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In this episode hosts Casey Seymour and Aaron Fintel of Moving Iron LLC sits down with Ben Freidhof, used ag acquisition and remarketing manager with AGCO dealer Ziegler Ag.

Ben shares a “boots on the ground” perspective of what the used equipment market looks like for Ziegler Ag, including how the market has shifted for sending used equipment overseas.

 
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Full Transcript

Kim Schmidt:

Hi, I'm Kim Schmidt, executive editor of Farm Equipment. Welcome to Farm Equipment's Used Equipment Remarketing Roadmaps podcast. In this episode, hosts Casey Seymour and Aaron Fintel of Moving Iron LLC sit down with Ben Friedhof, Used Ag Acquisition and Remarketing Manager with AGCO dealer Ziegler Ag. Let's jump in as Ben provides a boots on the ground update on what's happening in the used equipment market from his territory in Iowa.

Casey Seymour:

We have got a guest on this week, he's from Ziegler Ag, his name is Ben Friedhof. I hope I said that right, Ben, did I butcher your last name?

Ben Friedhof:

You're good.

Casey Seymour:

Right on.

Ben Friedhof:

You're great.

Casey Seymour:

Ben is with Ziegler Ag, like I said, and he is, is your title used equipment manager, Ben, or what's your title there at Ziegler?

Ben Friedhof:

My actual title is Used Ag Acquisition and Remarketing Manager. So I guess on your end, it'd probably be similar to what Aaron does there, but I do all the wholesaling right out of Ziegler as well as manage all of the out of territory sales, so all the tractor house calls, website calls, all that stuff, comes through me or my team.

Casey Seymour:

Yep. Right on. So Ben, talk a little bit about yourself, a little bit of your background, how you got to where you're at today.

Ben Friedhof:

I've been with Ziegler here for about 15 years, coming here after the first year. I started off as a territory salesman covering North Central, Northeast Iowa. I did that for about 13 years before I moved into this role. Prior to that, I was a product manager for another company. I graduated out of Iowa State, out of their AST program, but actually, I've been in the used equipment business, I've been in the auction business since I was 13. I went to auction school when I was 15, still carry my auctioneers license, so that's what all started this roadmap into where I'm at today. But I grew up in Iowa here, in Wisconsin actually, a farm kid, and I moved into the equipment business.

Casey Seymour:

So talk a little bit about getting your auction license when you're 15. You don't hear that very often.

Ben Friedhof:

I just followed Dad around to all the farm sales when I was a kid, thought it was kind of neat, and I had an opportunity to help out a family friend when I was real young and got real pulled into it, decided that was something I want to do. So actually went to auctioneer school, like I said when I was 15. Worked all the way through high school doing auctions here and there, and just something I enjoyed to do and still do to this day. Not near as much as I'd like to, but we still hit a few every now and then.

Casey Seymour:

So the auction market, it's a big part of this business, big part of any equipment business. I don't care if you're selling cars and trucks or semis and tractors and combines, that auction market is a big player. We're seeing some pretty big numbers come out of the auction market right now. Ben, as you take a look at what's going on in the auction marketplace, what are some of the trend lines you're seeing or you're following right now that are helping you stay ahead of the curve a little bit?

Ben Friedhof:

Well, I think the auction world has really changed, especially with the advent of the COVID and the shutdowns and everything. That auction market I'd say used to be, we'd call it our wholesale opportunity, but anymore, especially on your low hour local one owner type stuff, retirement auctions, there are some cases where they're setting the market anymore. They're getting out there and seeing people that, for lack of a better term, aren't coming to the dealer. Don't know really why. But a lot of opportunity there. So we use them as a judge and it's a good roadmap of where things are going and trending. But on occasion I think there's some of that stuff is almost out there, and you get any two guys getting against each other, either in person or online. You put a time date on an auction, and that's what brings some of your top dollar. It's kind of crazy, but it's a great opportunity.

We have a sale every year. We're on our third annual one coming up here, and we've hit pretty much every state in the union, all of Canada, Mexico, parts of South America, Europe. I had some combines go to China last year. So a good opportunity for us to actually use it as a marketing tool as well as a liquidation tool to some extent, and get rid of some iron that either needs to find a new home, or maybe it isn't our brand and something that has a good opportunity to sell and we can get pretty good dollar for it and move it out.

