Above: After its dealership was destroyed by a fire on May 20, 2013, McFarlanes’ acquired a 209,000 square foot facility a few blocks from its original location in Sauk City, Wis., and proceeded to dramatically expand its product offerings
When Chris Carnevale was invited to moderate a roundtable discussion during the February 2013 Dealership Minds Summit sponsored by Farm Equipment, he specifically requested the session dealing with facility modernization. He explained that McFarlanes’, a single-store AGCO dealership in Sauk City, Wis., where he was general manager, was planning to build a new facility to replace its 50-plus year old building. Carnevale wanted to hear first-hand what other dealers had already done or were planning to do to update or build new facilities.
At that point, owners of the dealership hadn’t set a timetable for the new construction. As it turned out, they didn’t have to because 3 months later, on May 20, a fire destroyed the facility.
The fire may or may not have contributed to a sense of urgency for a new facility, but rather than building new, McFarlanes’ ownership decided to purchase an existing 209,000 square foot facility located a block or so from where the old dealership had stood near downtown Sauk City.
Originally built as a manufacturing facility by Fiskars Brands in 1990 and added on to over the years, it had been vacant for about 5 years. According to Tom McFarlane, vice president and co-owner, purchasing the facility and turning it into a giant retail center was more cost effective than building a new store from the ground up. Not only would it give the dealership the space it needed, it would also be key to further expanding and diversifying the company’s retail operations. It would also reinforce McFarlanes’ well established brand in the area.
Growing the Brand
Through much of its company history, McFarlanes’ has been a diversified business. Today, it boasts of four divisions: manufacturing (farm implements), retail (farm equipment, tires, etc.), transport (company hauling) and structural steel (buildings).
McFarlanes’, Sauk City, Wis.
Founded: Company in 1917; Dealership in 1947
Employees: 212
Major ag lines: Massey Ferguson, Kubota, Fendt, McFarlane Mfg.
Major power equipment lines: Stihl, Ferris, Husqvarna, Simplicity, Toro, Boss
Tires: Bridgestone, Firestone
Hardware: True Value
Nationally, its manufacturing segment is probably its best known division. Earl McFarlane, grandfather of the current owners, started the Wisconsin Tractor Co. in 1917, when he designed and built the tractor named after his home state. Today, McFarlane Manufacturing Co. is best known for its tillage tools and implements for seedbed preparation.
Locally, the farm equipment dealership, which also housed a True Value Hardware store, is firmly established as a recognized brand in the community that customers simply call “McFarlanes’.” In addition, the company also owns a Bridgestone-Firestone tire store as part of its retail operation.
Takeaways
Brand your dealership first. The products you carry are there to support your business.
Develop strong roots in the communities your dealership serves. They are the ones who will keep you in business in the tough times.
Diversifying your product lines can help expand your customer base and soften the effects of a turndown with your mainline equipment.
The company began selling ag equipment in 1947. “We’ve been through a lot of color changes,” says Tom McFarlane. “We started with Oliver and went through all of their color changes. We’ve also had New Holland in here. Today, it’s Massey Ferguson and Kubota. We have customers who have switched brands with us as we’ve changed because they want to be with the McFarlanes’, not necessarily the brand that we sell.”
McFarlanes’ managers believed the move to the huge new facility would allow them to further establish the company’s brand as well as help them diversify their retail efforts.
Selling both ag equipment and hardware out of the old 28,000 square foot facility, there wasn’t much room to maneuver, let alone expand. According to Carnevale, they actually had about 50,000 square feet to work with, which included a separate shop for tractor repair and two warehouses. “It was a very inefficient 50,000 feet,” he says. “We’re using about 175,000 square feet in the new facility.” Most of the rest is currently being leased to another firm.
Carnevale says the “McFarlanes’” brand is well established in the communities the dealership serves. “There’s an Ace Hardware store in town. When people talk about it, they say things like, ‘I’m going to Ace.’ When they talk about our True Value store, they don’t say, ‘I’m going to True Value.’ They say, ‘I’m going to McFarlanes’. The same is true for our equipment business. It’s not Sauk City Massey Ferguson. It’s McFarlanes’.”
McFarlanes' is Back & Bigger Than Ever
James DeGraff, who was serving a 3 month internship at Lessiter Media, accompanied me during a visit to McFarlanes’. He was given the assignment of researching the dealership prior to our meeting with managers there, prepare questions for the interview, take photos and then write it up with a focus on the new facility, itself. DeGraff, who is from suburban Milwaukee, is a journalism student now in his junior year at the University of Wisconsin-Madison.
With the new facility, he says they are building on the strong brand identity the dealership has already established by expanding — in a big way — its existing retail operations.
Expanding Product Lines
In addition to its full-service Massey Ferguson and Kubota farm equipment dealership and a greatly expanded True Value Hardware operation, the new facility includes a wide range of other merchandise and services. These include home repair and improvement products, Stihl, ag and power equipment, an automotive care center to go along with its tire sales, and a Just Ask Rental business (power tools, party supplies, etc.). Last fall, the company added hunting and fishing gear to its retail operations, and the entire facility is now open 7 days a week.
