Multiple Stores Key to Farm Equipment Growth
Consolidation is that aggressive word which has been enveloping
agricultural business for several years now. In simple terms, it
results in fewer but bigger. And that certainly is the recent
history of the farm implement business, which used to pride itself
on having eight, 10, even 12 or more dealerships per county. Today
three or four farm equipment dealers per county is more the usual.
But ownership of farm implement stores today often includes multiple
locations throughout an entire state.
Arnold Companies, Inc., headquartered in Kimball, MN is a prime
example. Besides its 'corporate headquarters' in Kimball, population
746, Arnold Companies also has farm stores in Willmar, Glencoe, St.
Martin, and Mankato plus its newest store under construction in
Alden, just east of Albert Lea off I-90 and approaching by the
Offering the Case-IH line, the Kimball dealership was established in
1958 as part of a family business entity founded by the Dingmann
Hardware Store, which dates back to 1940. Today, owners and brothers
John and Peter Arnold share the responsibilities of this six-store
corporation. John joined the family business in 1980 just prior to
those hectic years when farm income plummeted, interest rates soared
into the 20 percent range, and many of farmers were closed out by their
local bankers. Peter joined the company in1988 and has managed
dealerships in Litchfield and Glencoe.
"We've survived because of the diversified agriculture around Kimball.
Also, we're close enough to the Metro area so part-time farmers also had
work in the cities," said John Arnold, who was interviewed at his Kimball
Is loyalty still a key factor in the farm implement business? The
Arnold Companies locations service some third-generation farmers. Arnold
explains, "We've got great people at our stores. That's key to long-time
customer loyalty. But obviously the quality of your farm equipment also
drives your customer base from one generation to the next. There's lots
of good iron out there today. We've been fortunate to get into some
strong markets with dairy farmers because we are the exclusive retail
dealer of the Claas forage harvesting equipment in Minnesota."
Is the Internet today a big factor in selling farm equipment? Arnold
responded, "It's having a huge impact in the farm equipment industry.
People are on our website continuously, or using the different links we
have in trade publications, farm magazines, and Tractor House, which
features equipment on a daily/constantly-changing web page. So, a good
number of our products get sold through the Internet. However, although it
may have started with that initial computer search, eventually they make
it to an Arnold's store." www.arnoldsinc.com
is the traffic vehicle.
He indicated some of their Case-IH equipment now moves across state lines
after first being located on the the Arnold Companies website. But obviously
customers from the local trade area of each Arnold's store are key to their
business success. And because the stores are located in higher population
rural areas, lawn and garden equipment also draws the "non-farmers." Even
the company's toy and clothing category attracts attention. People through
the front door are basically what this business is all about," said Arnold.
GPS technology is everywhere in the farm equipment business these days.
"Every tractor and combine, even crop sprayers, are factory wired providing
the capabilities to be GPS driven. We also do retrofitting of older
equipment so that it can be GPS driven also."
The Arnold Companies currently have four employees trained and dedicated to
providing service and education on what Case-IH calls Advanced Farming Systems.
This also involves RTK radio towers set up within their various trade
territories which provide the electronic communications needed to power GPS
Auto Track and other technology programs.
With 30 years of selling farm equipment how does Arnold view the difference of
running a farm store today versus 1980? "It's a much more complicated industry,"
he said. "Equipment is much better, and bigger, and will do more things. But
that's partly because a farmer's expectations keep expanding. And that's why
I'm proud of our technicians at our various stores. They know how to meet
these demands." The Arnold Companies employ nearly 165 people at its five store
Farm equipment costs big money these days, often crowding that half-million
dollar level on certain tractors and combines. But thanks to a thriving American
agriculture, revenue keeps increasing for the Arnold stores. Nationwide, tractor
sales were up 4 percent last year; combine sales up 6 percent. Case-IH offers
its own in-house credit plus there are several financial firms eager to provide
financing for customers wanting to upgrade their machinery lineup.
At Arnold's of Mankato, General Manager Brent Mueller said their average size
row-crop tractor is now about 300 hp and for the 4-wheel drive its 535 hp. In
combines, the Class 7 at 325 hp and the Class 8 at 450 hp are top movers but this
store also sold several Class 9 units which are 485 hp or greater. Indicative of
the tremendous capability of modern equipment, Mueller mentioned two partnership-farmers
who purchased a 36-row planter last spring, hitched it to a Case-IH Quad
Track and planted 5,000 acres of corn and soybeans in four days running 24 hours per
"Their objective was to minimize variances in their several fields so they could
complete all spraying at one time," said Mueller. "This also this let them do all
their nitrogen work in one time frame. Plus it helped calenderize their harvesting.
