Today's JD needs anti-repair policies, subscription pricing, and closed source code. It's easy to blame JD and maybe they do deserve blame but with so many companies pulled these shenanigans I think it's just a symptom of a wider economic pressures in the industry.
https://www.macrotrends.net/stocks/charts/DE/deere/profit-ma...
Due to advances in software, they saw an opportunity to increase their profit margins.
The question is, are there insufficient businesses that can sell what Deere sells without the restricting software at a lower price? Based on Deere’s success in increasing its profit margins, it seems like the answer is no.
So then the question is why are there insufficient businesses? Is selling what Deere sells so high barrier to entry that a new seller will not try? Is it possible to lower those barriers to entry?
Harvest time can be make-or-break for farmers. Stuff you don't expect like a large storm at the end of summer can blow over corn stalks. That makes it a lot slower to run the combine at harvest time. If early fall storms are forecast you might literally need to get everyone available out in the field to harvest the corn in the next 3-4 days or you can expect the value of your crop to drop dramatically - everything will be wet and it's no longer warm or sunny enough for it to dry out. The field turns to mud and the grain elevator ain't gonna pay full price for water-soaked corn.
Everyone else is in the same boat so every available truck+driver is booked. Every mechanic is already 5 tractors backlogged from all the other farmers with emergencies.
Then your harvester/combine dies.
If you're with JD... they have a crews of engineers/mechanics and semi trailers loaded with parts driving around the country following the harvest. They will get you going again in a day or two, not 1-4 weeks later when some other dealer can fit you in or when the spare part you need arrives.
From JD's perspective that service network and parts stock costs a lot of money to maintain so it is available during harvest. They don't want customers going the cheap aftermarket route 11 months of the year because one month of sales can't sustain harvest support teams long-term. It's similar to peak electric generation capacity. Generator plants aren't economic if they only run 5% of the year at regular prices. In this analogy peak pricing has a limit: it would very quickly make harvesting the crop unprofitable.
FWIW I do think it's mostly a money grab by JD. Same reason Chamberlain closed their garage door opener API and has locked down myIQ: they want to force platforms, automakers, etc to pay for access to "their" customers and turn garage door openers into MRR. It's basically free money that you couldn't even imagine prior to the internet.
And many parts you could fix yourself with a well stocked workshop (think welding gear, cutting equipment, stuff to work on hydraulics, lots of random crap, spare bits of metal and a large space or in the field).
Then came the computers...
If you have to pay someone labor the cost of keeping old machines running adds up a lot farther than most people realize. I know one construction company owner who in the 1990s worked it all out - all that 30 year old equipment that he was keeping running. Then he want to a dealer and signed a lease for $25,000/month, as he left the negotiations, reeling from the price tag, his account turned to him and said "you just saved yourself $30,000/month".
If you're in a business where a couple of days in lead time for repair can make or break a harvest, (1) having a repairs workshop (2) investing in tools you can reliably repair yourself is essentially an insurance premium that protects your harvest by placing its success squarely within the hands of the part most interested in success.
This "insurance" aspect is something that accountants reliably fail to account for, because it doesn't show up in any business ledger. But this way of thinking generally wins because it increases fiscal efficiency, while the side-effect of making systems more fragile is consistently written-off.
These things are not lawnmowers, and they should (if cared for) last.
I refused to even shop John Deere, the green paint tax is too high and on top of it you have all this subscription and computer B.S.
Personally I think they're milking it for extra profit when they could be establishing a better relationship with their customers.
There were a lot of green machines sitting on the sidelines this harvest waiting for technicians to get their shit together to reset this or service that.
Back in the era of the 95XX or even 8820s you could do it all yourself.
Now a fucking light comes on and you need to call someone to drive over an hour from our nearest dealership to plug in his gizmo to say this needs to happen. Not to mention they totally understock on prices.
Harvesting is rapidly becoming unprofitable. Just because an X10 can strip 50 tons an hour doesn’t mean it’s worthwhile at $1m a machine. That’s why we keep a CTS2 on the sidelines. Mightn’t strip as fast but at least it’s reliable and we can maintain it without getting a site visit
Then they could make the terms of the lease be amenable to the economics of their business without working to make things worse for everybody else.
what if they prevent you from doing it yourself in a minute or two?
It can if you charge more for it...
What? Equalizing or normalizing the costs over the entire year by price gouging on repairs during non-peak months doesn't suddenly make the total cost any different. Farmer's are absolutely bearing the cost having a service network that can satisfy peak demand no matter what kind of pricing scheme is backing it.
