[SUBSCRIBE TO THIS PODCAST]

---

Brought to you by:

In this episode of the Farm Equipment podcast is brought to you by Machinery Scope, sat down with George Russell, founding member of the Machinery Advisors Consortium, who we’ve been working with on the annual Big Dealer Report since 2009 to track dealer consolidation.

The Big Dealer Report is the bases of Farm Equipment Dealer 100, which we launched in 2023. As we prepare the annual report, George and I always sit down to discuss what impacted dealer consolidation and what trends are worth watching.

This is an excerpt of our conversation earlier this year as we dug into the latest report data.

               
           

         

               
           

This episode of Farm Equipment Podcast is brought to you by Machinery Scope.

At Machinery Scope, we’re more than a warranty provider—we’re your partner in closing deals, protecting margins, and building long-term customer relationships. Our flexible programs are designed to work with your sales process, whether you're selling new or used equipment, on the lot or online.

We help you stand behind what you sell with fast quotes, prompt claims, and insured coverage that builds buyer confidence. Plus, we pay fairly—retail labor rates, travel time, and MSRP on parts—so you and your customers stay protected without the hassle.

When you work with Machinery Scope, you’re backed by a team that’s been in your shoes—and works like you do.

Podcast Archive

Full Transcript

Hi, I am Kim Schmidt, Executive Editor of Farm Equipment. Welcome to Farm Equipment Podcast, brought to you by Machinery Scope. In this episode, I sat down with George Russell, founding member of the Machinery Advisors Consortium, who we've been working with on the annual Big Dealer Report since 2009 to track dealer consolidation. The Big Dealer Report is the basis of Farm Equipment's Dealer 100 which we launched in 2023. As we prepare the annual report, George and I always sit down to discuss what impacted dealer consolidation and what trends are worth watching. This is an excerpt of our conversation earlier this year as we dug into the latest report data. Let's jump into the conversation now as we talk about how a downturn in the ag economy typically impacts dealer consolidation.

Do you think historically, when we're in a downturn like this, acquisitions, do they go up?

What goes up is those dealers that have prepared themselves for the downturn are seizing opportunities in the downturn to do that. I don't know that it's necessary, but you'd see what happened with Johnson Tractor acquiring two more stores after already going through some acquisitions? Even these Deere acquisitions like Heritage and SN Partners, I don't think that cycle affected them. They were just going to do that anyhow.

But I think that dealers, and same thing with farmers, if you've got your debt-to-equity ratios, you got your absorption well, you find a lot of people, and you publish the numbers on the number of baby boomers that are trying to transition out of their equipment dealerships, and now they're saying, "I'm not going to go through another downturn," I think we're seeing that happening.

Now, to put a number on it, is it more or less, because that was your question? I do think that that is the dynamic that happens, that a downturn does cause people to question what they're doing and tighten things up. But the people that are aggressive and that are going to be big dealers, this is when they'll pull the trigger.

The people who were getting their businesses in good shape for whenever that time came, they might be looking at it like, "Now is the time with what we're facing economically." Then the big dealers who are always going to be big dealers, they're also prepared to make the purchase.

Yeah. Because they've been a client, I've got to be careful what I say, but you saw what happened with Titan Machinery buying Farmers Implement and Irrigation in South Dakota. Very well-run dealership, had already been through a family transition, put themselves in a really good position, and Titan acquired them.

Yeah, that one surprised me, but didn't surprise me I guess. It wasn't like they, as far as from what I could tell, not struggling or anything, so you don't have to say anything too much because they are your client. It was more the right time to do it.

Right. That also brings up the theme about the overlap between ag and CE. You see that with NNS Tractors acquiring some of the Case Construction stores on the West Coast, from Sonsray, who was also in the ag business and has other businesses. But the whole area of light construction particularly, and the synergies with ag dealers, and this extends into the rural lifestylers as well, but if you move away from big ag production, big combines and big tractors, and get into the smaller contractors and farmers that need a wheel loader or a excavator, the high competition there is in light construction.

It's like small tractors, everybody in the world is wanting to come into North America. Now you're seeing those distribution opportunities and overlap between ag and light construction. In some cases, heavy construction too, but that's a whole different mindset to go into with the heavy guys. But that Ag/CE overlap, we think of Kubota as a rural lifestyler company, but they really have a market-leading compact excavator and are expanding their line in that one as well. New Holland Construction's doing the same thing. CNH, as you know, they've taken the construction equipment business and have two brands. They are trying to grow both brands, but particularly New Holland Construction.

Then the other thing that's happening on the Deere side, which I found doing The Big Dealer report for CE, is where are all these Deere dealers coming from? They are ag dealers that are taking on the C and CE compact construction equipment line of Deere, and significantly. Almost every big Deere ag dealer has C and CE somewhere.

Wow, okay. Ones who didn't previously?

Yes.

What's different?

Deere has been pushing that for several years now of having dealers expanding their C and CE line.

Okay. Some of the changes that we saw this year, I know there were some bigs acquiring bigs, but where on the list did it seem to be was the most action when you were looking at it? Some years, the story is a 10-store dealer is acquiring another 10-store dealer, or bigger than that. I guess I'm looking at, was there more movement in that more middle range maybe than higher up?

Well, let's go down the list there. There's a story behind each one. Linder is that Deutz-Fahr deal. Champlain Valley was a big dealer acquiring a big dealer. That was Empire.

Right. But they were at least a small big dealer previously, right? They were at five or something.

