Dike, Iowa Five Years Later...
Titan Machinery credits quality employees and sound business practices as the foundation for a dealership turnaround.
Dave Kanicki, Executive Editor
After more than 20 years selling ag chemicals, Troy Price was excited when he was offered a job selling farm machinery.
On December 14, 2004, Price started his new job with Walterman Implement in Dike, Iowa. "It was near my home and I was ready for a career change," he says. Ten months later his new career had turned into a nightmare. "I knew very little about the company except it wasn't far from my home. Obviously I didn't know what I was getting into. I should have done more research."
On October 25, 2005, the courts forced Walterman Implement into involuntary Chapter 7 bankruptcy claiming misappropriation of funds and unpaid debt totaling $22 million. At that time, Walterman Implement was one of Case IH's biggest dealers in Iowa and reportedly its largest retailer of combines in North America.
CNH Capital could not offer comment for this story due to ongoing litigation, but Case IH's largest dealership group, Titan Machinery, provided insight on how they turned around a dealership that had gotten itself into big trouble.
New to the equipment business, Price, who is now store manager of Titan Machinery's Grundy Center, Iowa, location, said he didn't pick up that anything was wrong.
When a headhunter contacted Price about a sales job with Walterman Implement, he says he interviewed with another person from the store and never spoke with the owner before accepting the job.
Price was responsible for outside sales of 3- and 4-year old combines for the roll program in a large part of northern Missouri and southern Minnesota. As a result, he spent little time in the office.
Regarding the roll program, Price says, "I was sold on the concept. It was easy to sell. For about $10 an acre, a farmer could own a combine. The cost was fixed. The farmer knew what his interest costs would be, and that it would be fully reconditioned with a 100% warranty."
In retrospect, he adds, "Of course, I didn't know the whole picture."
After handling many of the customer concerns about the status of their equipment during the Dike dealership ordeal, Troy Price was named store manager of Titan Machinery's new store location in Grundy Center, Iowa.
It Hit the Fan
Shortly before the courts locked the dealership doors, Price says things started to unravel for Walterman Implement. "A colleague told me I needed to get out of there," he says.
"After the dealership was locked down, employees started leaving, rumors were churning and there was an eerie feeling I'll never forget."
No one who was left at the dealership knew what had happened or what was going to happen. Price says he called some people he knew at Case IH and CNH Capital to ask them what he should do. "I asked them if I should be looking around. If nothing else, I wanted to tie up the loose ends, then I could start looking. There was no word of Titan or anything at that point, just a lot of uncertainty."
Within days he and the others heard from Titan Machinery CEO David Meyer, and President, Peter Christianson, telling them to hang on.
Meyer says he had caught wind of something going on in Iowa and reached out to Case IH. "I told them if there was anything Titan could do to help, we'd be happy to." Case IH hired Titan as its agent to operate the dealership as the farm equipment maker sorted through the financial and legal maze of Walterman Implement.
Titan Machinery had other stores in Iowa, including one not too far away in Waverly. The company made it known it would be interested in owning a dealership in that area when the dust settled. Getting a Case IH dealership re-established to replace the Dike location wasn't going to be easy in light of the "negative goodwill" that it needed to overcome, and the fact that they had to do it in John Deere's back yard, just 30 miles from the company's manufacturing base in Waterloo, Iowa.
Open for Business
As quickly as the dealership doors had closed, Titan opened them back up and commenced operations. Immediately, Meyer and Christianson began separately interviewing many of the Walterman Implement employees still at the dealership.
"We were concerned about the customers and the employees. Case IH hired us to finalize any open customer transactions, including the servicing and delivery of equipment. There was a lot of new and used equipment that had been committed and paid for," Meyer says. What he discovered was the dealership was not doing a lot of business locally, but had equipment spread throughout a multi-state area.
Within a couple of days, most of the employees were on the Titan payroll, with benefits and the much-needed security of having a job. "These were talented people with solid values," says Meyer. "It was actually pretty emotional. Peter and I could feel their gratitude."
