As traditional distribution channels evolve to meet customer needs, manufacturers of smaller equipment search for new ways to move product to the retail level.

Like the manufacturers of larger, capital-intensive farm machinery, equipment makers producing smaller products, like tractor and skid steer attachments, are also confronting a growing number of hurdles in expanding or, in some cases, even maintaining their distribution channels. The dwindling number of traditional dealers is at the heart of the problem, but other factors are also contributing to the ongoing challenge of moving product to the retail level.

Worksaver Inc. is one such manufacturer that is taking a long, hard look at how it distributes its products. It manufactures nearly 400 different pieces of equipment for agricultural, lawn and garden, and commercial-industrial use. These include attachments for 3-point applications, front end loaders and skid steers that are marketed under the Worksaver brand. The company is also a contract manufacturer of similar equipment for other manufacturers.

CEO Tom Burenga says that, in addition to being heavily diversified in the products the company produces, Worksaver is also greatly diversified in how it markets its product line.

He says the company isn’t confronted by the “brand purity” push from the full-line manufacturers that is pressuring dealers to not carry many shortline products that their major suppliers consider competitive. But like most shortliners, Worksaver is heavily impacted by the ongoing consolidation in the ranks of traditional equipment dealers as well as the changing dynamics of the industry itself.

“Everything we build is of a smaller size and it’s not something many of the majors make,” says Burenga.

Distribution Channels

Most of the products that Worksaver produces are handled through regional distributors who make them available to local dealers. While Burenga says it will be difficult to move away from this model, he sees changes ahead for this traditional supply outlet.

“I’ve been here 35 years and I’ve been dealing with distributors for 35 years,” he says. “I don’t see all distributors going away, but I see some of them disappearing. There are a few out there who are very aggressive and innovative and they’re going to continue to be around. At the same time, there are others who are still doing business the same way they did 30 years ago and I would say the odds of them surviving a whole lot longer is probably pretty slim.”

Worksaver currently only goes direct-to-dealer in two states, Iowa and Illinois. To do this in other states, says Burenga, will inevitably create problems with current distributors. “That could create even more problems than we would realize in benefits.”

Besides, today’s farm equipment dealers aren’t nearly as plentiful or willing to take on new lines as they once were.

Burenga acknowledges that working with the mega-dealerships, formed through the escalating merger and acquisition trend over the past decade, can be difficult to work with. If they’re John Deere dealers, they already have the Frontier line of attachments that the company introduced several years ago, and which Worksaver produces some under contract with Deere.

Many Kubota dealers also have access to similar products that Worksaver manufactures through their partnership with Land Pride.

Farm Store Channels

It would seem that Worksaver-type products would be a good fit for national farm store chains like Tractor Supply and Rural King. In fact, for years these types of outlets served as a prime distribution avenue for the company. But, like many other channels, this one has become increasingly competitive and less profitable in recent years.

Burenga knows the Tractor Supply organization well, having run its manufacturing operations for 10 years prior to joining Worksaver in 1980. Of course, that was when all of U.S. agriculture was in its worst shape since the Great Depression. He says in the early ‘80s it seemed like many in farming were going bankrupt and dealers and distributors weren’t in the mood to listen to him or anyone else trying to sell them new products. But Burenga and Worksaver persisted by expanding its offerings to the farm store market.

“It grew and there was a time that the farm store market represented 50% of our sales,” he says.

Then, about 5 years ago, three other manufacturers entered the market and began building equipment specifically for the farm stores. “Of course, all they did was drive prices down. What little profit margin that existed was pretty well wiped out. One of them has already gone away and another decided to no longer build 3-point equipment. However, another company bought thee one out. So being a manufacturer and steering your whole market toward the farm stores is very, very competitive,” Burenga says. Worksaver has reduced its marketing to the farm store market considerably in the last few years.

New Directions?

Worksaver has since expanded its line to include light industrial products and attachments for skid steers and other construction-type equipment. But the distribution issue remains difficult.

The company has also tried retail catalog and Internet as avenues for distribution. “We’re not doing a lot with these, but they represent more diversification for the company. When you add all of it together, it helps.”

Burenga says he’s seen some manufacturers turn to auction yards. “We haven’t done this, but some companies haul truckloads of a variety of products, like landscape rakes and other equipment, not just one product, to the auction yard. Then they sit for a couple months and go through a number of different auctions until it’s all sold. It’s just another avenue to move product.”

He says Worksaver has looked at this channel. “When the economy is bad, you look at everything.”

Another possibility Burenga has seen are company owned distributorships. “Again this is not something we have done, but I know a couple of other manufacturers who are trying it. What they did was sign agreements with other manufacturers and they became distributors for a 2, 3 or 4 state area. So it diversified their sales efforts. They had a warehouse and sold their own products along with products from other manufacturers that they purchased and distribute to the dealers within that territory. So that’s another possibility.”

While Burenga says Worksaver will continue to explore additional distribution channels, what they and other shortline equipment manufacturers need to do is work on their own systems. “The way we see the future is shortliners need to reorganize how we do a lot of things. Even little things, like price sheets and what we have on the Internet to make it much easier for the dealers to have access to the information they need and to buy from us. We have made some of those changes, but we’ve got more to do.”