That's right. That Mixer Center, I don't know the dynamics behind that, why that joined. Are you familiar with that dealer? They are on the High Plains of Texas and New Mexico in that feedlot area. That's where they specialize in mixers, feed mixers, and they're also a New Holland dealer. That's what they've added some lines apparently to what they had before, which is why they jump. Messicks, you know. Ewald, that's the one, that Lansdowne-Moody. Marshall Machinery, do you know those folks?

I don't.

Earl Marshall, he's big with AED. He's a Northeast regional director. They've grown to seven locations. He is now working on the business, not in the business. The reason I know that is because we're working with them right now as well. I saw him at an AED used equipment thing, but they're a good example of a dealer that is in that challenges of growth, those phases of dealership that we've talked about in the past in the webinars. They're in that range. When you get over about five stores, then you start to have to think about how do I evolve my business to the next phase?

We will get back to my conversation with George Russell in a moment, but first I wanted to thank our sponsor, Machinery Scope. At Machinery Scope, they believe equipment owners and dealers deserve better: better protection, better support, better value. They're a family-owned team that's farmed the land, turned the wrenches, and sold iron, so they get it. Machinery Scope's extended warranty solutions are flexible, valuable, and fast with insured coverage you can count on and service that keeps deals moving. Whether you're protecting margins or equipment, they've got your back. Machinery Scope, raising the bar for people who keep the industry running.

All right, let's get back to my conversation with George. in this part, we'll be discussing the shifts we've seen in some CAT dealers refocusing their business and dropping their ag lines.

All right. AgRevolution, do you know Stacey Anthony and what's going on there?

Yep.

That's related to another theme of the big CAT dealers refocusing, like Ohio Cat dropping Ohio Ag, and then Ziegler and Butler dropping CLAAS. But AgRev, they were in place to be able to take that over. That was another thing with the CLAAS FARMPOINT setting up. That was another thing you can see, the CLAAS FARMPOINT is now a big dealer. I thought they were. Maybe, wait. Oh, I guess they only have Indiana, Kentucky, Iowa, and North Dakota.

Are the FARMPOINT locations really more servicing organizations, or are they sales too?

They start out to continue to service the customer and to try to not lose customers when the changes have been made. It starts out primarily parts and service to existing customers, but when you look at what they're trying to do, they're trying to move into and create them to be sales locations too.

I mean, it's similar to what CLAAS did by setting up their company stores in Canada and Nebraska when the CAT dealer in Nebraska dropped out. They've continued to grow that business by adding stores in Nebraska. It's just CLAAS taking a very pragmatic approach of having complete servicing locations, but having a different model with its FARMPOINT. A lighter load, more mobile service vehicles, more using more modern techniques, not having so much investment in bricks and mortar. That's the way I interpret it.

My question was going to be, there is the intention of sales eventually. If they're just a service operation and there were five of them, are they a big dealer or are they a big something else?

Well, I took a broad view when I included them in there, which is why CLAAS went from 75 to 53 in terms of ranking. Just trying to have a standard rule that if it's owned by one organization with different outlets, they're all a big dealer. Whether it's CLAAS in Western Canada with five stores or Nebraska with five stores, or five points with five stores but scattered across a bunch of states, I just took that rule but it's a different model.

They have 15 stores.

Yeah.

Okay. That makes sense.

But it'd be interesting to talk to the dealer development people at CLAAS to see what synergies they have among the five FARMPOINT locations. I've got to believe that they have one person in charge of all those that are taking best ideas, but I don't know. It'd be worth asking.

All right. WC Tractor is similar in that same Kubota story.

Yeah. WC Tractor, this is an example of a outside money and influence coming into an organization and really helping them grow if you're looking for that type of angle.

Okay. Do you think with Kubota's new restrictions, are WC Tractor and Ewald as big as they can get now?

I couldn't say without looking by state because it's by state. Number of outlets by state is the way their contract is.

Okay. Well, and they're both Texas.

Yeah. As you know, it's huge.

It's a huge state. That's true though. It's like there's more are allowed in Texas versus New Hampshire.

Right. Texas is the number one tractor state in the country and in the continent, because of the smaller tractors but because they're so big.

Yeah, I guess that's true. If you put Texas over the entire country, it's a good chunk of it. All right. Anything this year that was a surprise to you?

Well, I think the one that's most novel is this Linder and Deutz-Fahr because that is a different mindset as a distributor. How familiar are you with EMDA or that distributor organization?

Relatively.

Pat Collins used to be in charge of that. She's passed it on to another dealer. That's also related to EMDA, but also the short line company, FEMA, which I know you guys are doing more. These equipment dealers have other people calling on them other than their majors. These distributors distribute some other things, but also have equipment. That's a different distribution model as a distributor because it's a two-step distribution versus direct distribution as a manufacturer, and it can work. You can see that other parts of the world, it is very frequent to have a distributor be in charge of an entire country. I think that mindset that they're having there is interesting. But there's analogies in North America is my point, is that there are big distributors now that distribute some equipment. But mostly, they're distributing supplies or attachments or short line, not tractors.

Right. On the Heritage Tractor, whether it was a merger or an acquisition, I am not sure if I totally know, but the Martin part of it, that was just their ag business, right? Martin Tractor as a construction dealer still exists. Do you know?

Yeah, I had actually had them in training for an AED program.

Okay. That one I guess I just didn't see coming, but isn't totally surprising. It was interesting that they announced both together. They did it as one move.

Yeah. As you talk about that, Kim, that's also what happened with Four Rivers Equipment who sold their ag business to 21st Century and then focused just on construction.

Thanks to George Russell for taking the time to sit down and dig into the consolidation trends he's seeing. Thank you to all of you for listening and joining us for this episode of the Farm Equipment Podcast. Until next time, I'm Kim Schmidt. Thanks for joining us.