In the meantime, Case IH and CNH Capital had teams in the field visiting with farmers who had purchased combines from the previous dealer. "They went out and gave the farmers involved options," Price says. "But customers would call us and ask what they should I do. 'Should I take this offer?' We did a lot of hand holding and listening. For a lot of them, that's all they wanted; someone to talk to who they trusted."
While some employees avoided answering the telephone for fear it was an irate customer, Price had little choice. He says that many of his conversations with the farmers were difficult. "I'm sure when the announcement was made and the letters went out, they had to be Frightened," he says.
As the dust settled with the customers, Titan still had the dilemma of moving between 60 and 70 used combines. Being part of the Titan network proved to be a huge advantage in retailing the remaining combines.
Re-centering the Dealership
When Case IH gave Titan Machinery the contract for that area, the decision was made to build a new facility, but it wouldn't be in Dike. Ultimately, Grundy Center, Iowa, was chosen as the new location. Several considerations came into play in deciding to move the dealership out of its former home.
Price believes at least part of the decision to build the new facility in Grundy
Grundy Center farmer, Heath Meyers, in front of his newly purchased Case IH tractor, says with Titan Machinery in town he has a choice of equipment.
Center was to get away from the past. But several other factors played a role, as well.
The building complex itself, which Meyer called "dysfunctional," was far too large - estimated to be more than around 100,000-square feet of buildings.
"It didn't really fit the operation," Meyer says. "It was over-built and not conducive to our facility model that stresses efficient customer and employee flow, communications and the look and feel of a traditional dealership."
Also, the location was less than ideal with no freeway exposure. Today, that facility houses a sporting goods manufacturing operation.
At about the same time, Titan acquired Hauser Implement in Whitten, Iowa. Grundy Center was almost equidistant between the Dike and Whitten customer bases.
"Grundy Center is a county seat town with a John Deere dealeship, and where the banks, courthouse and government offices are located. It receives a lot of farmer traffic, and provided separation from our Waverly market. So, from a customer demographic, we thought it was the right place to be," says Meyer.
The new 25,000-square foot facility that was built incorporates all of the features that Titan has found to make its newest facilities almost a community center for the area.
While some concern remained about putting the dealership in Grundy Center in that it would be farther away from the Dike and Whitten customer bases, Price says the people he was able to blend from the two dealerships, 13 from Dike and 6 from Whitten, proved to be a blessing. Today, the dealership employs 25 and is one of the bigger employers in Grundy Center.
It also helped that Gary Hauser, the former dealer-principal of the Whitten store, agreed to stay on as he believed in the Titan model and brought goodwill and maintained the connection to the Whitten market. Also, Price made the Whitten service manager John Katzer a parts and service support person and put him on the road to keep contact with the people in the Whitten area.
"If I look back at something that was strategic and worked better than we had imagined, it was putting Katzer in place to keep in touch with our Whitten customers. More than one person told me that it wouldn't work and there was no way I could justify that position, but I'll tell you it's paying us back tenfold," Price says.
Titan's Grundy Center facility has an expo room (r) and a training center (l). To build community relations, the dealership makes both rooms available for local events at no charge. From 4H to FFA gatherings, there are few evenings when there isn't an event being held at the store.
A Good Neighbor
If the leadership of Titan Machinery believes in anything, it's that employees need to be involved in their communities. This was particularly true in the case of its Grundy Center store, because it still had what happened in Dike to contend with.
So, before the new dealership ever made a dime, it made a significant contribution to help build a water park that the town was planning. "We weren't even close to profitability at that time," Price says. "But we knew we had to reach out to local businesses and the community, and we haven't slowed down from there."
Besides the standard amenities of most new dealership buildings, the new Titan facility also has an expo room and training center. The exposition room is big enough to display several pieces of equipment, including the biggest machines the dealership has to offer. Especially on bad weather days, Titan salesmen can bring new and used equipment into the expo area for customers to look over.