Casey Seymour:

I guess to talk a little bit about what you're seeing on your area right now, I mean obviously inventory is inventory, that's what that looks like, but right now when you're seeing interest rates, situations, we've got just the price of equipment and the premium that we're seeing right there for stuff that's available in inventory. We can talk about that until we're blue in the face. But when you're looking at some of the stuff that we're putting numbers on that's 6, 9, 12 months out before it comes in, how are you looking at that and how are you making those decisions as static as things are, as static as that number is, in a very evolving marketplace, I guess? How are you making those decisions, and what tools are you using to help you do that?

Ben Friedhof:

Well, it's tough. I mean, obviously nobody has a crystal ball, and everybody's got a different opinion of commodity prices and machinery availability and when's this going to change. We're looking at the market today, and depending on the age, a lot of your late model stuff that we are looking at, a guy's got some tax issues probably to take care of, some pretty good farm incomes. A lot of it you're basing it off the new price and trying to work off a per hour cost, taking into effect some price increases, either known or unknown, which right now can sometimes be like throwing a dart at the wall. But you try to do the best you can and steer that ship.

As we get now out, I think we looked at a tractor the other day, spring of '24 is when we're going to see it, it's getting to a point where it's a discussion with a buyer and hey, this is kind of where we sync. But at the end of the day, I think we all would agree it's better for both parties. We put a number on it, kind of shake hands, agree, put some stuff on paper, but we're going to set that final price when it hits the yard.

And I think as a customer as well, over the last two years as you've seen some of the stuff appreciate in value, it's probably better off for them as well to put that number together at that point. And so we're trying to build that rapport with a customer and build that equipment advisor position is what we always called it. We're not just selling you something, we want to help you steer your decision making. I think that's the way you got to go into some of this stuff is it's just better for all parties to finalize it when it gets here.

And we'll hold the stuff as much as we can, but we've never had the position that 12 months down the road things change, a partner leaves the farm operation or whatever, we're not going to hold a guy's feet to the fire, and we'll try to work through about anything if we can.

Casey Seymour:

Right. Yep. I think that timeframe that we're looking at now, same situation, I mean we're looking at putting some of the stuff on there now. It's hard to see where things at.

Now, on the flip side of that, I'm sure you guys are gearing up, you got a lot of people that are probably interested in looking at some various things and year end coming in. The equipment that you have on the lot right now or that you can readily get, what's the pulse you're getting from the producers in the area about end of the year buying?

Ben Friedhof:

I think we'll have pretty good end of the year. I think there's going to be a fairly good demand. It's going to be very specific on the product. I firmly believe the older the combine, the tougher it's going to be. I think we're seeing, I would say anything eight years old for sure is going to be a little bit of a struggle. 10 years old definitely is really getting to be a problem.

We're large in the ag application business. That market is extremely tough, and I don't know what's going to change that. But good quality, low hour tractors, which everybody will tell you is good property, those will be well in demand. We have done pretty well at sourcing some of those. I've bought quite a few tractors, either retiring guys or whatever opportunities that arose out there. We've done quite a bit of that as well. Some lease returns that other dealers couldn't absorb, I picked up.

You're just trying to find inventory anywhere you can, but I'd say it's going to be specific, your tractor horsepowers. Guys are going to continue to update technology on planters. I really see combines, even the newer stuff, guys will update, but at some point I don't think they're going to take some of these big price increases as well as we think they will to where they may end up running one a little bit longer or rebuilding to a larger extent.

And along those lines, and this is something we've tried and we're working through, we've actually started doing some rebuilds on some tractors. So some of those desirable older machines, we've done a full tip to tail rebuild, essentially restored them to brand new, and we're having some pretty good success with those.

Aaron Fintel:

It's almost like you work at a car dealership.

Ben Friedhof:

It's kind of weird. I might have a connection there a little bit, but yeah, that's actually the idea, where it came from. But we just shipped one the other day, it had 12 or 13,000 hours on it when I brought it in out of a scraper application, and when it left it was a brand new 15 year old tractor.

