One of the most persistent problems facing today’s independent equipment manufacturers is the continued pressure from the mainline OEMs for their dealers to stock only the products produced by that manufacturer. Many of the major tractor manufacturers believe they fill many – or most of – the needs of the customer with the hope — and intention — of largely eliminating other colored brands from what they incorrectly view as “their dealerships.”

Jim Walker Talks

Retired mainline OEM executive Jim Walker marks history. Shortly after starting his career with John Deere in 1978, Walker recalls the words of then CEO Bill Hewitt 

He remembers Hewitt saying, “We are going to win the battle of the customers' minds by having the best dealer network. We're going to always be fighting for product. We're always going to be putting leading-edge products out there. We are going to have the best dealer network that serves the customer. 

“And so that was kind of the gauntlet, if you will, from Deere of stating they were going to do all the things necessary; that they were going to contribute and reinforce that, but that ‘expect mutual respect and mutual development.’. No doubt, Deere was the first one that said this would be important,” Walker recalls. “I remember going through all those 10 years, the evolution of the dealer network and how everything was dealer focused. Products were certainly important, but it was all dealer focused.”

Deere’s first push in what could be considered purity came on the rural lifestyle side of the business in the 1980s, as the ag industry shifted into a “dramatic downturn,” says Walker. At the time, a lot of Deere dealers were already carrying other brands of lawn equipment, particularly Cub Cadet and Kubota. 

Following his Deere days, Walker worked for Claas, AGCO and Case IH. And as a result, has seen purity from a variety of perspectives. He recounts that, while at Claas, the company made a concerted effort to gain Case IH dealers when the German manufacturer brought its forage harvester to the U.S. These were the very same dealers he then worked with as the Case IH VP of North America

“As OEMs, we like to say we'd like purity, but no one I knew from Deere and AGCO was going to go in there, even Deere, and pound their fist on the table if you didn't offer it as an OEM. 

“And in many cases, we may have offered it but it wasn't as good of a product as what the shortline offered. That gave incentive to the OEMs to improve that product because the only way you displace that shortline is to have a better product.”

While the push for purity by the major lines can be an issue for dealers, it is more troublesome for the shortline manufacturers, some who can suddenly lose territory in competitive markets. FEMA has helped shortlines navigate purity and other dealer issues by bringing its members together. 

Dealer Relations Committee Brings Unified Message

“If we didn't have FEMA to help bring us together as shortline manufacturers in the industry, we'd all be floating on our own aimlessly as to how to deal with getting in front of dealers about dealer purity,” Art’s Way’s Marc McConnell says. “The push to get dealers' attention is really difficult.”

FEMA gives the shortline manufacturers a larger — and louder — voice as were pressured to rationalize brands.

“Being part of FEMA allows us to learn best practices and to collectively bring our influence together to have an impact that we couldn't do as individuals,” McConnell says. 

The Dealer Relations Committee — and its early leaders like Charlie Glass and Vince Tomlonovic — deserve a lot of the credit for giving FEMA members that louder voice and educating them on the issues at hand.

“A lot of the work they did way back in the day has been very critical for members today,” says Craig Harthoorn, FEMA executive vice president. That early committee work includes things like standardizing dealer, rep agreements and distributor agreements — and creating an online portal to access state buyback laws and dealer protection laws, he says. 

“Some of that work, at times, even put us on an equal foothold as the majors,” he says. 

Past President Ben Hellbusch echoes Harthoorn’s sentiment, noting that the late Tomlonovic was among the most influential members of the committee. “He knew what a manufacturer would have to deal with or do or not be able to do in specific scenarios,” he says. 

“Vince kept an eye on it. He made sure that EVP knew about it. If we needed to take a formal position on that, we would. There were times where we declined. There are also times where we would get together with one of the other associations, like AEM and say, ‘Help us understand why you’re pushing this or that.’”

Because AEM represents a different segment of the machinery space, what they may want to happen isn’t always good for the small or mid-sized manufacturers of FEMA, Hellbusch says. “Those laws can be interpreted in 100 different ways. 

“So having somebody, like Vince and the others, paying attention to that stuff, that is one of those things that most manufacturers have absolutely no idea how much value they get from FEMA on that one committee alone — even if they aren’t yet members. FEMA is the scenes paying attention, taking stances when needed, and making tough decisions. And in some cases, spending tens of thousands, if not more, to defend something or to stop something that would've otherwise hurt everybody.”

Purity Efforts Continues 

In a Farm Equipment Industry Q&A on the topic in 2012, Jason Miller, Miller Equipment, Moosomin, Saks., said, “The concept behind dealer purity may be to promote the brand and leverage that strength to color the countryside. OEM’s have proven they cannot master every product category due to market-size, geography, technology and support among others. 

“If competitive shortline products are barred from the lot, they will end up on another dealer’s lot and that wholegoods business is gone forever, nevermind the parts and service. From a free-market perspective, less competition inflates prices, breeds complacency and suffocates innovation. Tell me, how that is good for anyone?”

After Case IH made a push for purity in 2014, Dave Kanicki, retired executive editor of Farm Equipment, “Now, whether or not a company can coerce its dealers to drop other equipment lines is not the question here — because we all know that if the majors want to badly enough, they’ll figure out a way to do it, whether or not it hurts their dealers — I think the bigger question is why.

“This is a stupid question, right? After all, it's obvious why the majors want their dealers to carry only their brand. Stupid or not, the fact of the matter is dealer purity not only hurts their dealers — the people who are their direct connection with their customers — but it also stifles competition, which is the driving force behind innovation.

“As much as the major farm equipment manufacturers want us to believe they are the innovators in this industry, there are very few people who know anything about ag machinery who won’t agree that ‘true’ innovation comes from the shortlines. Without the shortlines, the majors would be stuck copying from each other and then arguing who came up with the idea first.”

Former IH executive and former dealer-principal says today’s dealers are more stout in dealing with zone managers wanting shortlines gone. Deere, he says, was very good at it back in his era. 

The Big 5 continue to make pushes for dealer purity in their pursuit of “share of wallet” for the sign out front, with New Holland making a push for brand purity in 2023 and Kubota putting more emphasis on its own brand in recent years, too. 

Tim Brannon, owner of B&G Equipment in Paris, Tenn., says dealer purity efforts by the majors are alive and well. The “big companies,” he says, want only their product on the lots of what they consider to be “their dealers.”

“The majors want their brand to be promoted as all a customer needs. If they do not build it then you, Mr. Customer, do not need it. This is almost like a war on shortliners’ innovation.”

Brannon shares a story about his daughter who worked for a company that brought new products and services to the ag industry. “This requires time and huge amounts of investment cash,” he says. “They connected innovators with producers and manufacturers with the goal of bringing modern technology into the ag market.”

What Brannon took away from his daughter’s experience was that the major-line manufacturers didn’t welcome the innovators “with open arms. Many innovations were purchased just to be shelved so others could not beat them to the market with this product,” he says. “Many new products were purchased by investment groups and then picked apart for 1 or 2 features, sold to the industry, then scrapped the rest.”

Brannon argues that the fallacy of purity is the idea that customers buy the brand. “Wrong,” he says. “Customers largely buy from the dealer, specifically the salesman they trust. Dealers are forced to forgo many dollars in profits by not carrying popular shortlines that are sellable in the territory. 

“The majors are always fearful of dealers cherry-picking their line and selling only what they choose. So if a dealer does do that, then whose fault is that? The majors price vs. features and quality evidently are not up to snuff or this would not be an issue. Stocking only a single brand masks this issue. It has been our observation that when someone has a major-line, adding too many shortlines is not beneficial as well.”