Corriher Implement closed up?

[hazmat]

You disagree, yet New Holland and even TrueBlue agree. I don't think I will read that book you read.

Robert - As a newer father, you owe it to your daughter to read that book (regardless of the current discussion).

 

[Robert_in_NY]

Well, since you and Mike think I should I will.

 

[VAChesterfield]

It's not a bad book but it's got no relevance to this thread.

Tractors are not commodities where the only issue is price. Tractors have a local component of service and not simply warranty work. A truck can deliver the tractor and the UPS truck can deliver parts but neither can deliver service.

Mike, I believe the book is extremely relevant to this thread since we are discussing why Corriher went out of business. Some believe this occurred because Corriher “didn’t play by the rules” and other people have other opinions. Me, I believe it was because NH and a great many of its dealers, saw Corriher as a threat to their business interests, and engineered its exit from the market.

I agree with your assessments that tractors are not a commodity (but many of the lower end tractors are headed in that direction much like lower end personal computers), and I especially agree that local service is important. So important in fact, that local service ought to be a key differentiator that brings customers into the dealership. Unfortunately, in too many cases, tractor dealerships (most colors judging by the posts throughout TBN), treat service as a chore that must be offered and endured rather that as a primary component of their business model.

The “World is Flat” is not simply about selling commodity items based on price. It explains the dynamics which are driving fundamental changes in how businesses, any business, achieve their primary goal – making money.

NH was faced with a choice in dealing with the complaints from its dealer network about TarHeel and Corriher. They could embrace this new business model and find innovative ways for all of their dealers to gain marketshare in this new environment, or they could try to herd TarHeel and Corriher back into the fold to do business the same old way – just like everyone else.

As Trueblue points out, NH chose the latter alternative, Corriher refused to comply and they paid a high price for their noncompliance. But, as Harold_J points out, NH and its dealers do not live in a vacuum – there are other color tractors for buyers to choose from, and at some point, another color may leverage our flat world and push NH to the brink of extinction.

As for myself, before I purchased my NH, I was determined to buy a Chinese tractor. However, the price difference between those tractors and the TC 30 available from TarHeel convinced me to drive a few miles, pay a few more dollars, and get a better tractor.

So take another look at the “World is Flat”, and think about the ten flatteners and the triple convergence in light of the business model Corriher (and others) were trail blazing. Then ask yourself, should NH and its dealers stand still and continue to do business as they have for generations, or should they adapt to this new (and flat) world.

 

[Diesel-ME]

Perhaps Thomas Friedman can do what I cannot. I suggest you read his latest book (please try to find the updated version), The World Is Flat: A Brief History of the Twenty-first Century.

Information about the book is available on Wikipedia at The World Is Flat - Wikipedia, the free encyclopedia

Corriher was trying to live in a flat world, while the mass of other dealers insist the world is still round. One day, much like our American auto manufacturers, NH and the old die hard dealers will discover, to their horror, that the world is indeed flat.

I have to agree with VAChesterfield's assessment of Corriher's sales practices. While I have read Freidman's book and both enjoy the benefits of the 21st century global economy AND suffer its consequences, I don't necessarily agree that ANY dealer has the right to violate the rules sent down from above. Of course sometimes it takes a little civil disobedience to get the rules changed

Personally I was willing to spend the extra few $$'s (and in New England believe me it's extra) to do business with my local family run NH dealer. They are great people and I know that they will use me right. To me (not a farmer nor do I derive revenue from my, um, toys) a tractor is a specialty item not a commodity item. But I can see where to others, machinery would be commodity.

When it comes to cars and truck - I NEVER use local dealers unless they give me the BEST price - no exceptions. I've bought my last three new vehicles out of state. Low price wins and no BS is accepted..... The local car stealerships have OK service departments and the service managers have their own P&L. They are only too glad to perform both warrantee work and regular repairs. They do not treat me any different than they would if their boss's name was on a sticker on the back of the vehicle. BUT, cars/trucks (to me) are a commodity item.

Same thing with chainsaws. I buy a certain brand (not mentioned as I don't want to cause any debate) because they allow dealers to price as they wish. BUT to me a saw is a commodity item.

So you see, for each individual you might look at any given product or service as a commodity item or as a specialty item. There's no one "right" viewpoint.