At night, both the training center, a classroom-like room that can seat 40 or more people, and the expo area are available to groups in the community for meetings and other activities.
Whether it's the 4H, FFA or other community gatherings, the facility is available at no charge. "We only ask that they clean up after themselves," says Price. "There are very few evenings when it's not being utilized by someone locally."
But perhaps it was how the new dealership introduced itself to Grundy Center in August 2007 that was the real eye opener. The dealership invited 36 local residents to help move the equipment the nearly 20 miles from Dike to Grundy Center. One of the local newspapers described it as a "mile-long caravan of red against a backdrop of green fields that slowly made its way southwest through Grundy County. Sheriff's deputies blocked roads for the parade to pass safely at 16 mph."
A barbecue at the new dealership followed the equipment parade and everyone was invited.
Building Customer Trust
Price was named store manager at Grundy Center when the new building opened. He says after clearing out the used inventory and moving into the new facility, it was clear they needed to make "personal" customer contact.
He hired salesmen "to call on those local people who have never seen the red guy out on their farm and let them know we were in business and wanted their business," Price explains."
And for good reason. When Titan opened the new store, he estimates its market share for the local trade area was in single digits. Being located in "Deere's backyard" was making his job of building market share doubly difficult, but they've made big progress. The new store has not only experienced consecutive years of profitability, it has also achieved a market share that rivals some of Titan's best performing locations.
At least part of that progress has come by converting customers who previously bought equipment that wasn't red. One example is Heath Meyers, a young corn and soybean grower in the area. Up until 10 years ago, he and his family were exclusively Allis Chalmers equipment buyers. But in the past several years they've purchased farm machinery based on the "best warranty, best quality and best deal."
Since Titan Machinery has moved into the area, Meyers says he's changing over to a lot of red equipment. "We still run green planters, but just having them in Grundy Center has been awful nice. I drive by them every time I go from town to my house, and what we've done with them so far has been really positive."
He says it would pretty tough at this point to get him to start working with another dealer other than Titan. But he admits that some friends who got caught up in the Dike ordeal are still pretty bitter about it.
He says he's not sure if this will be enough to prevent them from doing business with the new Titan dealership. "I don't think if the dealership had moved into the old building, that it would have worked out as well. Moving to Grundy was a good idea because it separated them from that whole thing."
Alan Karkosh and Ted Hamer are partners in their joint farming operation. Prior to buying a red combine last year, Karkosh pretty much stuck with green equipment. Hamer, on the other hand, had been in the combine-roll program for 16 years. Karkosh says he's working with Titan Machinery because he believes people inside the dealership in Grundy Center are looking out for his best interest.
When it comes to equipment dealers, he gave Titan a chance because he got to know and trust the people there. "We want to work with good people who will meet our needs and do the right things, and from our limited experience with Titan, I would say so far they're doing that and it looks like they're in the game to meet our needs," says Karkosh.
Growers Alan Karkosh (l) and Ted Hamer say that the relationship with their equipment dealer far outweighs loyalty to the equipment brand.
When the Dust Settled
For Hamer, the decision to go back to red equipment was a difficult choice, at best. He had been in the Walterman Implement combine-roll program since 1993 and admits, "it worked." He says that until the dealership closed, they had lived up to all of its promises.
He found himself in the midst of the Walterman situation and ended up in Racine, Wis., with some other farmers and an attorney who were planning to sue Case IH. Hamer says that when Case IH and CNH Capital put a deal on the table, the farmers eventually accepted it rather than getting involved in a long, drawnout court battle.
"It was really hard for me to come back to red, but dealing with Troy Price and Marvin Freeseman at Titan has been a good experience. We feel like we've got a good relationship and feel comfortable with them."
Has the dust settled on the whole Walterman dilemma? "Yeah, I would say so," Hamer offers. "It's like my partner Alan Karkosh says, 'We've learned that relationships are more important than the name at the top of the marquee.' We don't care what that name is as long as we've got people inside that we trust." FE