Manufacturing outlook for machines and economies with AEM’s Curt Blades

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[Paul Yeager] Hi everyone, I'm Paul Yeager. This is the MToM podcast, a production of Iowa PBS and the Market to Market TV show. We're going to have a conversation today about the economy, manufacturing, specifically agriculture based manufacturing, where it's built, who's buying, who's working. What are the challenges facing the industry right now? What's it telling us about the farm economy in general? What signs are pointing to an up or down market right now? It's off. But why? We're going to look back at some of the numbers. We're going to dive into some of the issues that are facing manufacturers and just kind of the farm economy as a whole. We kind of divulged a little bit, or diverged a little bit in that with, Curt Blades.  He's the senior vice president for the Association of Equipment Manufacturers. It's an American based group that looks at manufacturers big and small across America. What issues are they talking about with the lawmakers in Washington and in state issues? We're gonna talk about his time in FFA and how FFA and forage can play a role in the future of America, specifically rural America. He's an old Missouri guy. We'll talk about some of the small town things there. But we start that any Tiger fan will know and how we start this discussion. If you have any feedback for me, hit me up in an email at Paul Yeager at Iowa pbs.org. Now, a simple exchange to get us started. Old habits die hard.

[Yeager]

So if I say M-I-Z….

[Curt Blades] Z-O-U.

[Yeager] You know, it doesn't go away.

[Blades] No, it does not.

[Yeager] So when you see Eli Drinkwitz the head football coach, and his interviews with that. Yes. What does that make you think? 

[Blades] I sometimes scream to the TV screen, ZOU. It’s just a habit.

[Yeager] So many from Missouri went to Mizzou. Yeah. Tell me about growing up in northeast Missouri.

[Blades] Well, I'm, I'm sixth generation farm kid from northeast Missouri. Shelbina is the name of the town we just, became a century farmers a little over here about five years ago. So pretty proud of that. Corn, soybeans, wheat, cattle, is, is what we grew, you know, active like most farm kids in, and for FFA. And that sparked your interest in agriculture, where I was kind of spent my entire career, went to Missouri, graduated, with, with a degree in economics, and have had a really interesting career that landed where I am today.

[Yeager] And you could have stayed on the farm question mark. Or was that one of those that the math doesn't compute?

[Blades] I had the opportunity to, I also have a brother in law who's running the farm full time right now and actually his nephew. So we've got now the seventh generation. And it was a better fit for them than it was for me.

[Yeager] Do you still identify? I mean, it's clearly part of your bio. It's part of your life and it's in your, in your blood. Can't shake it.

[Blades] Exactly, exactly. And you talk to any farm kid, they'll say the exact same thing. It's just part of who I am.

[Yeager] As an econ major, is the vision for a young Curt to go, oh, I want to be I want to be a market analyst? I want to trade commodities or manufacturing was kind of something that stuck out to you?

[Blades] I had a better idea of what I wanted to do when I was 18, that I do now that I'm 52. So, you know, it's funny how life, how life ends up working things. But what I did know at that particular time is that I wanted to make a difference in the industry that I care a lot about. And it's part of my DNA, and I, I pinch myself every day because I arguably have one of the coolest jobs in the world, representing equipment manufacturers all around the world and specifically here in the United States.

[Yeager] I've spent a little time in Missouri over the years, and I drive certain roads. And I certainly see a lot of smaller manufacturers that around there. And I can do the same in Iowa and in other spots. Tell me about the difference between the large companies and the small companies in your world.

[Blades] Well, one thing that you find with all manufacturers, within agriculture in the United States and, and we represent all sizes, is they're all founded basically with the same premise. It's all farm kids that had it in their DNA, and they wanted to make life just a little bit easier. I love the small manufacturers because that's where innovation tends to happen. That's where the you know, the don't necessarily have the weight of a large organization to, stifles creativity. And you see innovation happen to small manufacturing all over the place. Each one of these large businesses that we're familiar with, they started out as small, you know, one entrepreneur or two entrepreneurs that, they created those things to begin with. So the differences at the DNA level are exactly the same. You know, the operations become a little bit, a little bit different. You can look through the, you know, the 200 years that we've been farming here in the United States on a commercial level, and you see that, you know, there's some innovations that have changed. There's been some companies that have come, some companies that have gone, you see some companies that were, in huge favor, you know, 20 years ago that are no longer around. And companies that were pretty unsuccessful 20 years ago that are flying high right now. So it ebbs and flows. But what's interesting is that, you know, the spirit of agriculture is always the same, that spirit of innovation trying to squeeze a little bit more out of the land with a little bit less input is still what everybody strives to do every day.

