The John Deere strategy is to market the purchase of a classic green John Deere tractor along with matched Frontier implements as "green on green." But Horrell says it's not quite as simple as painting the equipment green to match the tractor.
"This is just one aspect of it. Anyone can paint anything John Deere green. Land Pride was doing this long before it partnered with Kubota," says Horrell. "You can order Land Pride products in John Deere green or any other color.
"You're right, Frontier green is the exact same color as John Deere green. The message to dealers is we're trying to make it simpler to deal with us as a supplier."
He adds, "What we've also done is changed the way a lot of shortline manufacturers are looking at the business. We think this is a positive thing for the industry and for the dealers.
"We're not trying to corner the market. This industry has been very fractured for a long time and we needed a more consistent business model. By taking some complexity out of the dealer model and putting it on the supply side, we think that customers will also benefit as the dealers will have more time to focus on a better retail experience for the customer."
A Subtle Difference
In most cases, the advantage of two manufacturers teaming up is apparent. But because the Land Pride and Kubota alliance is a marketing agreement vs. a manufacturing deal, the benefits of such partnerships aren't necessarily as evident, and inevitably lead to speculation.
The way Greg Beaver of Houston County Equipment, Crockett, Texas, sees it, the success of this alliance "is hard to predict."
Like many other dealers and industry watchers, Beaver wonders what Kubota has to gain in their marketing partnership with Land Pride.
"I'm curious about Kubota's arrangement with Land Pride," he says. "It's obvious how Land Pride will benefit from the exposure, but what's less clear is Kubota's advantage, unless they're planning a buyout."
Another question is how Land Pride is compensating Kubota. Land Pride has not commented on the arrangement.
Beaver speculates that, based on the John Deere-Woods' relationship through the Frontier brand, "it's possible that Kubota would look to acquire Land Pride at some point and establish a similar model. It appears Deere has had some success with the Frontier strategy, so maybe long-term, this will be a good move for Kubota. In the shorter term, though, I see it as creating unnecessary stress on dealers who have other shortlines that they do well with."
Beaver is one who carries a competing shortline brand. Though it remains unclear how his supplier will counter the Land Pride-Kubota arrangement, he says he knows what he'd like to see.
"As a dedicated Rhino dealer, it will be interesting to see how they respond. What I'd like to see is for Rhino come in with a buy-down program in which they would credit the dealer for whatever amount it costs to buy a deal down. In this way, I could continue to sell Rhino and do it on a level playing field with dealers who sell Land Pride."
Age of Alliances
What many farm equipment dealers see is that the John Deere-Frontier and Land Pride-Kubota arrangements are setting the stage for an "age of alliances," as one shortline manufacturer calls it. Views on where it will all ultimately lead are mixed, but most dealers see the trend toward manufacturer partnerships as being significant and could have a profound effect on their businesses and the distribution of farm equipment in general.
At least on paper, such partnerships would appear to be a win-win situation for the manufacturers involved. But the unknown, and much debated element in this marketing alliance equation, is what benefit such relationships bring to the frontline retailer and buying customer?
Already offering both equipment brands, Joe Hines of Hines Equipment, Altoona, Pa., says he can see how arrangements like this might work well for some dealers and not so well for others.
"Being a dealer for both brands makes me believe this will succeed," he says. "This alliance makes it easier for a customer to purchase attachments and finance them along with the tractor at promotional rates.
"As we've seen in the past with other mergers and buy-outs, there will be winners and losers. It will be hard for a Land Pride dealer not handling Kubota, especially if he is surrounded by Kubota dealers, which I'm sure he is. This would be my concern for other alliances. The next one that comes along may hurt us if we're only carrying one of the two brands involved."
Looking down the road, Hines says he expects to see more alliances between manufacturers. "If it works with this one, they all will try it."
James Fiser, Fiser Truck & Tractor, Alexander, Ark., also handles both lines and finds himself on the winning side of this equation. "The only real change for us is we can now offer Land Pride with a Kubota for the Kubota finance rates," says Fiser.
Jerry Owens, Owens Implement & Supply Co. of McCook, Neb., believes this concept is win-win for everyone involved. "For Kubota dealers, it gives them a quality line to sell, and it looks like a good fit for the small tractor buyer or weekend ranchette operator. It should also give Land Pride good exposure to sell its line with a well-known tractor line. Maybe Kubota will export Land Pride products to Japan," Owens says.
"Generally, I think it will help the retail businesses that cater to the small operator who is shunned by the 'bigs' in ag equipment."
Caught in the Crossfire
Taylor, the Wisconsin John Deere and Land Pride dealer, is feeling both the good and bad side effects of this "age of alliances." He says his dealerships are caught in the crossfire as battle lines are drawn.
On the positive side, Taylor says, "Frontier has been good for us. They offer quality products that are ordered through an 'e' system at very competitive prices. Likewise, I believe Land Pride will probably be good for Kubota dealers."
On the other hand, he adds, "We were a Land Pride dealer prior to taking on Frontier and have sold many, many Land Pride products over the years. Now our customers will go to the Kubota dealers for support."
