Air Tractor + Trush: A Letter to our Customers
To Our Customers :
It’s been three weeks since our announcement and we thought it would be a good time to share some information on why we agreed to go forward together, how the deal was structured, what’s happened since the announcement, and what the immediate plans are for the future.
There were a number of reasons combining forces made sense for both Air Tractor and Thrush. Air Tractor needed capacity and Thrush has plenty, which enabled Air Tractor to end their plans for a very large expansion into ‘Plant 5’ in Olney. Thrush needed capital to weather the Ag slowdown. Both companies needed a back up if a tornado or hurricane ever struck a factory.
From the industry perspective, given the way costs have increased in almost every aspect of the agricultural and firefighting markets, the OEM’s needed to find a way to reduce prices and give some relief to customers. We are still feeling the effects of COVID and war on the cost of materials and the performance of our supply chains. There are synergies that the two companies can harvest to eliminate the need for aggressive price increases in the future. There are savings in the supply chain, in engineering projects, in overhead expenses like marketing, in insurance policies, etc. There are processes at Air Tractor that are world class and there are processes at Thrush that are world class. The two have created teams that are at both locations working to harvest as much of these savings as quickly as possible to protect the battered AG market.
After a few weeks of collaboration between the Thrush and Air Tractor teams, we’ve identified a number of savings initiatives that can be enacted over the next few months. As such, we will pass those savings on to our customers. We’re announcing a 5% reduction in the price of the 510P2 and 510P2+ models effectively immediately. We expect to maintain that pricing through 2027. As the collaboration continues, we’ll share more information on how we can improve our support of the market.
The transaction was structured in a way that helped both companies set a foundation for future growth. Air Tractor Holdings, Inc, the parent of Air Tractor, bought the equity of Thrush Aircraft, LLC, bringing Thrush in its entirety under the parent. Thrush has a new board of directors and comes out of the gates with no debt. Air Tractor funded the working capital accounts and the all-employee bonus plan. We’ve launched a number of equipment and facility related projects in Albany. The new capital expenditure budget at Thrush will be three times higher than in the past, which means safer processes, better quality, more throughput, and lower costs through better efficiency. Employees from both companies are on board and excited about the future.In the marketplace, both company’s dealers are continuing to serve customers. No changes have been made to dealers or service centers and there is still competition occurring just like it was before our announcement. Air Tractor has confirmed in writing to Thrush customers that long-term contracts with product development activities will be executed as stated in the contracts, and those contracts include the 510 and the 710. Both companies are trying to learn from each other to improve products and services and to reduce costs.
The first three weeks went very well. We still have things to figure out but we’re committed to making this transition positive for the market. Please be patient with the process as we strive to feed and protect the world by providing the best AG planes, spares, and services possible when you need it as you need it.