[Yeager] I want to talk about trends in the industry, but I want to go back to what you just said about those that might have been in favor a few years ago that aren't. And what is the DNA of those companies that have maybe weathered the cycle on a more consistent or maybe have fallen a little more volatile?

[Blades] Well, I mean, it's basic business practices. I mean, there's no secret we're kind of in a little bit of a downturn right now in the ag economy. And those companies that have weathered those previous storms kind of recognize, you know, we're coming off of some pretty great years in agriculture. You know, the last 1015 have been really good. Those were coming off of some pretty rough ones. So those companies that have that memory of when it was tough 15, 20 years ago, made the appropriate adjustments, seeing these trends that are happening right now and, and adjusting to the production or making sure their savings and their balance sheet was in a good is in a good spot. Those are the ones that continue to weather the storm. and that sort of just basic business principles. And then every once in a while, you know, it's lightning in the bottle and finds a particular innovation that catches fire and that changes the dynamics of everything. And I tell you what, here and here in the Midwest, there are stories after stories after stories of just cool innovations that made a difference, that started a company out of, out of nowhere just because somebody had a really good idea.

[Yeager] And sometimes those companies, they draw the attention of the larger ones, and they say, you know what? We like that or what you've done is much better. It happens. It happens in all industry.

[Blades] Absolutely, absolutely. In fact, that's where I mentioned that a lot of times those innovations happen at the small company level because big companies recognize that, you know, their R&D is going to be able to deliver some really good things. And I don't want to discount the level of R&D and innovation that's coming from some of these great story brands based right here in Des Moines. But a lot of times they're the first to recognize that they can only go so far just because of other things that they're trying to, to come into play. And though it's not uncommon, I, I spent some time in the startup space, in the, in the 90s. And many times that exit strategy for a startup company is, your exit strategy is to be acquired by somebody else.

[Yeager] So let's go to your story then. So you graduate from Missouri and you have your sights set as an engineer. I mean, how did you get to where you're at now?

[Blades] I went to work for Farmland Industries, and that's how I fell in love with Iowa, in the early 90s when farmland industry is.

[Yeager] That's something you can say out loud in Missouri at home. They think so. Okay. They I mean, the people in.

[Blades] Iowa kind of…

[Yeager] Make fun of Missouri, but the people in Missouri kind of make fun of Iowa.

[Blades] So it's, it's mutually assured destruction, when you talk about it. But, you I work for farmland industries used to travel around, you know, the upper Midwest, working with the with the co-ops. And this is, you know, early 90s, when you remember what was going on, there was consolidation of some of those story brands that are now national brands were, you know, local here in Farmville or in West Central, crazy, crazy, stories that I was, you know, fortunate to be a part of. I did that for, you know, all the way up. And we all know how, unfortunately, how the story of farmland ended in the late 90s. But then, the.com boom was, you know, starting about that time and knocking on my door and had the opportunity to, to join a startup, organization as a, as employee number seven. And I have about, I don't know, $20 million worth of stock options that are worth exactly zero today. You know, in a company that was a lot of fun, but that provided some good learning experience that, that did, bring me here to Iowa, working for, successful farming and running, helping with the business side of successful farming magazine and Meredith, Meredith Corporation. Meredith agri-media. that, you know, brought me to Iowa. I've been here for, you know, going on 15, 15 years, from then, you know, it's always spent most of my life close to the manufacturing, business and manufacturing industry. And, when the opportunity presented itself to, to join the Association of Equipment Manufacturers and run the ag division, like I jumped right on. It wasn't even a question.

[Yeager] Well, how would you describe the agency that you work for?

