Representing Case-IH and John Deere!

Representing Case-IH . . . and John Deere!

THESE ARE very unusual times. What we wouldn't have expected to see a few years ago may be ordinary today. Take the case of Charles Lawson, an IH dealer for over 25 years at Stanberry, Mo., who now finds himself as his own main competitor.

These days, when many dealers are trying to get out of the business, why do others, such as Lawson, commit themselves by expanding and casting an optimistic look at days to come? Are manufacturers seeing that much good can come from using the ability and experience of dealers who have proven themselves? Is the traditional manufacturer resistance to creative dealer propositions diminishing? Let's hear what Lawson says:

"There was a time several years ago when I was feeling uneasy about the future of my IH contract. Back then, I contacted the Deere branch in Kansas City about buying out their dealer in nearby Albany and moving the franchise to my operation at Stanberry. But at that time, the dealer was only interested in selling his business complete--buildings and all other assets. And when Tenneco purchased IH's Ag Equipment Div. and merged with J I Case, I forgot the whole idea.'

The sales crunch intensified, however, and that Deere dealership again became a potential buyout opportunity. Meanwhile, Albany's Ford Tractor dealer died unexpectedly; his business was closed down, leaving a fairly new facility unused.

"I survived the cut when Case and IH became one, and I kept selling machines from the Stanberry store as best I could in difficult times. One day last winter, I got a call from Carl Smith of the Gentry County Bank in Albany, who wanted to discuss an idea he had. I said, "Fine, let's talk.''

The bank wanted to get the empty dealership back into productive use. The bank also knew the Albany Deere dealership was having economic problems. And it was common knowledge that Lawson, the county's senior dealer, had shown that he could keep his dealership healthy through the farm economy's ups and downs.

Smith presented Lawson with a plan for financing the former Ford dealership property. He also suggested a plan for a long-range payout on the assets of the faltering Deere dealership if Lawson was interested in buying it. Lawson was.

But what would Deere think of it, and how would Case-IH react?

Lawson contacted Deere and found a positive response. Deere favored maintaining the Albany operation as a separate dealership, not to be combined with an existing Case-IH operation. Deere asked Lawson for a proposal setting forth what he would do, how he expected to operate the business and what sales expectations he had.

Deere liked what it heard in response. Next, Lawson and the bank agreed on what would be paid for the former Ford buildings and the Deere dealership's assets.

Deere invited Lawson to Kansas City for more conversation. When he left, he had Deere's approval of all that had been planned. But Deere attached a string to its acceptance. It asked that a manager be hired for the Albany store, one who would become at least a 25 per cent owner. Lawson had no objection to that.

Dealer's position

After listening to Deere's outline of its requirements, Lawson offered a few of his own. "I told them that if I became a John Deere dealer, I would not let myself become buried with a lot full of interest-bearing inventory and I would not hire a high-priced manager right off the bat. He would come as the business could afford him.'

After legalities were settled, Lawson began searching for a potential manager to become, eventually, part owner. "I advertised, pat the word out through industry personnel, but was disappointed to find little interest,' he recalled. "I was offering a substantial salary, sales commission and profit sharing. I also required that the person hired live in Albany and be part of the community's daily business life. But responses were few and far between.'

The dealership had to be moved from an old building to a new facility, which needed to be "de-Forded' and then Deere-decorated. That was about Feb. 1, 1986. The goal was to be in full operation by the start of the busy spring season. It would be tough without that manager in place.

But Lawson rounded up a friend, Frank Carroll, who is a retired auto dealer living in Stanberry. Carroll agreed to help out during closedown of the Deere operation and then to oversee the move to newer buildings a mile away. He wasn't interested, however, in a long-term management position.

"But Frank saved the day for us,' says Lawson. "He helped get all parts returns organized and sent back, got all furnishings and equipment moved to the new location. It began to look like the dealership could have a grand opening on St. Patrick's Day . . . a great day for the Green in Albany!'

Anyone who has been involved in moving a dealership that's already doing business knows it isn't easy. Lawson worked up a schedule under which all parts were to be moved by a certain date, new and used equipment moved and re-displayed by another, and shop items moved and installed by still another date. And Frank Carroll delivered.

