Author: Andy Milsom, Head of Partner Training & Development, BNP Paribas Leasing Solutions

Despite widespread supply chain disruption due to the pandemic, registrations of agricultural tractors in Europe in 2021 were up 17% on 2020.  Nearly 230,000 tractors were registered across Europe in the full year 2021, the highest level for nearly a decade¹.

These are the findings in a recently-published release by CEMA, the European Agricultural Machinery Association.

In the UK, the year was a story of two halves, with an increase of 25% in the number of tractor registrations in the first six months, compared with same period in 2020. However, supply issues took their toll in the second half of 2021, with registrations only marginally higher than in 2020 and 2% below average.

Overall registrations for the year were on a par with better performing recent years – but this total could have been substantially higher without the significant supply chain issues.

CEMA notes

“It was a similar story for other types of farm equipment, with the value of orders for non-mobile machinery up 17% on 2020 but completed sales only 3% higher. The backlog of orders waiting to be delivered at the end of the year was 40% larger than a year before, having also risen at a similar rate during 2020.”

John Bolton, Head of Food & Agriculture at BNP Paribas Leasing Solutions, comments:

“The release echoes our findings – orders for tractors and agricultural equipment remain very strong but production delays are having a significant impact on delivery times. With these issues set to continue, buyers will need to think further ahead when considering their purchasing plans.”

“In addition to order backlogs, the industry is also contending with spiralling production costs. Despite these challenging conditions, demand remains buoyant and we continue to work closely with our manufacturer, dealer and broker partners to support them in delivering proactive finance solutions which help drive the industry forward.”

To read the CEMA release click here

With a sustained presence in the UK agricultural industry spanning nearly 50 years, we are proud of our deep roots and a strong heritage. Our team are looking forward to catching up with established valued partners and meeting new contacts at a number of upcoming shows including:

LAMMA 2022 4-5 May

Cereals 2022 8-9 June

Royal Highland Show 23-26 June

If you’re attending a show, please get in touch with your Account Manager or contact John Bolton john.bolton@uk.bnpparibas.com to arrange a catch up.

¹Report published by CEMA. 22^nd March 2022. For full report please see 2022-03-21-CEMA_Economic_Press_Release_Tractor_Registrations_2021.pdf (cema-agri.org). The total number of registrations may include other types of vehicles which are sometimes classified as tractors, such as quad bikes, side-by-sides, telehandlers or other equipment. Additionally, for certain countries it can include some second-hand registrations.

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Since May, the pound has lost over 5% of value against major world currencies as political and economic uncertainty in the UK filtered through to markets. The value of the pound matters because it affects the price of goods and services paid for in a foreign currency. A falling pound makes imports to the UK more expensive and exports from the UK less expensive and in the modern world of cross border integrated supply chains things become particularly complicated.

The World Bank estimates that imports currently account for about 30% of UK GDP, which means that if the pound does not quickly recover in value, the price of about a third of everything we buy will increase in line with any sterling devaluation. The Office for National Statistics blamed an inflation rate exceeding the 2% Bank of England target during 2016 and 2017 on the pound losing value against the Dollar and Euro in the aftermath of the EU referendum result.

Businesses in particular need to be aware of the risks of higher prices to their planned investment programmes. The need to increase productivity and take advantage of the raft of new technology becoming available involves acquiring new capital equipment, and any equipment that is either partly or wholly manufactured abroad is likely to be subject to currency related price increases.

There is therefore a strong case for businesses to quickly bring forward any planned capital investment to ensure that deals are struck before prices increase. The good news is that leasing allows such investment to take place now, even if budgets are not readily available. HMRC also allows the cost of leasing to be offset against tax with particularly generous allowances potentially available for Hire Purchase agreements.

Leasing also provides a hedge against an anticipated increase in the general rate of inflation, caused by a lower pound, given that rental payments are fixed for the duration of any lease agreement, typically five years. Rental payments will not go up even if the Bank of England raises interest rates as a response to increases in the rate of inflation.

In conclusion there are now very good reasons to invest in new technology and take full advantage of deals currently available by using leasing as the means of acquisition.