[Blades] So the Association of Equipment Manufacturers, AEM is, we represent non-road equipment in five sectors and construction, forestry, mining and utilities. So if you think of that that is the storied brands of familiar with. You're in Iowa. The green ones, the red ones, the yellow ones. The gold ones. but also those small companies, the technology companies, the service providers. So just a little over a thousand members, across the US and Canada. my job specifically is, overseeing the ag operations as the primary lead, but then I'm secondary lead on on the other sectors as well. I oversee all of our regulatory and compliance work and market share. Statistics and economics means we're really good, as am, at doing things that nobody sees or nobody knows that we do. Best way to describe it, every one of your listeners and viewers, I'm sure, has seen that twisty PTO guy, on the decal, that says, don't put your fingers there. Is the global library for those decals. And, one member of my team is solely responsible for making sure that those decals are available for all the pieces of equipment in all five of those segments. So really interesting stuff. Truly saves lives. but, you know, would you ever have known that that happens in Wisconsin or that I'm the one that's doing it? No, that's kind of beside the point. It's just a fun, fun role.

[Yeager] And you have also, a way to know you talk about trends, you know, what's going on. And you're also looking at, I mean, are these groups that you rep, these companies that you represent as a whole report to you data? Do you go for them for data to understand and how you put together reports?

[Blades] So we do a lot of analysis. I mean, the again, I say pinch myself every day is I have the best job in the world where I'm in regular contact with the executives of those companies. So we regularly get a sense for what's going on. Both of that kind of qualitative conversations. But in addition to that, the manufacturers all participate in a market share program, that, where they, present their information anonymously and, and that's aggregated and put back out to them. AEM facilitates that. We don't ever see that market share data, but we do see the aggregated data that talks about where tractors and combine sales are, that helps, you know, feed some of the other analysis that, you know, you combine that with information from USDA and other sources, and you get a pretty good indication of of what the market looks like today. We don't make a habit of looking into the future because that's kind of a dangerous thing to do. But we do provide good information that other people can, can create their own opinions off of.

[Yeager] So more of a look back than a look forward.

[Blades] We tend to not have an official looking forward position. Yeah.

[Yeager] That's fair and that's fine because we all know as long as we know what reports are and not forecasting. So what is it on the look back then when you say things haven't been good, what is the flag that starts to fly up that gets your attention?

[Blades] Well, the best way to describe the equipment market is, you know, again it's cyclical. It's agriculture. Just like, you know, you don't buy a combine for next year's harvest. You buy a combine for the next 5, 10, 15 years harvest depending on how you're set up. And so, you know, the ag equipment market is a really good indicator of the overall ag economy. And sometimes we're an early indicator of are things are is the psyche of farmers a little bit soft right now? During the pandemic, tractor sales were through the roof. and it was specifically small tractors. We couldn't satisfy the need. and basically what that amounted to was that, you know, folks might have been taking the trip to Europe, can't go to Europe. So they invest in their property and buying small tractors. That's not necessarily an ag market, but it's certainly benefited those manufacturers because they sold out of tractors. Then and quickly following that was, you know, the supply chain saw shortages that came about as a result of the pandemic. That led to some really good sales years for new equipment. And if you look back to the 2000 as early or early 2020s, all the way up until about 2023, we were year over year growth, really good in all classes of tractors and combines. but I think what happened is that that needs kind of been satisfied. And then we started to see, you know, late 23 and certainly early 24. Those tractor sales start to tighten up just a little bit. And you would see that same reflected in some of the headlines where maybe there was some staff reductions or reductions in productions, in anticipation of what we kind of saw this coming, that this is going to be a little bit of a soft time, for, for tractors and combine sales. And so for the last, you know, year 2024, we were we were down across pretty much all categories of tractors and combines. That's after some really strong years previously. But I think that's just a good indication of like that's sort of where the ag economy is right now.

[Yeager] So it's it sounds like more of a worn out. We've made the purchase. It's not necessarily a reflection of higher interest rates, lower commodity prices. I mean, those are factors.

[Blades] They're all factors.

[Yeager] One, just one way more than the other?.