In all likelihood, he explains, this will lead to an inability to maintain the order quantities that each manufacturer demands in order to keep his stocking dealer status.
"We won't have access to some brands so it limits our revenue potential," says Taylor. "It will make some competitive dealers stronger as they now have a more complete line to offer. Freight charges for all shortline equipment are an issue."
Like most other dealers caught up in the developing alliance battles, Taylor also sees more of these partnerships evolving, especially on a manufacturer's lower-margin products. "This type of marketing comes with less overhead," he says. "Normally a manufacturer's low-margin items are very good margin items for dealers like us."
On the other hand, Jim Bishop, Flint New Holland Inc., Burton, Mich., doesn't see any long-term advantages. In fact, he expects to see increased competition and a shrinking sales territory.
"This alliance," says Bishop, "should increase our Land Pride sales, but it's not likely to increase our overall sales since another shortline will probably be pushed out.
"My concern is that local area Kubota dealers that were not Land Pride dealers will start carrying the line. Originally, Land Pride attempted to give dealers some reasonable trade area. This is not the case with the new agreement. If other brands join in, it will also change the relationship of trade areas."
Bishop believes that if the recent venture works out, other manufacturers will also jump on the alliance bandwagon. "I think they will be watching Land Pride's sales very closely," he says.
Some dealers, like Leo Johnson of Johnson Tractor, say he'll let the market sort things out. With two store locations in Janesville, Wis., and Rochelle, Ill., Johnson is taking a "wait-and-see" approach.
"We sell Kubota at both locations, he says. "At one store, we have been selling Land Pride for 20 years. The other store has a loyal Woods customer base and is located about 15 miles from a major Woods factory in Oregon, Ill. Our position is to continue business as we have done in the past and see how our customers react."
Only the Beginning
For most dealers, the manufacturing and marketing alliances of John Deere-Frontier and Land Pride-Kubota are only the initial manifestations of what's ahead in the farm equipment business. Most retailers say they understand why it may be necessary for shortline manufacturers to hook up with other equipment producers — even the majors — in order to increase sales volumes and maintain their distribution channels. That's not to say they all like it, and different dealers see different consequences as a result of this trend.
If everything fell into place with such alliances, Greg Simpson, Simpson Farm Enterprises, Ransom, Kan., says everyone would be better off, including the fewer dealers that are left. "A tractor maker combining with an accessory manufacturer seems to be a natural fit. With this trend there will be fewer retailer-dealers, but perhaps less cut-throat pricing. The existing and more widely spread dealer network may make better margins."
Craig Schomaker, Colorado Equipment of Lamar, Colo., sees these partnerships as a natural progression of where the business is going. "Each of these companies have their strengths and are recognized as a strong player in their individual market. Joining forces allows each to focus all their assets on what they do best and still expand their businesses," he says.
At the same time, such ventures may limit dealer options and industry innovation, he adds, as some of the smaller manufacturers go by the wayside. "Who knows what one of those companies that will probably disappear would have come up with?"
Ian Burnbury of Avenue Machinery, Sumas, Wash., likes the partnership. It allies quality tractors with quality implements, but without all the challenges of ownership. But he adds, "We dealers still need the latitude in selecting product lines based on local markets and competition."
He, too, believes the stage is being set for future manufacturer hook-ups. "There will be more alliances so that companies can focus on what they do well, instead of trying to be all things to all people, and doing some of them poorly."
Increased Inline Competition
What concerns dealers most about the trend is the increased inline competition that often results when two supplier networks overlap in the same sales territory. According to Jeff Suchomski, Suchomski Equipment, Pinckneyville, Ill., this jeopardizes the dealers that sell only one of the lines. "One will probably be forced to give up the contract or it creates an unfair advantage one way or another."
This is the biggest downside when an implement supplier ties up with a tractor maker, says Eric Schnelle, S&H Farm Supply, Lockwood, Mo. "Everyone knows that inline competition is your worst competition."
Schnelle also sees a downside for the manufacturers. "From what I've seen from other alliances like this is that in the long run, the manufacturer is the ultimate loser because its existing dealer network for the product gets frustrated with the inline competition and sells less or switches to another line. Ultimately, this leaves the supplier with a weaker dealer network," Schelle says.
While Ron Waldschmidt, A.C. McCartney, Wataga, Ill., sees the upside for manufacturers, he also sees the dealer coming up on the short end. But an even broader issue in these alliances is both dealer and customer confusion.
"This agreement looks like it might benefit the suppliers on both sides but I am not sure how much the dealers will get out of it. It will give them a finance option to marry lines on a common contract but we are still dealing with two suppliers.
"We have been a Woods dealer for years and plan to continue that relationship as we have a large customer base. We also have a strong Kubota business.
"It appears that this model gives both sides some consideration in that neither loses identity nor do they have to come up with cash to acquire the other," says Waldschmidt.
"These alliances will certainly cause some confusion among dealers since overlap among dealers in a close area usually results in compromised margins and some confusion by customers.
"I can see some manufacturers using this model to address the fact that the industry is saturated in some product lines. It looks like the poor man's way to grow business without spending much. But, again, I see few benefits to the dealer's bottom line and growing confusion among customers as they struggle to understand the changes," adds Waldschmidt.
