Q: What impact will consolidation and acquisitions within the precision farming industry have on dealers in the coming years?
“We’re in play with the consolidation numbers. It’s not clear yet — in the long-run — whether we’re an acquirer or acquiree…”
Devin Dubois, Vice President of Integrated Solutions, Western Sales, Rosetown, Sask.: “The consolidation on the producer’s side is definitely changing how we view what we need to deliver because they have an impact. What those large producers need, clearly pushes us in one direction or another. We’re in play with the consolidation numbers. It’s not clear yet — in the long run — whether we’re an acquirer or acquiree. But we think one of the grand distinctions between those two positions may be how well we differentiate ourselves through delivery of higher value service.
“John Deere as manufacturer has kind of gone that way. They have a dealer of tomorrow program. Some of the major components of this involve having that integrated solution space in their mind figured out and solidified. Consolidation, both on the behalf of our customers and ourselves as dealership groups, is a big driver in behavior.
“The whole guiding light in this is what’s best for the producer. For us as a dealership, we must think that way. Maybe we’ve got a better geospatial data system and process to store it and put it in a useful place. We should collaborate with ag service providers to help them be better to the customer without us stealing that retail dollar they depend on. I hope that’s the way this sector is starting to fold into itself. So we don’t have good people in the ag sector out there beating up on each other for the same retail dollar.
“It’s more a matter of finding where everybody fits in the bucket and our philosophy as a dealership in the precision space is not to elbow everybody out. It’s very much to be inviting and cooperative.”
Matt Miller, Technology Sales Specialist, Butler Ag Equipment, Fremont, Neb.: “I see it going one of two ways. The first way is a bigger geographical dealership means that there are going to be more resources in terms of service and support to lean on. More manpower. More knowledge. And this will depend on the overall reputation of the dealership if they are to acquire more sales and service opportunities.
“On the other side of it, customers may lose to some degree the personalized service and support that they receive with a smaller dealership. There are going to be those customers who want that personalized service — knowing all the people at the dealership, getting the service that they’ve gotten for years past.
“The farmer to precision ag specialist ratio is probably going to decrease because guys like myself are going to be spread thinner. We’ll need to cover more territory making it harder to reach everyone and spend as much time with them as we’d like to.”
Dave Wharry, Precision Ag Regional Manager, Hoober Inc., Middletown, Del.: “The biggest negative impact that we are seeing is that as companies merge and or are bought up, it reduces the number of unique products available. If competitive dealers can offer similar products we have to find other ways to differentiate ourselves. On a positive note, with consolidation into larger suppliers product availability has gotten better. With larger companies and better resources, the rate of innovation continues to increase.”
Clint Schnoor, President, Agri-Service, Twin Falls, Idaho: “In the near-term consolidation and acquisitions within the precision farming industry will finally align some of the companies and complete their product portfolios. From a dealer’s perspective, I think we’ll start to be able to work with a company that has a single source of supply with the precision farming tools that we need. Depending on which side of the fence you are sitting on, you will be a player with a fairly complete product portfolio. And now you’ll be able to consolidate one or two suppliers that you can work with.”
Q What role or responsibility will precision dealers have in sales and service of autonomous vehicles?
Dubois: “The role dealers have will be no less significant then it is now, maybe even more significant because of autonomy. Self-driving equipment isn’t that much of leap and will not change things that much, but the notion of sensing, analysis then the live response going on inside the equipment is kind of scary. It will require a shift in thinking, plus a higher level of responsiveness to understand that whole analytic sensing part of the equation.
“There is a huge revolution coming in the next 5 years. The addition of sensing technology to the gear that exists will quickly be followed by the autonomous analytics of the equipment. That’s going to change how dealerships and those that supply dealerships will operate.”
Miller: “First of all, they’re going to have to build off the precision technology support. It’s going to build off the things we’ve seen in the past kind that will grow and change. It’s will be more in-depth because there are higher expectations and a lot more at stake.
“Secondly, the support of software, hardware, understanding of operations, functionality, capability, programming — all those things definitely tie into the electronics and technology of the equipment. The people that are going to understand these most are the people who have been in the precision technology industry for years.
“If you look at the sales side of it, it will rely heavily on the precision dealers to understand the product. What can we get out of these vehicles? We’ll also deal with high expectations of the customers. Precision people are going to be involved in the training so they’ll need to understand how the machines function or how to operate them safely and correctly. I see every facet of these vehicles involving some type of precision dealer or precision support team because they are so new and there is so much to them. There is a lot at stake.”