[Blades] It’s funny funny that you asked that question, because usually what I would say is that the biggest indication of, of a tractor purchase is, you know, do you need it or not? But if you also ask a farmers, like, how much, how much longer will this excuse me? How much longer will this tractor last? And the answer is oftentimes well just one more year. But if the psyche of a farmer is such and they feel really good about the market, they're willing to make some purchases. And so I think that's where those incremental purchases come into play. Now, having said that, over the last year, interest rates, I've been hearing more than ever when talking to farmer friends. Interest rates are more of a factor than they've been in years past. Obviously, the outlook of commodity prices, the storm clouds that are out there, whether it's related to biofuels or or global trade or whatever else it might be, there's just a number of storm clouds that are sort of weighing in to that softness of the of the new market and that's just that's just kind of one of those cyclical things. This too will pass. But this is where we are right now.

[Yeager] New sales are one thing, but the stories over the last six months to a year have been, oh used market. Check out that used market. How much do you follow that?

[Blades] Well, obviously I'm most interested in the new market because that's the business that I am in. But in agriculture you can't. And certainly in tractors, I mean, they're, they're they're hand in glove. And most of the times there's a lot of value left in those machines. And so depending on, you know, if a farmer is set up for new equipment, they're buying new equipment. If the farmer set up to be that second user of equipment, that's the market that they're in. And so we pay really close attention to that. Oftentimes you can't buy a new, you know, a half million dollar piece of equipment unless you get rid of that, the residual of that previous half million dollar piece of equipment. So that that's really an important place for us to pay attention to. The used market has been really strong lately for a number of, for certainly for a number of the classes, you know, you go into some of those specifics, but, I mean, there are some there were, there were some bargains to be found, not too long ago. I think maybe those are starting to dry up just a little bit.

[Yeager] Bargains in used?

[Blades] Used bargains and used to be found a little while ago. But there's less, those are starting to dry up. The reason why I mentioned all of this together is that it's so important to have the new and the used market sync up really well, because you think about the how much of a farmer's asset base complete balance sheet is based off of that equipment balance sheet. You don't want those used markets to go south. You don't want to oversaturate the market with new equipment, because that affects a farmer's ability to get loans. That affects all sorts of things, that affects the dealership, lot and their, their, their floor plan and maybe their ability to be a stable, stable business. So it's a delicate balance to make sure that the used market is where it needs to be. The new market is where it needs to be. And inventories don't get to to inflated. You can usually tell the health of the ag economy when you're driving through small towns and you see how many tractors run on a dealer lot, and when you start to see those get to be a little bit, populated. I get to worry a little bit.

[Yeager] Because the anecdote that I was told last summer at the state Fair in, in talking to different farmers was they were hearing that those who owned new, who had lots with new equipment, were hearing a lot from the salespeople at those places saying, I got a deal for you. We're trying basically, everyone's trying to move out. Is that reflective and data that was probably true in the middle of 2024.

[Blades] I think there were some deals to be had, and I think it was kind of clearing out some of that inventory in anticipation of a slowdown.

[Yeager] And so then I also want to go back to something you said a few minutes ago, about there's some that always buy new, some that always buy. I'm sitting there doing the math in my head. I'm guessing that the rough numbers broken into four parts. There's the 25% that always buy new. There's the 25% that never buy new. And then there's that middle. Is that pretty accurate?

[Blades] That's pretty accurate. That's not too far from the actual.

[Yeager] So then that middle 50 though is where everybody's going to make or break.

[Blades] A trend that determines whether it's a good year or a bad year. Oftentimes that's where, you know, and the other thing that falls into that trend in the profitability of those machines are those companies are, you know, we talk about trash that combines because they're easy and everybody can relate to them. But it's the implements. It's the hay and forage equipment that also come into that total profit margin. And that's where there's some pretty big swings in that market as well.

[Yeager] It goes back to what I asked you at the very beginning about your home area. My home area. There's a lot of those little manufacturers of hay and manure and spray or whatever that are dependent on somebody buying a new machine behind a machine. And so it does trickle beyond just the farm. It's a farm community business. And so therefore extremely important to monitor.

[Blades] Absolutely, absolutely. Well, in fact, you know, the numbers that we throw out with a, is that our industry or the Association of Equipment Manufacturers represents about 3.2 million jobs. It's quite a few jobs. Those are direct and indirect. So if you think about those small towns that you mentioned, it's the small town. It's the direct job. It's the person who's turning the wrenches. But it's the coffee shop as well that only exists because there's people that are getting paid to turn those wrenches. So it's a very important part of rural America.