If a low priority repair costs $5 in the off season, but $55 for the same thing during the peak, farmers aren't better off getting charged $30 for both. It's still $60 at the end of the year. If anything, that penalizes the farmer that's doing preventative maintenance in the off-season and benefits the farmer that leaves their equipment to break down at critical times. The responsible person is subsidizing the irresponsible person in that case.
that's not the story farmers are telling. Farmers have been complaining about not being able to get parts (https://talk.newagtalk.com/forums/thread-view.asp?tid=104450...) and saying that because they're forced to get repairs from John Deere that single source for service gets overwhelmed and they can end up waiting for weeks on technicians while watching their crops rot away. (https://www.ifixit.com/News/62788/john-deere-has-been-violat...)
The ~10 years that John Deere has shown this behavior might just be too little for the market to adjust.
So is the changing market dynamic is that John Deere now sells shitty tractors which means they have to depend on DRM and forcing people to get repairs through them in order to be profitable?
I suspect the reason so many companies resort to user-hostile anti-competitive practices is simply greed and a willingness to screw over anyone to make an extra buck at any cost. They want to have ever growing profits and growth which means they have to come up with more and more ways to take our money.
Farmers are still buying Deere equipment for a lot of reasons, including the fact that Deere has by far the best service network during planting and harvest seasons. You will have the least likelihood of disastrous downtime with Deere equipment. Forcing you to get service from the service network makes sure that the service network continues to exist.
It's a complicated situation. (I support right to repair, btw)
Which doesn't actually mean they aren't screwing people over. Personally, I don't know if they are or not -- I'm not a farmer, and I don't know what all the issues specific to farmers are.
But the arguments that JD are making are ones that are bad for everyone outside of the farm equipment business. In that sense, they're helping to screw all of us over.
Then what? We probably see higher volatility due to an increase in crop failures, but maybe lower average food prices overall.
Having exclusive ability to repair their tractors does not make it easier for John Deere to stock that inventory. It makes it more profitable for them to stock that inventory, because they know they can sell it. That profit allows them to tighten their margins elsewhere, and to expand their belt elsewhere, but it does not fundamentally change the actual repair. It does make it easier in some ways that they can exploit supply and demand and economies of scale.
There are other ways that John Deere can enforce said Monopoly. They can sign contracts. Maintenance contracts are very common in this space, stating that you will only do business with John deere. That's not an unreasonable thing to do. I am a okay if every farmer wants to sign that contract with John Deere. If John Deere were to make that part of every purchase, at least it would be understood that it were part of every purchase, that you could not buy John Deere tractors without buying their service contracts, and how that interacts with existing antitrust law is a separate problem. One that has been discussed to death and will continue to be.
That's weird, cars get by just fine on having mechanics in every town.
They can more than afford to offer a high level of service at harvest time without ripping off their customers and screwing over everyone else as well by opposing our right to repair.
As it stands their current level of service isn't even that great. Farmers have been complaining about not being able to get parts (https://talk.newagtalk.com/forums/thread-view.asp?tid=104450...) and saying that because they're forced to get repairs from John Deere that single source for service gets overwhelmed and they can end up waiting for weeks on technicians while watching their crops rot away. (https://www.ifixit.com/News/62788/john-deere-has-been-violat...)
There's no difference between having a capacitor replaced or EEPROM reflashed by someone wearing a green shirt and not. If the fault is gone, it's gone. Publishing the tools to validate repair would alleviate the pressure on JD's service network.
Is JD being evil or are they just bowing to competitive pressure? At a certain point the question becomes hard to answer. When certain behaviors we'd consider awful have been normalized throughout a sector of society (management in this case), there's always an argument about whether someone can be blamed for "just following orders" or "just implementing standard procedures" etc.
Unfortunately for farmers, everything is controlled by software, so every repair now needs a service call and JD has been cutting back on service techs so that during peak activity times (planting/harvest - where working 24 hrs isn't uncommon) it can be either (a) put your tractor on a flat bed and have it trucked hundreds of miles, or (b) wait a couple weeks.
It comes across as evil to me.
That's not an either-or kind of thing.
Capital gains tax should be split into two categories: Medium term (1+ year) and very long term (7+ years). Very long term tax would be much lower than today's tax, while medium term would be higher. This reform would reduce MBA's plundering company goodwill and trust for short-term quarterly boosts and reward long-term thinking.
If you invest in a company that goes on to become a conglomerate, nearly all of the value is now a capital gain. You can't invest it in something else without inducing a taxable event. Which means that investors prefer to keep their money in existing conglomerates than move it into prospective competitors. It's a huge tax preference to keep money invested in megacorps rather than new challengers.
It may even be the cause rather than the solution here. Because selling shares of a company that had previously been growing has a major tax disadvantage, investors then want those companies to keep growing even though they've saturated their market, so they demand abusive practices which are long-term detrimental to the company in order to keep the short-term growth rate competitive. Meanwhile this deprives potential challengers of capital which makes abusive practices more effective by making markets less competitive.