Andy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.

The largest part of the UK economy is the service sector. Given that success in this sector depends as much on the personal skills and motivation of the people who work in it, as the technology they use, investment in people is a key requirement.

The most effective method that employers can invest in their people is by providing an ongoing training programme to ensure that their employees have the skills and knowledge to succeed.

In some of the traditional professions, such as medicine and the law it is a requirement that a certain number of qualifying hours of training should be completed every year. Where such training is central to any job role, the Continuing Professional Development (CPD) Standards Office ensures content offered by training providers is subject to independent audit and provides accreditation when satisfactory standards of training delivery are met. It is only CPD accredited training courses that qualify for ‘training hours’ and certification is provided as proof of attendance.

It is a necessity for doctors, lawyers and other professional practitioners to attend a minimum number of CPD accredited training courses. But whilst there are many other professions where training is similarly important, no formal system of external audit is required for continued employment. Sales is one profession and as we see rapid changes in technology, market conditions and regulation, there has never been a more important time for professional sales people to ensure they have the knowledge and skills necessary to succeed in an increasingly competitive world.

For several years BNP Paribas Leasing Solutions have been offering specialist training to those who sell capital equipment to business customers. The training ensures that individuals are provided with the knowledge needed to understand the different types of business finance available and the skills to use that knowledge to overcome budgetary constraints. The aim is to ensure that their customers are given the means to acquire the equipment needed for their own business success.

The BNP Paribas Leasing Solutions Finance Unlocked training programme has recently received CPD accreditation and those attending now can offer independent proof to customers and colleagues that they have made an important commitment to their own continued professional development. This is part of our contribution to helping the UK solve the ‘Productivity Puzzle’.

Andy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.

Whilst the very low rate of productivity growth in the UK since 2010 is quite rightly a cause for concern, one unintended consequence is that more people are in employment than might have been the case if productivity was higher. This of course has some real benefit to the individuals concerned and for wider society.

In accepting that UK productivity is lower than most other leading economies, and that this is a reason why our unemployment rate is lower, we do need to consider other factors. This is particularly the case when trying to draw comparison between countries with differences in the relative size of their manufacturing and service sectors, simply because productivity comparisons are much easier when we look at manufacturing. As an example, if one car plant employs 500 workers to produce 100 cars a week whilst another needs 600 to achieve the same output, it is fairly easy to conclude that the former has employees which are nearly 20% more productive. So far, so good, but measuring productivity in the service sector is much more difficult.

Firstly we have some difficulty identifying a starting point because in the service sector, the qualitative element of any output produced is at least as important as the quantitative element. Let’s take an example: a sales person working in a business to business environment. Should that employee’s productivity be measured by the number of customers contacted, the total revenue generated, the average revenue per customer, the profitability of sales made or the total number of satisfied customers identified by a post-sale survey? The fact is that different businesses are likely to use different metrics, and so the basis of any comparison is flawed before we start any meaningful analysis.

Even assuming we can get some consistency in terms of agreeing a basis of measurement, the service sector has further challenges in creating productivity gains. Given that productivity is defined as the number of inputs required to generate one unit of output, a manufacturer will normally have more inputs (labour, plant and machinery) at its disposal than a service sector business, and therefore a greater ability to substitute inputs and generate productivity gains.

In the service sector, the main input is labour and any reduction in the number of people employed to provide a service will often have a damaging effect on output. This lever is therefore unavailable to achieve productivity gains. It would be wrong however to assume that productivity improvements in the service sector are not possible. Whilst machines cannot simply replace people, employees can be made more productive by being better trained. Furthermore, investment in new technology for example robotics, can help to ensure that employees spend more time engaging with customers and less time undertaking tasks that add little value.

As indicated at the start of this article, there has been a huge focus on the comparative lack of productivity growth in the UK over recent years. We should however remember that the service sector, where productivity gains are more difficult to achieve, represents nearly 80% of UK GDP, which is the largest proportion of all G7 countries.

Andy Milsom, Head of Partner Training & Development at BNP Paribas Leasing Solutions

Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.

If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.