[Yeager] So I ask who's buying right now? Is it still the large or are there still some medium to small operators that have the capital that buy that go back to I think you said something about a more of a scheduled buy and they were able to weather that big run in 2020.

[Blades] There's no simple formula as who's buying right now. I mean it's a completely an individual, business decision. But I will say that those farmers that have good working relationships with their dealers and the manufacturers and a well thought out equipment plan, they're buying, they're buying whether the market's up for the weather, the market's down because that's what their business is set up to do. I think we learned something during the pandemic where the supply chains were tight is that that's where everybody kind of needs to be because you can plan ahead for those purchase needs. So those people are buying regardless. We oftentimes refer to that as a replacement market. It's like every 5 or 7 years I'm going to buy a new tractor. Those folks are buying regardless. We are seeing those that want to take advantage of new technology and they hear some different, different stories about, you know, buying a new harvester. As an example, if you're running a harvester that is, you know, approaching 20 years old, being able to take advantage of the new technology and a new harvester because of fuel savings alone can almost pay for itself in a year. Just because, you know, it's 20% more efficient, you're dealing with less weather risk. So those folks that are making those decisions are, you know, considering updating their technology. And so that's that's part of the market. There are those that are acting completely independent of, of the ag economy in the small tractor market. That's kind of based on the economy or a whim or a bonus or something else that comes into play, that they consider those factors. And then it's, it's after that, it's just basically what's the need, you know, did I did it the the old tractor. Finally we're out. It's just time to update. Sometimes that happens.

[Yeager] You talk, like numbers are the main part of your game. But where does policy fit well into what you do?

[Blades] Every farmer knows that. That, there, you know, we have things that we can't control. We can't control the weather. We can't necessarily control global trade. We can't control policy, but we know that we are impacted by all of those types of things. So it's a very important part of our job at the association. But it's a part and part of every farmer. I mean, we're sitting here in the Midwest where like, the voters take that job very seriously because they know that, you know, global trade matters. They know that biofuels matter. They know that any sort of those tax policies make a big difference on their profit and losses. We spend a lot of time dealing with that, both in the state houses as well as federally and, and, and in, in Canada as well. We've been disappointed that we don't have a farm bill that weighs into me. It just can't help it way into tractor sales. We've been shouting from the rooftops whenever we get a chance to talk about that. So we're hoping that that hopefully gets resolved pretty soon. But not just passing a farm bill, but passing a farm bill that sets farmers up to take advantage of new technologies to do more with less, be more environmentally sustainable. All those types of things been big advocates of those coming into farm bills. So that's the type of policy work that we do in addition to, you know, good tax policy, good trade policy and making sure that the regulatory environment is such that innovation can happen all across America to allow farmers to do northwest.

[Yeager] Those all sound like secondary things that you monitor that are not necessarily on the units sold, but it's the company that makes it in the person that's buying whatever you're big, medium and, and the small company.

[Blades] As well as an association, it's one of our top pillars. but as obviously when representing farmers here, you know, it's, it's something that happens in the background. A lot of the things that we do happen in the background just for the benefit of the industry.

[Yeager] And you have to be involved in, I'm sure there is a policy or political lobby side of your industry that does. What are some of those talking points that they do on the federal level? Yeah.

[Blades] So we've got 12, 12 full time lobbyists in Washington, DC. And, 6 or 7 out in the states. so and they are they're, they're talking points are, you know, the on the ag specifically. Let's get a farm bill and, rural America, let's support rural broadband. Let's support those types of things that make, make, make America strong. And rural America is strong because of the support to these manufacturing jobs. Right behind that are some of those bigger issues that, you know, are facing all of business and all of society. You know, we've got to workforce shortage. We have 1000 members. Every single one of them is hiring. And so, you know, obviously we want to deal with good education. But also that touches that third rail of immigration. And how do you make sure that there are good workers for the plants as well as the operators of the machines? So that's those are the things that we begin to deal with. You know, I mentioned regulatory reform or just, you know, I think there's a there's a very important role that regulations play, but making sure that they're not burdensome, that that to to a manufacturer, to a business that allows them to, to be in a good business space, tax reform, you know, really important to us, especially to provide those incentives for manufacturers and innovators to, you know, participate in the innovation process, build up, you know, build up tractors that can drive themselves. but there's got to be incentives to do that or has got to be the right tax situation for that to happen. So all of these things, we just put a little bit of an egg spin on it. We put an equipment spin on it. And it makes a big difference.

