John Deere: A Sluggish Demand Forecast

Stuart Burns has the scoop on Spend Matters affiliate blog, Metal Miner, that John Deere is forecasting a 20% drop in global demand which could very well correlate with a similar drop in metals demand. Stuart notes that, "with companies like Caterpillar and John Deere being such large users of metals like steel castings, forgings and fabrications, a significant drop in demand is felt throughout the economy." What are the implications of this reduced demand picture? "As major consumers like this reduce demand there will inevitably be casualties in the casting and forging supply markets, which will in turn cause supply constraints when the market turns around, as turnaround it will at some point," Stuart notes. As such, companies should not only focus on thinking through the best ways to mitigate and manage supply risk to prevent disruptions from bankrupt suppliers in the downturn, but should also "lay the foundation for developing long term supply strategies and relationships that will be embedded when the supply market comes back into balance in 2010." Said another way, now more than ever as demand slackens, it's not only "spend" that matters. Supplier relationships do as well.

- Jason Busch

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