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Agrimarketing : March 2009
COVER STORY NEWERAOFEQUIPMENTDEALERS T by Tammy Dodderidge he U.S. has seen an increase in the number of large farms and the consolidation of their suppli- ers and those organizations that buy their products. Included in the group are ag equipment dealers. Over the past two decades, there has been a wave of consolidation in this busi- ness sector, as dealers strive to keep upwith the demands of larger cus- tomers, the latest technology and a changing agricultural landscape. Twowell-known leaders in ag equipment consolidation are RDOEquipment Co. and Titan Machinery Inc., both headquartered in Fargo,ND. The two companies have been tending to their acquisi- tion pipeline, expanding their store fleet, their equipment inventory, their services and their customer base. COMPANY BACKGROUND Founded in 1968, RDO Equipment Co. startedwhen RonaldD.Offutt, a fourth generation farmer, bought the local JohnDeere dealership in Casselton,ND.He acquired his sec- ond store in 1976 and continued the steady growth of his company through the 1980s. The company experienced the height of its growth in the 1990swith the acquisition or opening of 28more stores and the company continues to growtoday. RDO Equipment Co.’smajor lines include John Deere farm and construction equipment, and Vermeer,Hitachi, and Sakai equip- ment. Offutt serves as Chairman of the Board and his daughter, Christi J.Offutt, is CEO. Technically,TitanMachinerywas founded in 1980, but the company is actually the continuation of two Red River Valley dealerships dating back to 1926.Meyer Equipment, owned by DavidMeyer, and CI FarmPower, owned by Peter Christianson. TitanMachinerywas an early pioneer of dealership consolidation acquiring stores through the ’80s and ’90s cumulatingwith themerger of theMeyer and Christianson stores in 2002-2003 creating a 13-store group. According toMeyer, “2002was a turning point for our company.We changed our name to TitanMachin- ery,expanded ourmanagement team, raised outside equity capital and started on the path to become a public company.” Additional acquisitions took place in 2004 and steady growth has continued. Last year alone, the com- pany added 24 stores to its assem- blage. The company’smajor lines are CaseIHAg, Case Construction,New Holland Ag andNewHolland Construction. Christianson is the company’s President andMeyer serves as CEO. EXPANSION FACTORS For years, themajority of farm equipment dealerships in the U.S. were family owned and grown. But just as the traditional family farm has changed, so has the family farm equipment business. Like farms, these dealerships have a history of being passed down fromgeneration to generation. Chil- dren growupworking at the store and learning the trade, andwhen their parents retire, they are ready to take over. But this isn’t happening as much today.Some children simply have different interests, and others see the 24/7 demands today’s sophisticated farming puts on a small family dealership and decide it’s not for them. Sowhen retirement age ap- proaches,many owners are looking to sell, instead of passing down their business. “Alot of the individualswe’ve been buying dealerships fromare in the twilight of their career,” says Titan CEODavidMeyer. “They are con- cerned for their employee group and their customers. Theywant tomake sure that the continuing operation survives.And theywant somebody who’s going to growthe business, while putting emphasis on customer support and employee focus. “The combination of all these thingsmakes themlook for awell- capitalized and professionallyman- aged organization to come in and put their family business—the busi- ness they’ve built theirwhole lives —into somebody else’s hands.And theywant tomake sure it’s a good decision.” As farms get larger, farmers are One of RDO Equipment Company’sstores located inMoorhead,MN. 34 AgriMarketing s March 2009 demandingmore fromtheir equip- ment dealers in terms of service and technology.Therefore,mergers and