It could even make it worse. If you've invested in a company 5 years ago, you're stuck holding it for another two years and now you want to goose the stock price so it peaks when you hit the lower tax rate.
We may be better off with the opposite -- allow basis transfers without a taxable event when you're only changing what you're investing in rather than divesting in order to spend the money. Remove the tax preference for abusive conglomerates.
This is an appealing idea, but it comes at the expense of even further reducing taxes that are typically paid by wealthy people.
How to beneficially tax equity-related transactions is a really tricky problem to solve.
Trying to lay out the balance of an ideal solution:
(1) We want people to invest in equities (2) we do want to [eventually] tax profits (3) We do want investors to adjust allocations from low-growth-expectation assets to high-growth-expectation assets, because high-growth-expectation is a signal of filling a gap in demand.
I think I'd be on board with your suggestion, which essentially trades off 2 for 3.
I think we'd need to bundle it with a serious revision of estate taxes and the various schemes people use to get around them. So you're definitely taxed when you convert your tax-aware capital gains into income, or your heirs are taxed when those capital gains become their inheritance.
Maybe if we bundle two unpopular reforms together, we can get a popular reform. :)
It is in theory, but in practice it's already avoided in a thousand ways. The first is, of course, by just not selling the shares in whatever you hold right now, which is the perverse incentive we're trying to fix. Then there are the outright avoidance strategies, like foreign holding companies in jurisdictions with different tax laws, and even the fully intentional ones, like tax-deferred retirement accounts.
> I think we'd need to bundle it with a serious revision of estate taxes and the various schemes people use to get around them.
Combining this with the removal of the step up in basis on inheritance would basically do it, and would remove a major justification for keeping that -- it exists in large part to allow the heirs to sell the asset instead of being coerced by tax incentives into investing into whatever their parents did, i.e. the same thing we're trying to fix here.
This way the heirs could sell the asset and buy another one without a taxable event, but don't get a basis reset. So if they want to spend the money, they have to pay the tax.
Of course, the even simpler version of this is to just eliminate income taxes in general and use a consumption tax, then make it progressive by adding a UBI. But maybe one step at a time.
Making good products and respecting your customers is a great way to stay in business. I don't see why china selling tractors would change that. If anything, it would matter more than ever.
It seems to me that they push for some short term profit to get bonuses and promotions and then move to do the same things elsewhere.
However, it could also be a personal selection or survivor bias in my memory (I remember stuff like that more). Nevertheless, it really feels that very few companies optimize for the long run by prioritizing user satisfaction or similar metrics.
To maintain or increase profits, it becomes necessary to exploit workers more to reduce costs and to prevent competition to increase prices.
For national security concerns alone, I’d wish we could incentivize growth by years and decades.
The knowledge loss alone is alarming.
If it were possible to construct huge gasometers and to draw together and compress within them the whole of the atmosphere, it would have been done long ago, and we should have been compelled to work for them in order to get money to buy air to breathe. And if that seemingly impossible thing were accomplished tomorrow, you would see thousands of people dying for want of air – or of the money to buy it – even as now thousands are dying for want of the other necessities of life. You would see people going about gasping for breath, and telling each other that the likes of them could not expect to have air to breathe unless the had the money to pay for it. Most of you here, for instance, would think and say so. Even as you think at present that it’s right for so few people to own the Earth, the Minerals and the Water, which are all just as necessary as is the air. In exactly the same spirit as you now say: “It’s Their Land,” “It’s Their Water,” “It’s Their Coal,” “It’s Their Iron,” so you would say “It’s Their Air,” “These are their gasometers, and what right have the likes of us to expect them to allow us to breathe for nothing?”
And even while he is doing this the air monopolist will be preaching sermons on the Brotherhood of Man; he will be dispensing advice on “Christian Duty” in the Sunday magazines; he will give utterance to numerous more or less moral maxims for the guidance of the young. And meantime, all around, people will be dying for want of some of the air that he will have bottled up in his gasometers.
And when you are all dragging out a miserable existence, gasping for breath or dying for want of air, if one of your number suggests smashing a hole in the side of one of the gasometers, you will all fall upon him in the name of law and order, and after doing your best to tear him limb from limb, you’ll drag him, covered with blood, in triumph to the nearest Police Station and deliver him up to “justice” in the hope of being given a few half-pounds of air for your trouble.’
Robert Tressell, The Ragged-Trousered Philathropists (1914) | Ch 15Now, since pollution spreads so far and so quickly in air, he may have a different point, whereby the corps freely ruin the air, and then could charge for purified, usable air. The root problem there is the pollution, not the purification---which takes effort and capital to perform at scale.
Tressell is just another person who takes real problems, the depression of the poor, and suggests that a simple fix is to just "don't let them do this," as if anything in the world is this simple.
I guess what I'm saying is, the golden shields were just a happy accident of other terrible behaviors?