Casey Seymour:

Yeah. And I think that you're going to see that, I think that's going to be a bigger deal. I talked about this whole new segmentation of buying groups and how that looks, and just because the pricing of equipment and where things are falling in, that those groups are being more defined now as to where they fall in there. And there's only certain number of machines that are going to be out there that they can afford to buy. And some of those options might be, you're talking about a whole frame off type overhaul where you're going to all new components, new engines rebuilt. You guys, are you talking rebuilding the engine? Do you put new engines in? And how's that work?

Ben Friedhof:

So basically we strip them down to the frame, and then they're a full remanufactured engine done in our own rebuild center, full remanufactured training done in our rebuild center, and all new wiring harnesses, paint. About the only thing we're saving is the hard parts, the frames, the blocks, the casings. We are redoing the hoods and some of that stuff just because of availability, paint and body work. But yeah, they're essentially turnkey 15 year old tractors. The last one I think that left was a 2007 by serial number.

Casey Seymour:

Yeah. And I think that's going to be a very cool concept when you start looking at it from a customer's perspective. It's nothing new on the construction side. I mean, you hear stores all the time of 50,000 hour scrapers and those kind of things running around out there that have been rebuilt two or three times and that kind of thing.

Ben Friedhof:

Absolutely.

Casey Seymour:

So I think it is going to be a cool thing to watch as this transition because you sit back and you look at where some of this availability of inventory is going to be even after all this supply chain shortage stuff calms down. There's going to be '23 model years are going to be just some... There's going to be some very sparse years to have used equipment out there when you start looking at just the number of machines that are available and what that trade cycle and turnaround cycle looks like. For some of these folks, that might be the best option for them.

Ben Friedhof:

Right. And you start looking at a high wear item, like a combine, for example, or a forage harvester. We've added some technology to those products over the years, but let's be real, a combine is really still a combine. And so if you can put 50, 80 grand worth of sheet metal into something and make it run for another five years or four or whatever, does that make for some sense to a guy? And I think some of those conversations are being had right now, just because availability, like you said, how many, I'm sure you guys have seen it and every brand has, but how many things got slipped and didn't quite make it for harvest or didn't quite make it for spring? Some of that stuff, I think, it's going to be coming to top line.

Kim Schmidt:

We'll get back to the conversation in a minute, but first I wanted to invite you to join us virtually this December 8th and 9th for the Ag Equipment Intelligence Executive Briefing. To learn more and to register, visit agequipmentintelligence.com/executivebriefing. Now back to Casey, Aaron, and Ben.

Casey Seymour:

It's just going to be a different world over the next five years as we look into the future, what does this look like and how these things are going to come together, because the one thing that I don't think we'll have to worry about, I don't want to say ever again, but for a very long time, is an oversupplied used equipment marketplace. I feel like that's because of what we've seen through this supply chain shortage and the number of machines that have been pushed in. They're out of a year, and stuff that just got canceled, and all these different things that came into play.

It's going to take a long time to have a 2012 through 2014 style disaster again when it comes to rebuilding equipment, because I had a conversation with a guy today about this, and I'd love your feedback on this, but the one thing about a 2012, 2013, 2014, that timeframe in there, there were still people that were buying the onesie, twosie new things, and not that guys aren't doing that now, but it's not nearly as prevalent as it was back then, but you can still get a combine for 250 to 300,000 bucks. You know what I mean?

Ben Friedhof:

Right.

Casey Seymour:

So that makes a big difference in how someone looks at their market. Now fast forward and then you're looking at 450 to $550,000 combines, depending on what it is that you're getting. But that's just a different conversation that you're having with folks. And the guy that's still buying the 250, $300,000 combine, $350,000 combine back in '12, '13, '14, he's still buying the 250 or $300,000, $350,000 combine now, but it's used. So, I guess, what's your thoughts on that?

Ben Friedhof:

Well, I think along those lines, well, I think you're exactly right. And I think you're seeing a lot of guys slip from that A buyer, that guy that bought new, to being a B or C. And I see that continuing because of the cost and the ability to absorb those costs across the acres.