[Yeager] Because when you have a manufacturer and a small I'm going to go I think I keep thinking of the smaller community, not necessarily where the Caterpillar's the John Deere's and the Case’s are.

[Blades] They're often in small towns.

[Yeager] But they also have small towns. Yeah, but that's also important about the workforce. You bet. And having employees who are trained and those who are interested in doing the job. I mean, do you think about I can name several that have worked on their day job is is maybe building a tractor or a sprayer and their afternoon job is farming. I mean, those two jobs.

[Blades] Over and over and over and over again, that story is told.

[Yeager] And so that is important to have a trained workforce. And so then where is the or how does your organization and then have a conversation with, with school and education. Because you can't all be about taxes in the house?

[Blades] Well, we have you know, if you ask our members what are their number one concerns? It depends on the day. but for years, the number one concern has been workforce. And that's at all levels. That's the operator, of the, you know, tractor, a bulldozer that's the welder of the tractor bulldozer. That's the tech person at the local dealer. It's at all levels. So that's been the number one thing. So we've kind of been going through a number of things. There's a fortunately kind of a growing movement in, in all of, North America to revisit trade schools, revisit work. We're at work ready education. We're big proponents of that. Obviously, I benefited from the college and I and it was a great experience. But it's not for everybody. And I think we've learned that that's not for everybody. And certainly in, in small towns, it's really important to sort of recognize the value of staying home, staying back in the community, giving back to your community because there's good, meaningful work and well-paying jobs that can be that can be had at the local manufacturing facility or, you know, whether it's for the big brand or for the one of the component manufacturers to feed up to it.  So we do that through Ford, through FFA, through all of these organizations that are supporting youth because we find that you've got to have those conversations early ten, 12, up to 15. After that, they might have made their mind up and we might have lost them.

[Yeager] We're going to get to FFA, don't worry. Okay. We get to that.

[Blades] And we can't do it without it.

[Yeager] But I want to go back to, communities that you and I live in. And I think of Iowa that has a major move to larger metropolitan. And I think of Fargo. I think of Kansas City, Saint Louis. Those communities have had lots of people leave rural areas and go into those. Yes. How do you spring those kids back out of the suburb schools or the city schools back out to go work in, you know, Grand Prairie or Grand Valley, pick a small town that has a, a manufacturing plant that might have an engineer need or an accountant need that are part of that company, let alone the worker themselves on the line.

[Blades] One thing that we've learned, I guess maybe the hard way is that, you know, oftentimes recruitment is local and, workforce issue is a local issue oftentimes in small towns. So when you recruit someone from Fargo to all of a sudden LivingSocial buying in Missouri, that may not work out long term. And so we find more and more, our manufacturers try to say, well, let's reach these kids before they leave the town, keep them inspired, get them excited about the about the opportunity, provide all the opportunity in the world for them to get trained. So that's that's, you know, it's a longer term play, but that's really important. One thing that you mentioned when you talk about our, our some of our policy priorities about focusing in on rural America is that rural broadband is a great equalizer. and it does provide better opportunities than we've that we've had in decades for someone to have a good, meaningful career, perhaps remote, or if it's, if it's a, you know, husband wife pair or, or a married couple, the ability for one to be in a, in a role that might be a little bit more local and one to be remote because that that, rural broadband allows for, you know, for those needs to be met both places. I think generationally, we're also seeing some shifts where, you know, my generation of, you know, Gen X, I love talking about the difference of the personalities, the generation. But, Gen X, we were pretty we were pretty quick to get out of small towns, and not necessarily look back. I think the generations that are graduating from high school today have a completely different view about small towns and rural America, maybe even a simpler life. And, you know, these things may correct themselves.

