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Agrimarketing : March 2009
TitanMachinery’sMoorhead,MN, dealership. acquisitions are amust for dealers whowant to keep upwith the chang- ing and increasing customer needs. Keith Kreps,NorthernAgricul- ture Vice President for RDO Equip- ment Co., agrees.He sayswhen he startedwith the company 11 years ago, he sawfarmerswhowere of the mindset of supporting a small, single store operation. Butwith the growth of farms and the development of more aggressive farming practices, farmers today are seeing the need for the quality and level of service that a large dealer can provide. “With today’s agricultural needs and equipment needs, the progres- sive farmers need the quality or level of service that only a large dealer can provide,” Kreps says. “As farms get bigger and needmore support, it’s only logical that the equipment deal- ers that serve themare going to fol- lowthat same path.” Manufacturers also have a voice inwho’s going to be the continuing dealer in specificmarkets. “We’re not a franchise,we’re under a dealer agreement, but the manufacturer has to give final approvalwhen a dealership is being sold,” Kreps says. “We’ve always been pushing the limit on howbig was too big in John Deere’s eyes as we have been their largest dealer for quite some time.” Kreps says as other dealers have consolidated, it has opened the door for RDO Equipment Co. to grow “becausewe’re not the only one out therewith that businessmodel.” KEYS TO GROWTH AND SUCCESS Diversification has played amajor role in the success of equipment dealerships throughout the U.S. Expanding product lines and adding construction equipment to themix have enabled dealers to attract new business. Most offer newand used equip- ment to try tomeet the needs of their customers. Other services include equipment rental, and parts and ser- vice departments.And through com- panyWeb sites, customers can locate and research the type of equipment they need—yet another service. Stocking equipment that has the latest technology has helped create a customer base for dealers.Machin- ery innovations and the integration of advanced technology based on GPS technology enables farmers to better control costs and improve yields.Newer tractors, sprayers, planters and combines are equipped with systems that allowautomated steering under computer control using GPS. “Customers are seeing huge returns on their investmentwhen they start putting technology into their equipment,”Meyer reports. “So these are some things that are going to growour organic (same store) business.” Kreps says providing good train- ing for employees and keeping them motivated have contributed greatly to RDO Equipment Co.’s success. “We’reselling the same green equipment as 1,600 other JohnDeere dealerships across the country,” he says. “It’s only our people and our ability to train themand develop them that distinguishes us fromour com- petitors.As a company,we invest a substantial amount in that area.” An operatingmodel that’s geared for consolidation has been a key to Titan’s successful growth. The com- pany uses a “Strong StoreModel” where a lot of emphasis is placed on the storemanager. The decisionmak- ing and day-to-day activities are all managed at the store level and the company’s headquarters backs them upwith accounting, administration, human resources,MIS/IT,marketing and so on. The idea is to allowthe storemanager to focus on the busi- ness at hand—his employees and customers. “I think our operatingmodel is advantageous to growth because it’s totally scalable,”Meyer says. “We’re just adding these operating units into this provenmodel. Keeping a flat organizational structurewith open lines of communication so that there is a free flowof information is also critical.Wewant to be close to the customer.” GOING PUBLIC Titan is the only equipment dealer in the U.S. that is publicly traded. The companymade the decision to go public in December 2007.Meyer says the advantage to being a publicly traded company is that it putsmore capital into the distribution channel. “For family owned businesses, when you get a change in genera- tions there are heirs and estate taxes to dealwith. You have the capital that is automatically taken out of the distribution channel and transferred into some other area,”Meyer explains. “Butwhen you have a pub- (more on page 36) March 2009 s AgriMarketing 35