When Bruce Johnson opened Ag Plus Mechanical in Medicine Hat, Alta., back in 1996, it was a one man repair shop. Today the shortline dealership carries 15 lines and has a staff of 30 employees.

“We grew based on need really more than profitability. Our business grew to get the job done,” Johnson says.

While the business was successful as a repair shop, Johnson recognized he wasn’t offering customers a reason to come back beyond just Ag Plus’ reputation. “In just selling labor as a non OEM repair shop, you’re really not building any niche clientele base. You’re not building any salability into your business because there’s no vested reason to come back to your business other than reputation of service,” he says. 

In 2004, Ag Plus began its transition from repair shop to dealership by adding the Landini line of tractors, followed by McCormick in January 2005. By August of that year, the dealership added Bobcat. Vermeer was added to the lineup in 2008. Other shortlines include Mahindra, Kioti, HLA Attachments and Farm King.

Ag Plus Mechanical

Founded: 1996 as a repair shop and took on first shortline in 2004
Location: Medicine Hat, Alta.
Owners: Bruce Johnson and Jeff Gold
Employees: 30
Primary Lines: Versatile, Vermeer, McCormick

Secondary Lines:

Bobcat
HLA Attachments
Landini

Farm King
Kioti
Mahindra

The dealership’s latest addition was Versatile in October 2013. The addition of Versatile took Ag Plus to a new level, Johnson says. “In my opinion, Versatile is the last opportunity in North America for a full line dealership setting. They’ve been an awesome addition for us,” he says. 

Changing Up the Business

Going from a repair shop to a shortline machinery dealership wasn’t without its challenges. Recognizing that his strength was in being in front of the customer, Johnson brought on Jeff Gold as a partner in 2009. Gold has 40% ownership in the dealership and brings more business experience to the company. “I understand the aspects and everything that happens in our business, but he’s really good at it and he enjoys the checks and balances and the profitability, that’s what he’s good at,” Johnson says.

He says the hardest thing to wrap his head around in their growth was the direct expense of adding employees. “How is this person going to change my business? You have to recognize that some of it is not just about what are they going to do from a profitability standpoint, but more importantly how are they going to save you money. What inefficiencies are they going to take away from your business?

Bruce Johnson

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Jeff Gold

“With the multiple manufacturers even from warranty administration to just the natural ebb and flow of paper that runs through the building, when you’ve got 5 or 6 manufacturers, we recognized that we needed more staff and people. That was a tough one to get around, but we’ve got our business fine tuned to the point now where we can see from a profitability stand point exactly where we are and how the addition of any individual inside the building is going to contribute and benefit,” Johnson says.

Small Fish Among Sharks            

Ag Plus Mechanical is the only single store dealership in its trading area. He says one of the most significant changes in the industry over the last 10 years has been the amalgamation of larger dealerships and dealerships becoming more corporate born entities. “I was actually quite concerned for our business footprint because I wasn’t sure what a small, shortline dealership’s viability looked like. You’re kind of the small fish in a big tank of sharks,” he says. “So I really didn’t know what that was going to look like, but we did a really good job of making sure that we had the product we needed to go in the back door not necessarily the front. I’m not saying we have the strength to go in on a six unit combine deal, but we certainly have the strength in service to sell that customer anything he needs without overloading ourselves with trade iron.”

Success in Shortline Machinery is a feature in E-Watch, our bi-weekly e-newsletter. It is brought to you by Versatile.

More from this series

Versatile, celebrating 50 years of 4WD production, is a full-line equipment manufacturer known for building products that are simple, reliable and easy to service and maintain. Versatile is seeking independent-minded dealers capable of selling and servicing equipment for large scale farming operations. If you want to add more horsepower to your bottom line, contact Alan Graff at agraff@versatile-ag.com or (920) 819-9039.

Being the lone single store among large, multi-store dealership groups has been an advantage though. Johnson has found that Ag Plus is able to provide customers with the attention and care that may have been lacking at some of his competitors. “I’m finding that the local customer pulse would rather do business with the single store, the guy who has some ownership in his business. Once these customers do business with an entity that doesn’t look after them, and then they come to you and find someone who does look after them it’s typically from the service shop standpoint where the relationship starts. We’ve gained a lot of new business just based on quality of service for sure,” he says.

Metrics Matter

While Ag Plus Mechanical may be a small operation compared to the other dealerships in the area, Johnson is a sophisticated dealer principal. Every department of the dealership is looked at as a profit center, and nothing is treated as a cost of doing business. “That’s a mistake a lot of the ‘mom and pop’ dealerships made. Their business was all based around their wholegoods and the salability of their product, and they would treat their service department and parts department as a cost of doing business to supplement their wholegoods. We don’t. Everything is a profit center. We run on targets. We run budgets and each department is stand alone and is expected to contribute to the bottom line.”

Bird's-eye view of Ag Plus Mechanical's repair shop.

Johnson says gross margin, budget and cost of doing business are metrics Ag Plus is regularly watching. All employees are aware of the dealership’s goals and the management team regularly communicates status updates. “We sit down with our techs every month. We go over all of the things that matter for profitability in the service department with each tech and give them targets. And we give them the tools to be successful in the department,” Johnson says. “There are no loopholes. We close off all loopholes. Every hour is accounted for, whether it’s billable or not it’s accounted for.” 

Ag Plus also pays close attention to warranty work. He says warranty work should not be a profit center, but it also should not be a cost of doing business. “It should be a wash,” he says. With the amount of electronic components involved in farm machinery today, warranty work is a big part of the business. Johnson says he gets calls from other dealers asking his opinion, and the first thing he asks them is how often they reconcile warranty recovery and what’s their gross margin in their service shop. “If they can’t answer either one of those, they have no idea what their profitability is in their service department, and they’re in trouble. That would tell me that they’re not holding any of their manufacturers accountable for warranty reconciliation rate and things that matter,” he says.

Looking Beyond Challenges

Carrying so many shortline machinery brands creates challenges, particularly when it comes to tooling and training.  “As an example, we’ve got an $11,000 diagnostic tool for McCormick tractors, and we’ve got an $4,000 diagnostic tool for Kioti and they won’t communicate. So it really increases your cost of doing business with multiple lines for sure.

At the end of the day, Johnson says those challenges are worth it. “It’s definitely worth it, but it definitely presents some challenges. You’ve got to really, really be on top of what’s going on in all of your department for sure,” he says.

Success in Shortline Machinery is a regular feature in E-Watch, our bi-weekly e-newsletter. It is brought to you by Versatile.

Versatile, celebrating 50 years of 4WD production, is a full-line equipment manufacturer known for building products that are simple, reliable and easy to service and maintain. Versatile is seeking independent-minded dealers capable of selling and servicing equipment for large scale farming operations. If you want to add more horsepower to your bottom line, contact Alan Graff at agraff@versatile-ag.com or (920) 819-9039.