Arts Way Manufacturing Co Inc's Comment on Competitors and Industry Peers
In addition to the competitive strengths of each of our segments described below,
we believe our diversified revenue base helps to provide protection against competitive
factors in any one industry. Our Pressurized Vessels, Modular Buildings, and Tools
segments provide us with diversified revenues rather than solely relying on the
agricultural machinery sector. We are also diversified on the basis of our sales
presence and customer base.
Agricultural Products
Our Agricultural Products segment competes in a highly competitive agricultural
equipment industry. We compete with larger manufacturers and suppliers that have
broader product offerings and significant resources at their disposal; however,
we believe that our competitive strengths allow us to compete effectively in our
market.
Management believes that grain and livestock producers, as well as those who provide
services to grain and livestock operations, are the primary purchasers of agricultural
equipment. Many factors influence a buyer’s choice for agricultural equipment.
Any one or all factors may be determinative, but they include brand loyalty, the
relationship with dealers, product quality and performance, product innovation,
product availability, parts and warranty programs, price and customer service.
While our larger competitors may have resources greater than ours, we believe
we compete effectively in the farm equipment industry by serving smaller markets
in specific product areas rather than directly competing with larger competitors
across an extensive range of products. Our Agricultural Products segment caters
to niche markets in the agricultural industry. We do not have a direct competitor
that has the same product offerings that we do. Instead, each of our product lines
competes with similar products of many other manufacturers. Some of our product
lines face greater competition than others, but we believe that our products are
competitively priced with greater diversity than most competitor product lines.
Other companies produce feed processing equipment, sugar beet harvesting and defoliating
equipment, grinders, shredders and other products similar to ours; therefore,
we focus on providing the best product available at a reasonable price. Overall,
we believe our products are competitively priced with above average quality and
performance, in a market where price, product performance and quality are principal
elements.
In addition, in order to capitalize on brand recognition for our Agricultural
Products segment, we have numerous product lines produced under our labels and
private labels, and have made strategic acquisitions to strengthen our dealer
base. We also provide aftermarket service parts which are available to keep our
branded and OEM-produced equipment operating to the satisfaction of the customer.
We sell products to customers in the United States and four foreign countries
through a network of approximately 1,800 independent dealers in the United States
and Canada, as well as overseas dealers in the United Kingdom and Australia.
We believe that our competitive pricing, product quality and performance, a network
of worldwide and domestic distributors and our strong market share for many of
our products allow us to compete effectively in the agricultural products market.
Pressurized Vessels
Competition in the pressurized vessel industry is intense. It is critical in this
business to deliver a quality product on a timely basis. We continue to work on
delivering a quality product and improving our reputation within the industry.
Modular Buildings
We expect continued competition from our Modular Buildings segment’s existing
competitors, which include conventional design/build firms, as well as competition
from new entrants into the modular building market. To some extent, we believe
barriers to entry in the modular building industry limit the competition we face
in the industry. Barriers to entry in the market consist primarily of access to
capital, access to a qualified labor pool, and the bidding process that accompanies
many jobs in the health and education markets. Despite these barriers, manufacturers
who have a skilled work force and adequate production facilities could adapt their
manufacturing facilities to produce modular structures.
We believe the competitive strength of our Modular Buildings segment is our ability
to design and produce high-tech modular buildings more quickly than conventional
design/build firms. Conventional design/build construction may take two to five
years, while our modular laboratories can be delivered in as little as six months.
As one of the few companies in the industry to supply turnkey modular buildings
and laboratories, we believe we provide high quality buildings at reasonable prices
that meet our customers’ time, flexibility and security expectations.
Tools
We expect competition in our Tools segment from off shore products which have
gained market share over the last twenty years. Our greatest threat continues
to be emerging technologies that replace the need for brazed tools. These competitive
threats are countered by our ability to offer the widest range of standard carbide
tipped brazed tool inventories to be found in North America. These inventories
are strategically located in four warehouses across the U.S. enabling our customers
to receive product quickly with minimal shipping costs. Our ability to produce
special, engineered, value added products in volume with short lead times sets
us apart from our competitors. This is most evident in certain segments of the
pipe processing industry, where we have been able to establish and maintain market
share despite efforts from companies significantly larger than ourselves.