I think while it will be a long time before we get into a possible scenario where we were in '12, '13, '14, I think there is still the opportunity or the possibility, or we need to very much watch out for the possibility, of those items, like I said, those 10 year old plus combines sneaking up on us.

Casey Seymour:

Sure.

Aaron Fintel:

Yeah.

Ben Friedhof:

And I think the market's still going to dictate to us what they will buy. And if we're not there to watch them, we're going to get caught a little bit.

I'd say another prime example, maybe not near as prevalent, the draper market industry is huge to the point where an auger head is basically scrap iron. I mean nobody's buying those older, those auger heads. And the customer has told us what they want, but they still want the top dollar from out of the shed. But you're going to get to a point where those just aren't... What are going to do with them?

Casey Seymour:

Yep.

Aaron Fintel:

They're basically direct to export now.

Ben Friedhof:

Exactly. Yep. They're going in a container and leaving the country.

Casey Seymour:

That was one of my next questions I was going to ask. As you look at the way we're structuring our used equipment marketplace right now, there's still a lot of 2012, '13, '14, '15 model stuff out there. I mean, there's still that bulge out there that bulges doesn't-

Ben Friedhof:

Sell it every day.

Casey Seymour:

You know what I mean? It's not going anywhere. It's still there and you're still seeing it come and go. You start looking at some of the stuff like a '16, '17, '18 model something when there was still... Because you think about that production years, those production years in there compared to these production years now, and it's almost, I bet it's double, I don't know this for a fact, but-

Ben Friedhof:

Oh, it's got to be.

Casey Seymour:

It'd be close to double.

Aaron Fintel:

It's got to be more. More.

Casey Seymour:

Of inventory, easily. I mean, you could easily-

Ben Friedhof:

Well, for instance, like you talking about the bulge is still there. In the last two weeks I've sold four 2012 combines. They're still here. I don't know if I've sold any of them maybe three times now, but they're here forever.

Casey Seymour:

Yeah. Ben, when you're looking at that, that used equipment space where there's still available stuff out there, I see two things happen. One is I think the international marketplace is going to continue to grow. I think you're going to continue to see growth in some of these countries. There's a big push around the world now to become more self-reliant and less reliant on other places that have been traditionally strong suppliers of grain and proteins and those kind of things. But as you're looking at that from your perspective, how much do you say, getting into the next couple years, think about it from that perspective, how much is the international marketplace going to play in the way you guys look at business and the way you look at used equipment?

Ben Friedhof:

There's a lot of variables in there. Obviously, Ukraine was a large opportunity for a lot of our product, especially the cloth combine and the big flat track or the two track tractors. That's obviously changed. It's not been completely cut off, but it's definitely changed. So it's something to look at there.

South America, for us, used to buy some, especially application equipment. That market is almost completely shut off, have not found much of anything going south for that application.

China's really come onboard. I was kind of shocked by that. But I think it's going to be more and more, especially of your older stuff, that they're going to... And they're actually moving into some pretty late model stuff as well. But I think it's going to be more and more of a player.

You've got the dollar to worry about a little bit. Obviously, our interest rates here at home, and some of the political stuff going back and forth to control that, that we really don't have any power over and we just kind of got to steer the ship wherever the waves take us. But I think they're continue to be and become more of a player in some of those markets, especially stuff that we're not moving here, that they're just not going anywhere over here so we've got to find somewhere else to go with them.

Aaron Fintel:

Right. Some way, somehow.

Ben Friedhof:

Some way, somehow, yeah.

Casey Seymour:

And that's going to be, even from the international side, that's getting to be a bigger and bigger issue that we see happening because some of the stuff that was that key international buyer spectrum, they're looking for stuff that's two and three years old in some cases.

Ben Friedhof:

They've almost skipped a generation.

Aaron Fintel:

Right. Exactly.

Casey Seymour:

Yeah. And it's throwing a kink into the middle of that. So I guess I've racked my brain about this, and maybe you've got a better answer than I do, Ben, but when I'm looking at some of this stuff, like the '12, '13, '14 model stuff, some of that stuff has got so many hours on it now because it was run for so long before it went through those trade cycles that we would normally see. Some of that stuff is getting to the point where you're starting to see 2000 hour, 2,500 hour combines, 2000 hour combines. I looked at a 50 series combine the other day, I don't remember what I had on it, 5,500 hours or something like that. I mean, just a ton of hours on these things anymore. And as you're starting to look at those kind of things, what do you do with them? Where do they go? And how do you price them? I think we've hit that point in time where some of those machines have become a commodity.