Wharry: “We are in the ‘Look what we are technically capable of,’ phase and not what’s necessarily going to be reality in the market place in the coming year. There needs to be advances in technology to help drive prices of autonomy down to be viable in the mainstream. That’s a few years down the road. There are also legal hurdles to overcome before we are selling autonomous vehicles.
“A precision dealer’s role in autonomy will depend on whether or not the dealer carries an OEM. I don’t expect a large amount of aftermarket involvement, especially in the innovator to early adopter stage…”
“I do think that within 5 years, autonomous vehicles could appear in a place like the Grain Belt or Canada where you’ve got one driver in the field and then several autonomous tractors behind him running. I can see that technology being applied out there in the big acreages where you really can safely apply it. In the smaller fields here in the suburban areas of the east coast safety and security of these machines is going to be a constraint we are going to have to work around.
“From a standpoint of what the precision dealer’s role will be with autonomy, it will depend on whether or not the dealer carries an OEM. I don’t expect a large amount of aftermarket involvement, especially up front in the innovator to early adopter stage. From an OEM precision dealer standpoint, Case IH in our case, the specialists will be very involved with setup and monitoring of the autonomous vehicles in the field.”
Schnoor: “If you are just a pure precision dealer that isn’t connected with an OEM manufacturer, I think that the role will be limited. Most of the autonomous vehicle push will come from the iron manufacturer side. The push will be limited from a pure precision dealer and probably more focused on the equipment dealers that also have strong precision farming departments.”
Q What is one mistake and lesson learned you’ve applied to develop a more productive and profitable precision farming business?”
Dubois: “Coming to the realization that the technical tools customers buy doesn’t matter. Whether its some kind of physical gear or software, they are secondary to the success of their operation. Their success relies on having quality people; the right people for what you are trying to achieve. A group of people who work together effectively will find the right tools that they need.
“Precision tools are almost useless and meaningless if we don’t have quality people driving whatever we’re doing. Because, at the end of the day, it’s still people delivering the service that we’re providing, even when we get into the advanced technology, the autonomous application, etc. There will still be people who are delivering those services and programs, and they need to be the right people.
“If we have quality experts, selling quality advice and support, we are selling those people, not the tools our customers are using. There is value in that and the dealership will get a good portion of that retail dollar. But if we have quality agronomists or quality technical experts working on this, there is added value in that because they can employ these tools better then other people can and actually pull more value out of whatever these tools do.
“Farmers will pay for that and they’ll pay real money. It might sound like I’m downplaying the value of these tools, and I don’t mean to because there are a lot of good tools and bad tools. But in terms of the retail part of the business model, we can’t resell those tools as a business. There just isn’t much value.”
Miller: “I think the biggest lesson that we’ve learned is just trying to communicate with the customer to the point where we figure out what their needs are and finding an appropriate solution for them. We shouldn’t just fill the immediate need or want the customer wanted right then and there. Instead, we should be drawing that conversation out. Talking about some of the long-term goals, things they’d like to do, areas they’d like to expand.
“When it comes down to it, customers just need us to help them find a solution for what they are trying to do. And what we try to strive to do is finding the right solution that fits them and their operation because every operation is different.”
Wharry: “The biggest mistake we can make is put our head in the sand and say, ‘We’re going to do things this way because we’ve always done it this way.’ That’s going to bury your business. We’ve got to be very reactive and proactive in adjusting to the climate.
“When we started heavily into precision farming 12 years ago, it made sense for it to be separate as almost all sales were aftermarket and there were few factory fit options available. Now that there are so many factory options and factory integration, we see it necessary to integrate precision into our entire business. Our specialists are taking on more sales and support roles and we are training our shop technicians to continue to provide the level of service our customers have come to expect.
“We focus very heavily on support and believe if we take care of the products and keep customers well supported, the sales will come. Don’t focus on sales; focus on service. By service we grow was the principal we were founded on in 1941 and it has endured for 75 years throughout the entire company.”
Schnoor: “One mistake that we’ve made is the desire that we’ve had to be to diversified in the precision services we offer. That has been a stumbling block for us because we are spreading our resources too thin.
“Instead of being really, really good at a couple areas of the precision business, we’ve tried to be OK at a bunch of things. The key for us was narrowing our focus and eliminating some of the things that are maybe agronomy partners are better suited to do. This is a better choice for us. The tougher choice is what we’re not going to do in our precision farming dealership vs. what we are going to do. This allows us to keep the focus on what we need to do to make sure we are very good at what we decide to do.”