Certain Markets Will Benefit
Some dealers feel the alliances between manufacturers will be more predominant in certain markets and on a limited basis.
These partnerships will work best with shortline tractor suppliers, according to Schnelle of S&H Farm Supply. But, he adds, "With the market being soft and the vicious competition between the small tractor manufacturers we're seeing these days, I would say that there won't be very many tractor companies left that need this type of alliance."
Mike Meth of Colorado Equipment, Greeley, Colo., doesn't see the majors getting deeply involved in alliances with other suppliers, especially in equipment for their professional farm customers. He does see the rural lifestyle market as ripe for the picking for such deals. In these types of markets, he says, it makes sense as it offers the specialty manufacturers additional exposure.
"These alliances can be good for the retailer as well as the end-user," says Meth. "To go into a dealership and get all your needs filled in one spot is a convenience for the customer and should bring more of their business back into your dealership.
"We will see more and more of this happening in the lifestyler market. The trend has been embraced and is here to stay. It will help sustain some dealers through the tough market cycles," says Meth.
A Longer-Term Trend?
Some equipment retailers say that amid the shuffling that's going on with manufacturers these days, they're spotting a longer-term trend in how traditional shortline equipment will be produced and distributed in the future.
Some foresee an overall reduction in shortline suppliers, thus diminished competition among the implement makers as they increasingly become the suppliers to major, full-line equipment makers.
Jim Bishop of Flint New Holland believes this is the main reason for the Kubota-Land Pride alliance concept. "Most of the major manufacturers, Kubota and New Holland for example, have never figured out how to build and supply a complete line of competitively priced attachments to complement their tractors. This [tying up with Land Pride] was a simple way for Kubota to accomplish this," says Bishop.
"Customers view Kubota tractors as high-quality equipment and most likely, this view will be carried over to the attachments."
Ross Morgan of H&R Agripower, Hopkinsville, Ky., also sees his major suppliers — Kubota, New Holland and Case IH — following the path blazed by John Deere-Frontier and widened by Kubota-Land Pride.
"Manufacturing technology for producing implements is usually low-skill, low-tech and labor intensive vs. the technology used to manufacture engines, drivetrains and hydraulic systems," says Morgan. "There is a strong move by the tractor manufacturers to outsource most of their low-tech products because, as it's been demonstrated in the automotive industry, outsourcing appears to have a positive impact on profitability."
Morgan believes the movement in this direction by the other majors could have dire implications for the shortline industry. "If this proves to be a superior marketing model," he says, "others will be forced to adapt. It could reduce the number of retail outlets available to the shortline implement manufacturers."
Pointing to the number of retagged products Hesston makes for other equipment suppliers, Jerry Owens of Owens Implement & Supply also believes the move toward more manufacturing alliances will continue and will ultimately force counter moves by the shortlines. "Yes, I think there will be additional alliances because it's obvious that the few major suppliers left want only mega-dealers that will display and sell the majors lines only.
"It looks to me like the 'small's' will need to band together and create a 'heavy hardware store' where smaller customers can buy small tractors, maybe a horse tank and 'weekend' equipment to attach to their small tractor."
The Question: What If They Don't Follow?
Should dealers be concerned if the "alliance models" demonstrated by John Deere-Frontier and Kubota-Land Pride are embraced by other manufacturers?
"The better question might be, what would happen if they don't?" says David Meissner of Southwest Implement, Oberlin, Kan. "Chances are, their market share will suffer because of the limited product line they offer. Cooperation between companies will only serve to make each stronger as one complements the other.
"If the smaller manufacturers can't afford to expand product lines or keep up with market trends, then an alliance with other companies is the next best avenue."
Meissner's view of manufacturer alliance seems to be the general consensus of the dealers that Farm Equipment surveyed. Ag equipment retailers see such partnerships as inevitable — if not a move in the right direction.
"These types of alliances will create more structure and consolidation with the shortline manufacturers, which is similar to what we've seen with our major manufacturers," says Brion Torgerson, Torgerson's LLC of Great Falls, Mont.
This being the case, he suggests that dealers "immediately hook up with a shortline that you deem important to your long-term success."
Likewise, Scott Benko, Indy Tractor, Mooresville, Ind., sees manufacturing partnerships becoming increasingly important to the shortlines as a means of survival.
"I see this in the future of many companies," he says. "It allows them to enter other areas of need without the investment of doing it themselves. As things become more specialized and some traditional equipment needs disappear, it will be the only way for some companies, especially the smaller ones, to survive."
Pragmatically, Jeff Suchomski, a third-generation equipment dealer, says he can see more manufacturers seeking additional alliances in the years ahead.
"Why develop or purchase a line to fill a need when an alliance would work? Typically, the smaller companies are trying to gear up to be more like the majors anyway; pushing for more and more volume and larger preseason orders," he says.
And if it works as it should, Suchomski says, it should be good for everyone involved. But there is an "if" involved.
"If an alliance helps dealers avoid overstocking product to meet the supplier's sales goals, this would be a great thing for the dealer and manufacturer. We could increase overall volume and decrease the pressure on dealers to order more and more."