Just read Mike Lessiter’s Op-Ed (“To The Point: In Praise of Straight Talk,” March 2015).
In my circle of life (began since 1960s, dealer-principal since the 1970s), I have been a student of the industry. I followed Case and its rise, along with the disasters along the way, as well as Allis Chalmers and its demise.
I sit now looking at the industry’s Big Three. What a potential disaster. I just talked to another dealer and had to laugh as I heard the latest stories about what was happening at the top of his mainline supplier.
What is the issue at these major OEMs? The MBA degrees. Having a MBA degree is having been taught to drive down an interstate at 90 mph looking only through the rear view mirror. You have no clue where you are going, but you can tell with 100% accuracy where you have been. You drive from one ditch to the other on the way to a short-term profit padding the resumes at every stop.
The problem is no one wants to do the due diligence and hard work to design a product, market it, service it and provide parts for it, while organizing a dealer organization to do all this at a profit and, in the process, still have my back. All have gone a whoring after $100,000-plus invoices and let the rest go to outsourcing, thus empowering new offshore companies who can become competitors in the near future.
All want dealers who pay for everything without floorplanning of any type — and who cover an entire state or more. Another local three-store dealer was cancelled who paid the bills and had good market share. “Family owned/farming involved businesses are not in our future.” What happened to the icon of agriculture in rural Americana? MBAs. Yes, no one wants to bunt, steal and sacrifice — they just want home runs.
This is the train wreck that will occur unless a miracle happens. The problem is dealers are loaded beyond capitalization with late-model used inventory — with no one to sell to. The farmers have been gluttonous consumers of everything they can buy in the last 5 years in search of tax evasion. Now they face payments in the reality of non-profitability in their operations. The collision will terminate when the investors — no longer proud founders of the dealership — see no future when presented with barrels of red ink.
Right now, the managers are wringing their hands dreading the next board meeting. The rest of the personnel have no clue as what is to occur. Recent events are only the tip of the iceberg that will trigger the tsunami to follow. One large Case dealer in the south has gone SOT (?); struggling to make amends, without a plan for profitability. So this dealer has no credit; thus a terminal cannibalization process begins.
What will happen when an entire state-covering dealer closes the doors? Will Deere, Case and AGCO step in and take over as coffee shop talk suggests? No, they do not hold ownership to the land. Other creditors await like a pack of wolves ready to strike, the employees will do the “rat/sinking ship” thing and farmers will be like zombies in a bad movie at the front door. My little imagination can't comprehend the carnage of the wreck ...
How did we get to this state? Management who never experienced the 1980s ...
Agriculture will survive; there are enough well managed and financed farms and dealerships to right the ship. There will be bargains to be had and wealth to be created. It is part of a capitalistic system that has its faults, but is still better by a long shot than whatever is in second place.
Just some rambling thoughts on a slow morning where all the farmers are at an auction where the older mega-farmer can't get a full operating loan because of not being able to pencil a profit. He can’t make a profit, thus won’t able to make the fall equipment and land payments, and thus is getting out now while the getting is not good, but workable.
Hope my looking glass is flawed…
— Name Withheld By Dealer’s Request