They could pick and choose their fields rather than spreading out the harvest over
a longer period."
He said 98 percent of their sales are "auto guide"- ready and functional to go.
Combines, tractors, and almost all planters sold at the Mankato store go out wired
ready to use GPS technology. Yes, this technology costs money. Mueller says you
can figure about an additional $15,000 for your base system including color monitor.
Also many farmers now use cell phone access to RTK rather than pay the fees to tie
into an area RTK tower system.
A continually growing U.S. agriculture has been rewarding to the farm equipment
industry, Arnold acknowledged. "The past five years have been good years for us. It's
a competitive business but great opportunities too," he said. "Despite some squeezing
in the dairy and livestock industries, cash grain farmers are coming off a surprisingly
strong year. Agriculture will continue to be a major player in our state and national
economy so we're pleased to be in a business that serves this exciting and dynamic industry."
With many older farmers in a transitional phase with a younger son or son-in-law,
Arnold noted that today the "deal-maker" on a new piece of machinery is often the
younger member of the team. "Dads are stepping aside because they know it's just
a matter of time and prefer instead to become 'good helpers' to their sons or
sons-in-laws," he explained. "The successful farmer-fathers know how to make that
transition so that both ends of the partnership are okay."
Relating to his own stores, Arnold says good used equipment always has a market. But
it may require moving that particular equipment to another store location. With this
farming transition to fewer but bigger farmers, will more stores be in the future of
the Arnold Companies?
"We've done a good job with our expansions to date. So if future success suggests
another store, I suspect that could happen," he said. A growing marketing tool
for the Arnold Companies is "hands on" field events. For example, tillage demos
held at various Arnolds outlets are always popular. Farmers actually drive various
tillage tools and see first-hand results. "With more residue issues on continuous
corn, farmers are looking hard for what works best," notes Arnold.
As expected, Case-IH brand equipment is the primary revenue stream for the Arnold
Companies. The Claas Forage Harvester is number two and three. Perhaps
surprising, is the Drago chopping corn head built in Italy. Not so surprising,
however, is that Kubota now ranks number four in revenue generation. With a variety
of small tractors and ATVs plus various attachments, loaders, etc., Kubota has wide
appeal to the Arnold Compaines customer base and definitely builds traffic in their
stores. Perhaps adding to the appeal of the Drago corn head is the fact that it is
interchangeable with John Deere, Gleaner, New Holland or even a Massey combine unit.
Other vendors share in the growth of the Arnold Companies Inc. A good example is
Schweiss Manufacturing in rural Fairfax, MN. This firm builds both bifold and
one-piece hydraulic doors for a nationwide market. A few years back, the Arnold
Companies selected Schweiss bifold doors for two buildings at the Kimball location.
Subsequently, Schweiss doors were also installed at their Mankato, Glencoe, and
Willmar stores plus the new store in Alden. "We didn't want to go with a rollup
door for something that big. Schweiss has been in the door business for a long
time so we knew their doors were dependable. Our Schweiss doors have functioned
just fine so we're very satisfied going with Schweiss."
These Schweiss bifold doors are big measuring 40' wide by 18' tall. As farm
equipment keeps expanding in size, bigger doors have become a must for farm
equipment dealers. These doors easily handle 35' headers, 12-row cornheads,
and big planters. "We insulated the shop door and had two windows installed for
safety/visibility. With that unique lift-strap mechanism, these big doors open
and close quickly. Our shop technicians think this door is the greatest," said Mueller.
Leasing of farm equipment is a small revenue stream at the Arnolds locations.
Just too many business complexities get in the way. But a growing trend are
farmers who "trade up" every year regardless. Always being on the front end
of technology and accessing the latest warranties are partially what drives this,
In concluding the interview Arnold gave credit to the quality of the people he
works with as key to the success of the Arnold Companies. Age is not a factor
with his employees. "If they're doing their job, they can stay on indefinitely
as far as I'm concerned," he said. "We appreciate people who want to work with
us so its management's job to share our respect for their loyalties and good work.
Being a growing company inspires people to stay with us. Growth energizes all of
us and presents more opportunities as well."
When asked if Minnesota is a good business state, Arnold was forthright. "It's
a good place to live," he said "Minnesota has a lot to offer. Do I like to pay
taxes? No. Does anyone want to pay taxes? No. But Minnesota has an exciting
business environment that can be very rewarding."