The one thing Deere Did Right - this comment shared on the Barn Talk podcast about the Deere dealer's numbers being the reason for their success is correct. The supporting statements are mostly incorrect.
First, no company has a department for pushing out good dealers. Look at AGCO / Massey Ferguson/ Allis-Chalmers for example — they even have 2 good dealers with locations in the same town. Good dealers are a precious commodity. Secondly, there are strong state laws that protect dealers and their contracts. Thirdly, it would have just been against the business plan of all the manufacturers.
Another issue with this statement is that research will prove Deere probably lost as many dealers as any, they had more to lose while leaving room for those left to prosper.
Forcing out dealers is a fact, but, the reason for this is dealers did not perform to required minimum sales, standards OR the biggy, maintain the necessary financial health and finances to secure the requirements for a personal guarantee for parts and floorplans. Would a farmer sell and finance one of his tractors to another farmer in another state who had no money or land but did have good intentions for paying for the tractor ? We think not.
Another factor is dealers did not keep the contract current with succession plans. Many dealerships had the dad or grandad as the personal guarantor and the company let it slide as the kids took over. When the patriarch passed, the contract was voided and the ones running the business did not have the
financials to sustain the level of business required. Also, we know of 2 dealers who were out-performing the market, were not in Deere’s plans, and were forced out and forced to sell to mega dealers due to contract loopholes at the dealership.
Do not paint Deere as a benevolent god father of dealers. Deere, in the 1960s and '70s, demanded its dealers keep retained earnings IN the dealership. A lot of the other brand dealers saw the money farmers were making and started farming themselves or invested in higher profit, lower capital-intensive enterprises. When hard times of the 80s hit, they exited the farm implement business. Allis-Chalmers had "Action 80" and IH had the 'XL' Dealer program in the 70s to emulate Deere — all too little too late — the horse was out of the gate by mid 1980s.
Deere dealers mostly stayed — they had no other place to go. Good business foresight by Deere as it 'did away with farmer/dealers' as was told to our dealer in his cancellation letter.
All the commentator's neighbors might have had MF combines, probably had a rare, great combine dealer, but the combine company went broke, was moved and nationalized by Canada, then went broke again as a general statement. Thank goodness for AGCO or there quite possibly would be no MF. The story of Case/IH/NH is well documented — a product of bad economic times, management, survival and making the best of a near bankrupt situation. All were a case of too many sellers in a market that sold to a shrinking number of farms and now less than 2% of the North American population.
While an out the window observation was probably correct on this local level, it was a much different picture in North America as a whole.