[Yeager] Why are we speaking to the others? Because we really are on the same page. I mean, we're the same way. Well, about the same age, about the same town size that we grew up in. Yet you know, it wasn't that I didn't want to come back, but I was the, you know, like many products of something just didn't line up. Yeah. But, you know, I'm also thinking about Coach Drinkwitz when he's recruiting to Columbia. He's, he's he might get Fort Lauderdale, but it doesn't always work to get that kid to come.

[Blades] Well, the transfer portal is a whole different conversation.

[Yeager] You know, whatever the cash says. But, I mean, it's the same way the workforce as it is. And if you're not used to that type of a community, it's not going to work out. And for the man you want a community to have that manufacturing base or build that company there, you don't want it always. Yeah. In a suburb or in a city.

[Blades] Well, I can't see Chiefs fan. So you want a franchise player. You want a Patrick Mahomes that, comes in and, and invests in your company not just of their time, but their treasury invests in the community and becomes part of that community. They're a better worker. You're going to get more out of them, and it's going to be better for every everything. So I think, you know, there's some areas within Iowa specifically that have, a rich history of manufacturing. And I'm just amazed when you go like around around Pella. It's amazing how much manufacturers part of that culture down there. And there's some great families, family owned companies that have been there for generations. But then within those manufacturing facilities, there's generations that are working for those same companies, multi-generations. And so it's part of the community gets woven into the fabric. Yeah that doesn't happen everywhere. But it does make a big difference in it. That's why you know Pella Iowa as an example is a not just a, you know, bright spot for Iowa, but a bright spot for frankly, all of the United States for how do you do this correctly and how you do workforce correctly.

[Yeager] And Pella supports those companies in Pella support for an hour around or further. exactly. And I grew up in a, in a community in the shadow of John Deere. And they drove 45 to an hour as well, if not longer, to go work. And so it does. It does impact a big geography when you look at for and you look at FFA and their recruitments of students to join those organizations. But what's the outside involvement? I mean, you personally and professionally have, but just specifically on FFA to heighten, highlight some of the importance of working in a community.

[Blades] So my FFA experience, in Missouri meant a lot to me. And, it actually influenced my career influences, kind of everything I do every day. I sort of stepped away from the organization for a number of years, after, serving as, as a state of, say, officer and having a great experience there. But then when I started to realize, as I got a little bit older is that, you know, my experience was great. I focused in on the leadership work that got me exposure, you know, around the around the nation, around the world that I wouldn't have seen necessarily otherwise. But what I quickly realized is where the biggest need, within FFA right now is getting those work, getting those kids ready for school, getting those kids ready for, for work, that are in high school today. That leadership track is really important for that. That vocational track is equally important. And when I was involved in the 80s, we were quickly moving away from that vocational track. In fact, we even changed the name from vocational agriculture to agricultural education as a way to sort of, pivot more towards that, that, professional track. And I think what we've quickly realized at the national level, and certainly at all of the state levels, is like, we might have swung the pendulum a little bit too far. So I invest my time and treasure to make sure that that organization for HFA and others are all focused in on making sure the workforce matches the needs of where the workers are needed.

[Yeager] All right. I know your organization, and what you do is, is a look back. And I know looking forward isn't quite. But give me as we close here things that those kids and those following agriculture and and agriculture are going to watch here in the next 6 to 12 months that we need to see that will be those indicators that something is changing the market is coming back, in ag manufacturing and and where when we start to see numbers on a chart, head up in a different direction.

[Blades] Well, we are a look forward organization for everything except for predicting the market. So let me be very clear on that. So what I get excited about and can talk about all day long is that, you know, a farmer doesn't buy a tractor for tomorrow. They buy a tractor for the next five years. Agriculture is always going to be in need. And here in the United States, we produce the best and most efficient, crops in the world. So, yeah, there's some tough spots, you know, maybe for the next few months. But boy, the long term outlook couldn't be more exciting. So I look really you know, I think the storm clouds that we're dealing with right now, whether it's interest rates or, you know, global unrest or trade or questions around biofuels, questions around, you know, ethanol or other things like that, those will resolve themselves and we'll find the certainty that will that will the where the water will find its level. The boy to get involved in an industry that is rich with data, that we are just on the cusp of seeing what we can do with land because of modern technology, artificial intelligence, tractors that drive themselves, that gets exciting. And for a young kid to be a part of that and truly, make some revolutionary changes that will last for centuries, not just decades. What a cool opportunity for a kid to enter into this career right now.

