Question: What is your #1 business concern for the remainder of this year and going into 2015 and how are you addressing it?
Answers:
“There are two major issues facing my business. One of which only God can fix: the lack of rain. The drought is now going on approximately 6 years. Throw in the economy with severe drought and we have had an uphill battle. The other major problem we are facing is the Internet sales of everything I sell — discounted prices, free freight, delivered to your door and no taxes. I blame the major manufacturers for this problem. They make no more profit as a manufacturer once it leaves their dock. They don’t care if it sells for 2% or 50% margin to the customer. The problem is they want the dealer network to solve all their warranty issues, customer complaints and be their show floor for the Internet sales. As a dealer, on the front line, this issue needs to be addressed.”
— Ray Johnson, Turf & Irrigation Corpus, Christi, Texas
“Right now the biggest concern is falling commodity prices and accelerating equipment prices. We have very few large farms in our state and the smallest amount of farm ground in North America. Neither one of these conditions lend themselves well with the rising cost of new equipment and we’re wondering what the future holds for us. We are in the worst drought in many years and we are praying for moisture every day.”
— Dave Ott, Ott’s Farm Equipment, Fallon, N.Y.
“Our #1 concern is keeping enough inventory on hand to meet growing demand. After a record setting 2013, 2014 has exceeded those records already with 4 months to go. We continue to increase order levels, but we’re still not keeping up with demand. We have worked closely with Massey Ferguson to order for drastic growth for the remainder of 2014 and 2015. AGCO is very proactive with forecasting tools to help me select the right equipment and to make sure it arrives at the right time, plus they offer safety nets in case the market changes direction to prevent overstocking.”
— Doug Vahrenberg, Vahrenberg Implement Inc., Higginsville, Mo.
“Forecasting for our pre-season order is always a challenge. Even though we study sales history in depth, predicting what customers are going to purchase still remains somewhat of a guess. Just because an item or model was hot one year does not mean the sales will continue. One thing we focus on as we get closer to the fourth quarter is making sure current inventory is moving, so we don’t have a large amount when new inventory arrives. Whether it’s dropping the price, packaging it with other implements to make it more attractive to the customer, etc. ... it needs to be moved.”
— Jason Wilkes, Louisburg Tractor, Wake Forest, N.C.
“I’m most concerned with finance retail and wholesale floorplanning.”
— Kenneth Fairbanks, Fairbanks Farm Equipment, Wood River, Neb.
“Inventory! We are concerned with ‘right sizing’ our new inventory levels in terms of aging and the overall level of total new inventory as we move into 2015. We are focused on significantly reducing our used inventory levels and cleaning up aged levels. We focus on our used level as a percent of new and used sales and try to keep our used levels under 15% of that total. Our goal is to keep our aged used inventory that is over 365 days old under 3% of the total new and used sales level. With our turf, we target 180 days.
"In regard to used levels, we have designed our own interest rate and discount programs on our aged used inventory and are working closely with our OEM on other programs to spark reductions in our used inventory. We are also taking advantage of our strong dealer network in North America as we wholesale a significant amount of used equipment into areas of Canada and the U.S. where there may be pockets of demand that are higher than in our own area. Our focus first and foremost is to keep as much used equipment in our AOR (area of responsibility). However, our used volumes typically are greater than our AOR can handle so we have become accustomed to exporting and wholesaling used equipment outside of our AOR.”
— Darrin Didychuk, Green Diamond Equipment, Moncton, New Brunswick
“The #1 concern this year and next is the lack of experienced employees that are available in this area. Fewer people are entering the profession of heavy duty ag mechanic and the almost zero unemployment is taking its toll.”
— Paul Hepworth, Hepson Equipment, Brandon, Manitoba
“In recent years, staffing our dealership has become our #1 ongoing concern. Having the right number of properly trained employees to meet peak season demands without ‘breaking the bank’ in the off-season is a huge challenge. We are located in a metro area and finding employees who are willing to work the hours required during the summer months is much more difficult than it would be in a rural area. In past years, we operated with barely enough staff to meet peak season demands and then carried excess staff through the winter months. Young people entering the workforce today are much more concerned about having Saturdays off than they are about a good benefits program.”
—Mike McCrate, Tulsa New Holland, Tulsa, Okla.
“I think my greatest concern as we look into the next crop year is how to discuss priority equipment needs with my customers and try to match it with my inventory. If the customer needs to purchase units to make his operation more efficient and my inventory is overstocked with items that are contrary to his needs, how can we have a mutually beneficial conversation? This situation is seldom addressed in the ‘selling skills’ presentations I have experienced over my years in this business.”
— Ron Walkschmidt, A.C. McCartney, Durand, Ill.
-“We are taking a harder look at on-hand inventory, both new and used, with the goal of reducing levels to suit our own forecasting. Our parts inventory levels are higher than current conventional wisdom would recommend, but we do not plan to marginalize our track record of customer support following the sale. We hope to continue our reputation as a steady, dependable retail and supporting dealer for the lines we represent. As we continue to evaluate profitability, we are taking steps to better evaluate any lines/products we represent to be sure they are profitable or at least valid loss-leaders.”
— Lowell D. Graybill, Binkley & Hurst, Lititz, Pa.
“Used equipment values and market demand are our biggest concerns. We try addressing it by lowering actual on trades.”
— Jon W. A. Maus, Ziegler Ag Equipment, Shakopee, Minn.
“The large amount of used equipment that we have in inventory is our top concern. We have strategized how to reduce the inventory and we are making more contacts with customers to be proactive in initiating trades. The one way to stay out of too much used inventory is to be smarter when trading. Educating the customer why his equipment is worth the offer you are making is a fine line to walk. Once a customer thinks about what is explained to him, his attitude comes around to the agreed price.”
— Walter Green, Deer Country Equipment, Corydon, Ind.
