To complement this SHOWCASE’s report on what happens after the ink dries on a dealer acquisition (Dealer Acquisitions Report), I’d been exploring the major lines’ resources, checklists and protocols to help dealers integrate newly acquired stores. With the exception of John Deere (declined to participate), the majors supported the topic and cooperated with materials. Their viewpoint seemed a fitting introduction for this month’s “To the Point” column.
But in our business, planning too far in advance of deadlines only ensures something will come along to trump it. The announcement of Kubota’s intent to buy Great Plains Manufacturing for $430 million caused us to “stop the presses” on our May Ag Equipment Intelligence and go with an expanded edition. Likewise, the original musings prepared for this column are getting shelved. It isn’t every day you see a new major-line force appearing in a mature ag market, but that’s what it’s starting to feel like.
Kubota making a bold move was not surprising (it’s been deliberate about becoming a global full-line supplier). While Kubota’s common-law marriage with Land Pride now makes the acquisition seem obvious, some other ones also looked ripe for the picking. But with Great Plains, the largest U.S. shortline manufacturer with drills, tillage, planters, fertilizer applicators and pull-type sprayers, Kubota gains immediate access into new market segments, with an experienced dealer base to boot.
How the distribution networks end up will be interesting. Kubota and Great Plains both report about 1,000 dealers in the U.S., and an overlay of their dealer maps shows Kubota could gain access to a wide swath of new outlets in the breadbasket states.
But the Kubota dealers in true ag country are generally attached to a major line. Ag Equipment Intelligence’s 2016 Big Dealer Report showed only 15 Kubota dealers among the top 175 largest dealer groups, and each of those shares lot space with Case IH, New Holland or John Deere.
Kubota’s presence on Case IH lots is the most common, as Case IH long ago left open an uncontested door for red dealers to move the smaller orange tractors to the masses. One Case IH dealer says Kubota was a natural and successful addition for the lower horsepower tractors, lawn/garden and RTVs. “But that was before Kubota got all hell-bent on getting into the hay and row-crop business,” he says.
For years now, Kubota has been singled out (with strong language) during Case IH’s national dealer meetings. So this development will only intensify those rallying-cry speeches questioning dealer loyalties and demands for more share of the farmer’s wallet. If Case IH was indifferent about Kubota’s entrance into the hay tool world the last few years, such a reaction isn’t likely this time around, particularly with Case IH’s recent investments in planting and tillage.
What’ll be interesting is how long Kubota, as it marches forward in a bigger way can — or wants to — operate with tentacles attached to dealers carrying rival ag brands. The competitive overlap is real.
So what’s next? While the idea of a dealer putting up separate brick and mortar for brands competitive to its mainline hasn’t been economically feasible to date, a Kubota-Great Plains-Land Pride “core” offering makes it more imaginable. Taking that a step further is the notion of a retail partnership between someone like a Claas (offering the combine and bigger tractor) and coupling everything that now exists in Kubota’s basket. Yet then again, maybe Kubota’s acquisition appetite hasn’t yet been satisfied.
Much will change for Kubota as we know it, including far greater demands from farmers. And should Kubota one day become a primary full-line ag dealer, it’ll be interesting to see how/if its business model breaks trails from that of the U.S. majors.