Aaron Fintel:

Eventually my joke becomes reality. What do they weigh?

Ben Friedhof:

Oh, the what's it worth, what's it weigh talk? Yeah, we've that conversation. Will you remove the tires for me?

Aaron Fintel:

Exactly.

Ben Friedhof:

That goes back to, you get to some of those hours, it's the builder market. Can you find a guy that'll tear it down? And that's where I've been out and tasked with is some of those machines you know you're probably not going to sell as a whole unit.

And whether it's the best one you've ever seen backed out of the guy's shop, and it's clean, local one owner, or it's got a billion hours on it with a trainee out of it, the difference in value is minimal. And so, some of our older combines, you're talking '06, '07, some of those older ones, I got a few guys I go right to and see if they're interested off the bat, knowing full well they're probably going for parts. And that's really, that's what they're for. And we've had to have some tough conversations with some customers that, "Hey, you've got your good ATS machine, you need a second bean unit, might as well keep her around because it's not worth what you think it's worth."

Casey Seymour:

Right.

Aaron Fintel:

And that's a great point. With some of these combines, that's going to be pretty damn commonplace. They're just going to hang onto them. It's worth a hell of a lot more as a backup or second, like you said, when it's bean time, run two, and corn of one.

Ben Friedhof:

Yeah. Well, and we've had the conversation as well with some of the parts availability issues. If you're looking at that older combine that's maybe only worth 30 to 50,000 or 60,000, keep it around. It ain't really worth a whole lot. It doesn't owe you much. It's depreciated out. And your right angle gear box goes out of your new one, pull that one out of the shed and wait for the part because it might do three, four weeks before you get it, depending on what horror story you want to believe at that point. There's some things to be said there for those older machines.

Casey Seymour:

Absolutely. Absolutely. Well, Ben, talk a little bit about your auction coming up and how people can get information on that.

Ben Friedhof:

Yep. So we're having our, I'll call it our third annual, I'm kind of using that little plug, but our third annual auction here at Ziegler. It'll be the first full week of December. I believe it's Tuesday. I haven't quite finalized that yet, but it's the first full Tuesday of December. Will be provided by Sullivan Auctioneers, the online only. And basically, I don't want to call it a dispersal sale, but it's the stuff that we want to move on to a new home. It's good used equipment, some combines, some planters. There'll be some application equipment on it. There'll be some competitive colors for us that we'll put on there. So yeah, you can check our website or check Sullivan's. It'll be coming up on there here pretty quick.

Casey Seymour:

Right on, man.

Aaron Fintel:

Cool.

Casey Seymour:

Well, Ben, do you have any final thoughts you want to throw out there before we shut the podcast down?

Ben Friedhof:

Get out there and have fun. Buy often, bid often, and have a safe Fall.

Casey Seymour:

Right on.

Ben Friedhof:

It's a good ride, and it's been fun.

Casey Seymour:

Yeah, definitely. Definitely. Well, if folks want to reach out to you, Ben, what's the best way for them to get ahold of you?

Ben Friedhof:

Best way is actually on my cell phone and I'd give that out, but 641-745-5427. Give me a shout.

Casey Seymour:

Right on. Well, Ben, I appreciate you being on the podcast, man. Aaron, you got any final thoughts?

Aaron Fintel:

I don't. I don't. I'm just a blank slate. Thanks for spending time with us, Ben, and shedding the light on your part of the world and your color, and giving everybody the up to date, so appreciate it.

Casey Seymour:

Right on.

Ben Friedhof:

Thanks for having me on, guys. Appreciate it.

Kim Schmidt:

Thanks to Casey, Aaron, and Ben for sharing their conversation with us. You can keep up on the latest industry news by registering online. To receive our free newsletters, visit www.farm-equipment.com. For Casey as well as our entire staff here at Farm Equipment, I'm Kim Schmidt. Thanks for listening.