration manager at John Deere Financial, told Equipment Finance News this week at the 41st annual Equip Exposition.
“Our No. 1 priority is making sure that we manage [high rates] and manage the performance of the portfolio based on that,” he said. “And then just the increasing costs of everything has increased the importance of financing.”
Offering flexible loan terms and seasonal “skip pays” are two ways John Deere Financial is helping customers overcome high interest rates, Stull said.
Dealers strain
Dealers are also still feeling the strain of a tight lending climate due to exacting customer demands, Charles Baldwin, a sales representative at Elizabethtown, Ky.-based manufacturer Kato Compact Excavator Sales, told EFN.
“If you can offer 0% financing for 60 months, you’re an automatic and you’re very attractive to a retail customer,” he said. “Getting financing for our dealers and our rental houses isn’t the problem, necessarily, but it’s that end-user financing, because everybody wants that 0%. So, we’re getting creative with offer terms. Sometimes, we subsidize the rates down a little bit.”
Kato works with West Chester, Pa.-based Oakmont Capital to provide equipment financing for customers, Baldwin said.
Meanwhile, the pandemic contributed to a dearth of skilled heavy-equipment operators, and more professionals are retiring or changing careers, Case Construction Equipment North American Product Manager Brad Stemper told EFN.
An estimated 501,000 construction workers in 2024 and 454,000 in 2025 are needed in the industry to meet demands, according to a January report by Associated Builders and Contractors.
“There’s a newer generation of operators coming into the business of running equipment,” Stemper said. Case is making machines that are “easier to use, easier to navigate and more consistent across product lines” to address this challenge, he said.
And in a bid to bolster workforce development programs in high schools and technical schools, Caterpillar donated $500,000 to the Associated Equipment Distributors Foundation in June, according to a company release.
Supply chain shortages
Lingering supply chain shortages from the pandemic are still disrupting the agriculture equipment sector, Jon Richardson, director of the rural lifestyle division at Adairsville, Ga.-based manufacturer Yanmar America, told EFN.
“Even though we’re out of COVID, supply chains run from six to eight or nine months to a year,” he said. Yanmar is constantly “tackling and moving through inventory” to ensure that its dealers’ inventory levels are “healthy and manageable.”
Register here for the free webinar “Used equipment financing in 2025 as markets normalize,” taking place on Tuesday, Oct. 22, at 11 a.m. ET.