[Yeager] I may get you in trouble if I ask you this question. You can wave me off. Have we seen the the end of the very peak of the large tractor being produced? And we're going to be in those middle sized units or smaller that are going to be driven by AI or driven by technology that are going to we're going to see this swarm of little smaller tractors back in the field.

[Blades] That's a fun thought exercise. I don't know the answer. but I love having that. I love having that conversation. And there certainly is a school of thought that says that we are about, you know, max size, for no other reason. The practical reality of being able to get it down the road. So we might be getting close to that now, 20 years from now. That will sound like a really stupid statement, but so that's that's certainly one argument. but the other side of it, it's really exciting. You think about how much of the weight of a tractor, or the weight of a spray boom is, built in to create the size, and that size is created because of efficiency. We need that efficiency because we have labor shortages, when all of a sudden labor becomes less of an issue, the tractor can drive itself. You worry a little bit less about the size. Maybe you worry a little bit less about the weight, which means you worry a little bit less about the weather conditions. The ripple effect of that is pretty fascinating. So the basic shape of a combine hasn't changed in 150 years. I mean, we created the combine, we put the thresher harvester together. But for all practical purposes, it's just what was what used to be stationary became mobile, all with the central drive unit. That's been the same basic paradigm for hundred 50 years. What happens when that paradigm changes just a little bit? Because you're, you know, electricity can go in a straight corner versus hydraulics have to have to go at a curve or a belt has to be in a straight line. All of a sudden, new paradigms can show up and it's fascinating to see what will happen as a result of, you know, new data, new stuff that's available we haven't even dreamed of yet. Be fun to see. So our swarm tractors part of it, I think we are in some businesses. I think greenhouses are a really important thing to take a look at in some instances, but also the stuff that oh, sorry about that. We've got to tickle. So swarm robots are really part of the story. you know, greenhouses are part of the story, but also the equipment that we're used to seeing today, the large equipment that gets bigger and bigger, that's part of the story as well. It's going to be a mixture of all of them, and I don't know what's going to be, but I'm pretty excited about what's going to look like.

[Yeager] Because we look at Brazil and wide open fields. Big equipment's not going away. They know and we look at, you know, you drive to Wisconsin on a regular basis. Those are smaller fields. There are some smaller fields in Minnesota. In Michigan, smaller places. I just did an interview with a researcher at Michigan State who's looking at that, answering that labor question and the automation and trying to put the two together. Lastly, let's finish on trade, because you've kind of mentioned it is, is that one thing that we may have to one of those things that we're there monitoring? Yeah. we do a lot of trade in North America. Yeah. and, and manufacturing on both sides of the border. And there's always this of thing. There's a little. Are you concerned about agriculture getting caught up in the middle of some of this?

[Blades] I am, I absolutely am. And I think every one of your listeners, and viewers should be as well. If you're involved in farming, this is important. We rely on our biggest trading partner to the north and to the south. and I think that's a that's a critical conversation we need to be paying attention to, and then in addition, we've got some trading partners that are big consumers of grain produced here in the Midwest that we don't necessarily like that. Well, or they don't necessarily like us. And that creates some real pressure on our market. It's a delicate dance that we have to play, and it's I don't want farmers to be caught in the middle. but it kind of appears that we are on that run, that risk of being in the middle of this conversation.

[Yeager] A lot to do. All right.

[Blades] Let's call that job security.

[Yeager] We'll call that job security. M-I-Z…

[Blades] Z-O-U.

[Yeager] My thanks to Curt Blades, for his time as we discuss that issue. And thank you for watching new episodes of this podcast come out each and every Tuesday. If you want to find out what's next, subscribe to the Market Insider Newsletter, available wherever you go on our website. You can't miss the sign up! Send us an email at Market to Market at Iowa PBS. If you have a different question, or you want me to talk about a different topic, we'll see you next time. Bye bye.