Deere and Case IH Dealers Compete in Janesville

Leo Johnson

Partner,
Johnson Tractor, Janesville, Wis.

Chris Frodel

Vice President & Co-Owner,
Mid-State Equipment, Janesville, Wis.

Pictured Above: “Curt Hanson is a legend in Wisconsin as a progressive, aggressive and large Deere dealer. Chris is now the face of Mid-State Equipment. Few people in the larger industry knew my dad as parts/service manager, so I’ve had that role at our company since the early 1980s, although on a smaller scale than you and your dad.”— Leo Johnson, (left), on topics he wanted to explore with Hanson’s daughter Chris Frodel (right).

Leo Johnson: My dad was an International Harvester dealer, and his partner hired me right out of college in 1978. Today, we are mainly Case IH and Kubota. What’s it like being a John Deere dealer?

Chris Frodel: I’m sure you also have days when dealing with the major manufacturer is challenging. But I end those days knowing I wouldn’t want to be anything else. We used to be a Kubota dealer, and we’re still a Bobcat dealer, so we see things from other manufacturers, too. They aren’t that different. They’re all going after market share.

Johnson: And in the end, maybe they aren’t so wrong. Even when they want you to do something different than you’d choose or something gets in your cross-hairs. With the whole purity thing, it seems Deere carries a bigger stick than Case does. (Frodel nods). I can probably buy or open another store someplace, and take on Kubota, or other lines — to a certain extent.

Frodel: Right, we could not. There are specific guidelines dealers need to follow. When we bought the Salem store in 2012, we did eliminate Kubota and Gehl from our product line offering.

Johnson: But that’s the clout that number one in the market has that number two doesn’t. When I talk to people outside our industry who learn I’m a farm equipment dealer, they naturally say “Oh, you sell John Deere.” But there are things in number two (Case IH) that aren’t so bad. My perception is that overall, we may have less inline pressure from other Case IH dealers.

Janesville, Wis. has been in the news a lot lately, not only as the home of U.S. House Speaker Paul Ryan but because of the best-selling business book Janesville: An American Story (an excellent read by the way) by Washington Post writer Amy Goldstein that follows the loss of the iconic General Motors plant, which incidentally had ag implement roots. Visit www.farm-equipment.com/janesville to learn more about the Janesville market for agriculture and rural lifestyle equipment. – Mike Lessiter

Frodel: I think so. We feel more pressure from our inline competition than we do from you. A lot of the large acreage grain farmers are still specific to the color of their equipment.

Johnson: Yet there’s some change now and again but it’s funny. We’ve made a few conquest sales over the years, and then sure-shooting, 5 or 10 years later, you get them back. We’ve had the same experience the other way, too.

Frodel: The changes in generations can entertain a switch, and both of our majors have programs to make you go after and pick off one or two of those each year. And then 2 years down the road, they go back. We do have those customers that have red combines, green tractors or red tractors and a green planter behind it. But our daily challenges are more so against our neighboring Deere dealers.

We respect each other, but we don’t talk much outside of the meetings. There are other Deere dealers who have more open relationships, but it’s just the way things are. I’d say it’s a little different from 10 years ago. Consolidation and the pressure from Deere and their dealer goals. That bar keeps getting raised for market share, and everyone’s trying to get it. We understand that market share is important, but we add the word “profitable” — profitable market share. You can’t just go in and buy it.

Johnson: As an outsider, you don’t seem afraid to take on additional lines. There are niches, right? A lot of Deere dealers won’t even dabble with them. Is this something that’s come along with your culture to try to gain as much of the share of wallet...

Frodel: No, those decisions primarily were made for customer needs. Being in dairy country and Kuhn and Kuhn Knight products, for example, makes sense. Landoll and their VT machine before Deere had anything there, that was a niche. So, where it fits and where it makes sense, we’ll make those decisions. We’ve also exited other brands through the years too, and we continually “80/20” our business.

