April 16th, 2018

Dear Art’s Way Dealer:

I hope that all of you are off to a strong year and experiencing some improvement in market conditions in the area you serve.

I am sure that you, like me, have been following the news closely in recent weeks regarding steel and aluminum tariffs and have been quite concerned about the effect that would have on the prices of equipment you sell as well as retaliatory measures that could negatively impact the farmers you serve.   Our concern grew stronger as those tariffs were ultimately implemented and made a reality.

Shortly after our last price update in the fall we began incurring steadily rising steel prices, largely driven by broader economic activity outside of ag.  With the tariffs in place we began seeing immediate price increases from our steel and component suppliers as well as lead-times pushed out significantly. In several cases we’ve seen pricing jump 30% and lead times go from 4 weeks to 12 weeks.  

With raw steel and steel components constituting a dominant percentage of the cost of our products, we are impacted very directly and unfortunately have no alternative to raising prices of our products by 8% on orders received after the close of business on April 13th.  All orders received before that time will be entered at current pricing, thus giving you some time to react to this significant news.  I would expect all peers in our industry to be forced to take similar action with some variation in percentage depending on the steel content in their products.  We will continue to monitor the steel price situation very closely and do our best to avoid additional price increases in the foreseeable future.  We appreciate your business and trust that you can understand the circumstances that lead to this decision.  

While I realize this will be unwelcome news to you I feel compelled to point out that Art’s Way’s last meaningful price increase occurred in early 2015, over 3 years ago.  In both 2016 and 2017 we kept pricing stable to help you be more competitive in the marketplace.  Upon our last revision in announced in the fall of 2017 for 2018 orders we significantly reduced the price of several items and made very modest upward adjustments to others.  In the aggregate, our pricing remained flat.   

During these years without price increases we focused very intently and strategically on setting our sights on developing industry-leading customer service, product quality, and innovative product development, all areas that were shortcomings in years past.  You will recall the dozen or so product introductions that have occurred during that time…the 7165 Grinder-Mixer, the Top-Spread Bale Processor, the 692-Z Sugarbeet Harvester, the 9016-BT High-Dump Cart, the 8200 Commercial Forage Box, and more recently the new JR series 50- and 75-bushel Grinder Mixers.   We have significantly improved customer service by shortening warranty processing time, making warranty more fair to dealers, improving same-day parts turn-around, giving you an online dealer portal, adding knowledgeable tech sport, and increasing field support to end-users.  We have also improved product fit and finish, quality, and aesthetics…and seek to go the next level with continuous improvement initiatives.

To further assist you as a dealer we have recently introduced an effective floor plan, modified sales programs to be more dealer-friendly, participated in more regional shows, and have invested more in marketing and digital media to drive end-users to your dealership for innovative products they truly want.

As a consequence of these efforts we are seeing very positive feedback from dealers and end-users alike, signed a record number of new dealers this fall, and have seen momentum building in demand for our products.  We have very loft goals and much work yet to do but overall we’re making significant progress as a customer-focused company and think we’ll be most successful long-term by doing everything we can to make our dealers successful and tend to their needs.

As we move forward I can assure you that we have greatly improved Art’s Way’s position both as a company and as a brand for the better times that lie ahead for our industry. We look forward to ongoing partnership with you and hope that tone is apparent in every dealing you have with us.

We thank you again for your business.

Best Regards,

Chairman

Art’s Way Mfg. Co., Inc.