Carnevale likens McFarlanes’ expanded operation to a Farm & Fleet store, a specialty discount retailer with 36 locations throughout Wisconsin, Illinois and Iowa. But it could also be described as a hybrid of a Tractor Supply store, the country’s largest rural lifestyle retailer, with clothing, animal health products and feed.
The new facility afforded the business with the ability to greatly increase its power equipment offerings. “I believe we have one of the largest walls of Stihl products in the nation,” says McFarlane. “If it’s not, it’s definitely in the top 3. And the area where we have our Simplicity and Ferris mowers is set up like an expo center with iPads and videos for customers to check on products and view them in operation.”
Without a doubt, the expansive product line has grown McFarlanes’ customer base. “Our customer base has to be the most diverse of any farm equipment dealership in the country,” says Carnevale. “We have farmers, hobby farmers, landscapers, construction companies, people who just want a tractor. We’re getting all sorts of contractors and we’re seeing a lot more homeowners.”
He estimates that on a typical day, they will see 400 customers. “Another positive is the increase of female shoppers to the facility. It used to be the husband would come in and his wife would sit in the car. Now they’re both coming in grabbing separate shopping carts, going in different directions and shopping.”
Keeping It Indoors
What their farm customers may like best about the new facility, says John Bachhuber, assistant general manager, is nearly everything is under roof, which is especially advantageous during Wisconsin winters. “I don’t know of many dealership showrooms that can house a Massey Ferguson 8600 series dueled up with a massive hydro-push manure spreader. Plus, we have several other big tractors and R series Kubotas, all indoor, along with all of the mowers and utility vehicles. It’s really something you need to see to appreciate.
Bouncing Back from the Fire
While it didn’t seem to be at the time, the fire that destroyed the McFarlanes’ farm equipment dealership in Sauk City, Wis., may have been a blessing as it set the stage for a major expansion for the nearly 70 year old dealership. It also became clear that not only the community, but also McFarlanes’ suppliers were behind them all of the way.
According to Chris Carnevale, general manager, between May 20, 2013, the date of the fire, to Labor Day of that year, the dealership continued serving its customers by operating out of three separate locations. “It was tough and the space was tight, but we made it. In fact, our business was very good during that time. It actually got better.”
He says the town rallied around the dealership during this time. “The city and our customers really supported us through that fire, which gave us the momentum. I think there was some question in the back of our minds whether we would keep going as a business or not. That was an option, but business kept coming. That was really a testament to the McFarlanes. Since 1917 they invested in the community, always doing the right things, and developed a great business reputation. It really made a big difference.”
The support kept coming. “It started with our insurance agent, M3, and our carrier, Travelers. They were excellent and we were made whole with almost no fuss. The claim went seamlessly,” he says.
“We also received outstanding support from some of our vendors, including AGCO, True Value and Firestone. But most importantly, the support from the community was second to none. I don’t believe we would have been able to keep the momentum if we were an anonymous dealer without deep community involvement.”
“Like most implement dealers, at the old place we had to leave all of the customer’s equipment outside,” Bachhuber adds. “Whether it’s a push mower or high-horsepower tractors, it’s a huge plus for us to physically keep equipment inside for the customer; that means a lot to them.”
Employee Opportunities
Today, McFarlanes’ employs 212 people across all four divisions, with 50 working in the retail segment of the business. According to Carnevale, in many cases, it gives the company the option of moving people around where they’re needed. “If I was the worker, I’d be happy that this option is available. Sometimes we’ve had employees go back and forth between manufacturing and retail. We have a lot of examples of a young person starting in manufacturing and now they’re running a department over here in retail and vice versa as their careers evolve. It’s a good situation for us and the employees.”
Does Diversification Pay Off?
Considering the cyclical nature of agriculture, diversification would seem to be a sound strategy. According to McFarlane, it is in a way.
“It softens the cycles somewhat, but does it even them out, I would say no. It helps cushion the downturns. Our manufacturing segment just had some super years and now they’re in a little bit of a slump, but our retail has had a super year. The profit margins aren’t as good in retail as they are in manufacturing, so it takes a lot higher highs in retail to get that gross margin. I mean you can only get so much for a tire or for a lawnmower. There’s a lot more competition for these type of products.”
Bachhuber points out that while pricing is a huge factor, McFarlanes’ is able to set itself apart from the other retailers with service. “Customers may be able to get some things cheaper at a big box, but they can’t get the kind of service we can provide. And then there are parts. We have them and they don’t. This is something we do a very good job with and we know it makes a difference.”
When you consider that branding is all about making the kind of difference that customers want and sets a business apart, it would appear that McFarlanes’ diversification strategy is a viable one for the long term.
McFarlanes' is Back & Bigger Than Ever