Johnson: Yeah, we see the same things. Another thought to ask you about ... Our biggest strategic decision was to come to Janesville. Closing up our little store at Darien, Wis., and buying Janesville in 1986 was a big move. Our next big move was buying Rochelle (northern Illinois), and that took us from 25 to 50 employees in the heart of great farmland. That almost doubled our volume overnight. That was another good move. What comes to mind for you, Bryan and your dad?

“I have my own shoes, I said. They’re different, and that’s going to have to be OK…”
– Chris Frodel

Frodel: The same — our purchase of Power Town and coming to Janesville. Prior to that we were in Columbus and Watertown, which we bought in 1990, and we’d opened a small 4-employee store in Hartford in 1998.

Buying Janesville in 2000 was a big moment. Columbus and Janesville became our two main ag stores and that added 42 people at that time — we have 195 total today. That location got us a lot more volume coming down here. We’d taken a dealership that didn’t have good market share and got it to a commendable level in a pretty short time.

Johnson: I knew at that point that it was going to get tougher for us around here with a formidable competitor. But I also figured there’d be a little bit more consistency without crazy deals made as soon as Deere called up the store and said, “You’ve got to go sell some stuff.” I didn’t fear Mid-State when I heard you bought it. Instead, I was thinking you’ll bring some stability.

Frodel: I was 28 years old when we came down here in 2000. I remember the night we stood in there alongside the previous owner in front of the 40-some employees and he said, “Here’s your new management.” My dad is well known in this industry and had done very well for himself. Some people had said to me “You’ve got big shoes to fill.” And I right away would say, “I have my own shoes. They’re different, and that’s going to have to be OK.” My dad is very oriented to wholegoods sales. I don’t sell, and I don’t pretend to be the most technical person. I have different skills and different roles, and that’s OK.

Johnson: Much different skills are needed to manage a large growing entity than a 2-store operation, right?

Frodel: Yeah, and he’ll say it too. It’s evolved to be so much more with 7 stores vs. one or two. It’s hard for him in many respects, but he also knows that more layers are needed to meet customer and employee demands. People management is huge, and I deal a lot with that.

Johnson: It’s interesting how our roles change. We never had the size and scope of what your dad was, but when I was more active in wholegoods sales, I did everything wholegoods related. And my brother, Eric, is that way too. We were very
wholegoods focused. I no longer retail anything and personally don’t have any customers anymore. If someone I used to deal with comes in, I turn them over to somebody smarter than me. It’s been good for our business to step aside from retail sales and turn it over to those who specialize in and do it daily. As you know, it’s impossible to truly service a customer in sales and still run the dealership.

And I’ve probably reached my managerial capacity; we might be able to add a couple more stores but I wouldn’t be able to run 12, and I don’t really want to.

We talked a bit earlier about consolidation among the groups, what do you see?

Frodel: I think it’s well-known that Deere would like fewer dealership owner groups.

Johnson: I’d heard basically about one ownership group per state.

Frodel: It depends on the state, I’m sure.

Johnson: Maybe not any change in the number of rooftops, but in ownership groups, right? With Case IH dealers, we have about 2.5 stores per ownership group. And Deere’s is ...

Frodel: Probably 8-9. We’re probably considered smaller now with our 7 stores. I don’t know that we aspire to be a 20-location owner group. And it looks different when you have partners at that point and merge with others. That’s hard for me to get my head around as to how that’ll look. We’ve been a family owned business ...

Johnson: Exactly.

Frodel: There’s several dealers that have venture capitalists who’ve just invested in their dealerships.

Johnson: Yeah, more so in the Deere network than in our network. I think stores and dealership complexes and shares of dealerships all get traded more often in the Deere distribution, just because it’s number one in the market.

Frodel: Is that the direction your leadership wants to go?

Johnson: It changes, and now of course we have a new bunch of leaders at the top end of our main supplier, so who knows? Number one (John Deere) is setting the standard, and I’ve got to think all the other brands wonder if that’s the path they should be on. But, I don’t know if that’s right for everybody.