The shop crew kept working in the old building up to the day before the open house, but they showed up for the event in fresh uniforms, just to talk with visitors. They they were told to "get the new shop broken in as fast as possible.'

Operations

"We expect to operate the two separate, competing dealerships, each with its own sales crew,' Lawson says. "We want our regular red customers to know we'll keep supplying their needs. We also want the loyal Deere users to realized that they now have a full-service dealership ready to care for them, too.'

Is the purchase of the Deere dealership being accepted in the territory?

"Is it!' exclaims Lawson. "A group of farmers came in and helped us with the physicial move to the new facility in Albany.'

Lawson notes that the people in Gentry County know the dealership "and we know most of our potential customers. They saw us survive the Case-IH merger, and they now look to the same type of management being responsible for the green as well as the red. I feel both dealerships can profitably co-exist. As they prosper, so will the customers they serve.'

Deere asked Lawson to prepare a two-year projection of what he expected to do. "Naturally, they would like a dealer to say he would boost sales by 10 per cent or more every year and convert large numbers of farmers to the Deere line,' observes Lawson. "But I want to be realistic. I want the dealership to remain small, for a while anyhow, and also efficient and profitable. I will not be influenced by a supplier to the point that I'm overloaded with inventory.'

He elaborates: "I don't aspire to have that new store become the biggest, but I do direct that it take good care of the present Deere owners and that it make enough money from the sales of parts and service to cover the overhead. I'll be happy to let whole goods sales fall where they will.'

Sometimes a potential customer asks a Case-IH salesman for a quote on a Deere machine. But salesmen are told to refer such requests to their counterparts at the other store. The rule: If a customer walks into either store, the first obligation is to treat his preferences. "But if he's leaning toward Deere, the Case-IH people will try to convert him to red. If that can't be done, he'll be referred to the Albany store.'

Recently, a customer came into the Case-IH store seeking a used corn planter. "If I'd had one here, I'd have tried to sell it to him, but I didn't, and the Albany store still had a Deere one on hand, so I called and put the customer in touch with our Albany dealership.'

Another Lawson rule: "I will not allow our sales people to carry two price books, Case-IH and John Deere. They must sell the line of the store that hires them.'

Most of the eight employees at the Deere dealership had worked for the former Deere retailer. Lawson has named one of them, Lonnie Messner, to oversee the store's operations as well as to sell the line. Meanwhile, Lawson is guiding them and showing them his methods of management.

Case-IH's reaction

And how did Case-IH feel about Lawson, one of its top retailers in the area, buying a Deere dealership? Naturally, they were concerned. Lawson was asked to come into the Kansas City office and explain what he was doing.

"We talked over various phases of the project, and I assured them that Lawson Truck & Tractor would continue to represent them as it had in the past. We debated how ownership of two competing-line dealerships was not all that unique to the industry in 1986. I also reminded them how many dealerships were dualing with more than one line being offered under one roof.'

Lawson made the point that the two dealerships would be separate entities, each with a different manager. There would be two sets of internal controls, and two separate banks would be used. There would be no merging of the two dealerships' assets.

"I don't think that under these circumstances, Case-IH interests would be affected,' Lawson says. "Had I tried to merge another tractor line right into the home operation at Stanberry, that could have been another matter.'

What's the volume objective? Stanberry will produce about $3 million in a good year. "And we're shooting for $1 million in the Albany store's first year under new ownership,' says Lawson. "With proper management, we expect that it can be a $2 million-plus dealership.'

What would Lawson advise other dealers who might face a decision similar to the one he dealt with?

"Mine was a unique opportunity. I'd advise anyone to take the precautions I did. Make certain there is financial backing in the community the dealership proposes to serve. Be sure the purchased business forces no financial strain on your existing dealership. And be completely dedicated to the success of the business.'

Some dealers are seeking diversification from the farm equipment business. But Charles Lawson sees it this way:

"I feel that buying another farm equipment dealership is far better than trying to diversity--for instance, by installing a computer store in a shopping mall.

"If you know you are good at selling farm equipment, then stick to it!'

Photo: Charles Lawson

Photo: Here's the 25-year dealership from which Lawson has represented IH and then Case-IH at Stanberry, Mo . . ..

Photo: And here's Agri-Equipment, Albany, Mo., the newly established Deere dealership Lawson recently organized.