AGRICULTURAL NEWS - The emphasis on financing is turning from pure asset financing to 'access' financing as mainstream agriculture, manufacturers and construction companies look for ways to increase the efficiency of their business with a challenging economic environment placing pressure on operating margins.
This according to Toni Fritz, head of vehicle and asset finance at Standard Bank, who points out that the prevailing economic climate has led to assets, particularly yellow metal in the construction sector, lying unused in owners’ yards and auction lots.
Although this raises the possibility of bargains being available for those with full order books, many operators are searching for ways of improving the fleet management of existing core assets and looking to reduce costs and the strain of having under-performing assets on balance sheets. Others are examining their places in the value chain and possibilities of increasing the downstream and upstream participation.
Measured on quality
"The emphasis is changing from linear operations that begin at one point and end with the supply of a defined product at another. Instead, all alternatives of increased participation in the value chain are being looked at as companies assess ways of securing their futures."
“Where options of expanding in the value chain are limited for some operators, especially in the construction sector, others are concentrating on building their core competencies and examining ways of effectively obtaining access financing. This is done so that they can rather outsource equipment and rent it for the duration of projects, as opposed to purchasing them and being left with holding costs for non-performing assets.
“The rationale behind this approach is that they are being measured on the quality of their outputs and that their ownership of assets required to complete a job are of little interest to those who are commissioning projects.”
Although this raises the possibility of bargains being available for those with full order books, many operators are searching for ways of improving the fleet management of existing core assets and looking to reduce costs and the strain of having under-performing assets on balance sheets. Others are examining their places in the value chain and possibilities of increasing the downstream and upstream participation.
Measured on quality
"The emphasis is changing from linear operations that begin at one point and end with the supply of a defined product at another. Instead, all alternatives of increased participation in the value chain are being looked at as companies assess ways of securing their futures."
“Where options of expanding in the value chain are limited for some operators, especially in the construction sector, others are concentrating on building their core competencies and examining ways of effectively obtaining access financing. This is done so that they can rather outsource equipment and rent it for the duration of projects, as opposed to purchasing them and being left with holding costs for non-performing assets.
“The rationale behind this approach is that they are being measured on the quality of their outputs and that their ownership of assets required to complete a job are of little interest to those who are commissioning projects.”