But, alas, da CNH rules are da CNH rules.

~paul

 

[jimg]

Well, since you and Mike think I should I will.

Why? If the wiki page is a good representation of the book save yourself the time and $$. Its laughable! Wishing the world was 'flat' isnt the same thing as it being that way. The commies and socialist have been at this task for decades.

 

[trueblue]

Trueblue, I know what you are saying about how some people don't like certain local dealers. But if you don't like your local NH dealer because of problems with warranty work then how is buying a tractor from another dealer out of state going to solve your warranty work problem?

Much like my response to jimg, I did not intend to suggest that buying out of state will solve the warranty problem. I was only trying to make people understand the circumstances under which many out of state customers approached us. I may have been unclear...

Having said that, it was mentioned that in this business you have to "play by the rules" or suffer the consequences. Our rules are the New Holland Dealer's Agreement. There are no territories in that agreement. There is no rule that says you can't sell a tractor to another part of the country. There IS a rule that says any New Holland dealer HAS to perform warranty work on any New Holland under warranty. So if you are following the rules of the dealer's agreement to the letter, Tarheel and Corriher never broke the rules while all these other dealers that were refusing to provide warranty work to people who bought from us or Corriher simply out of spite were, in fact, breaking the rules of the dealer's agreement.

That was then. More recently New Holland issued a statement (mostly aimed at Tarheel and Corriher) saying anyone who advertised less than retail price on the internet (especially eBay) or in print in another market would lose incentives. We did the math and Corriher (I guess) did too. Our math told us it would be wiser financially to comply with this new advertising policy and keep our incentives. Corriher obviously figured they could make more money losing the incentives and continuing business as usual. I can't say that was what led to the close for them-I really don't know for certain.

We like out of state customers because as long as we do our part it is almost always a smooth, pleasant transaction for both sides. We like our local customers because we can develop relationships with them-like Robert has done-and quite honestly we can get their parts and service business. If someone didn't buy their equipment from us we would NEVER turn them away or charge them more for warranty work. We would try to leave the best impression possible so we could have their business in the future. That may be obvious to most of you, but surprisingly it has not been obvious to many dealers.

I'm not here to spam you guys or sell you anything on our philosophy, blah, blah, blah...I just want to provide a different perspective on a situation I'm close to.

 

[MikePA]

Mike, I believe the book is extremely relevant to this thread since we are discussing why Corriher went out of business.

IMO, anyone who breaks the established rules in any human endeavor gains an advantage over those who do not and this applies in all aspects of human interaction, not just in business. IOW, it's not new versus old model or round versus flat model and it's got nothing to do with other dealers whining, as some in the thread have accused.

Not knowing the details of the rules makes it difficult to evaluate but based on comments from trueblue, NH has a territory based contract with it's dealers. Corriher and Tarheel broke those rules by selling on eBay, posting prices on the Internet, etc., and attracting customers from other NH territories. Yes, some of those sales went to customers in areas without a NH dealer, but some did not. By breaking the rules, they gained an advantage over dealers of other makes but also over other NH dealers.

A contemporary sports analogy is Barry Bonds, assuming the accusation of steroid use are true.

The established rules (model) of baseball prohibit steroid use. Bonds used steroids and gained an unfair advantage, both for him (homerun record) and the Giants (more wins). However, he did it at the expense of the other teams as well as baseball in general. Most Giant fans love Bonds, fans of other teams do not nor do fans of baseball, hence the push to put an * behind his name when he breaks Aaron's record.

Bonds and the Giants gained an advantage because they broke the rules not because they adopted a new model.

Baseball can react in one of 2 ways, change their rules (model) to allow performance enhancing drugs or enforce the rules of their existing model. The deciding factor should be what's best for baseball, not what's best for Bonds, the Giants or fans of the Giants.

Replace

• Bonds with Corriher
• Giant fans with Corriher customers
• Other teams with other NH dealers
• Baseball with NH

and it describes the topic of this thread.

Is a business model not based on dealer territories better or worse for NH? Who knows. It'd sure cost a lot of money to replace it but assuming it's better based on Corriher breaking the rules is a bad idea. Corriher didn't sell more tractors because of a better model, they sold more tractors because they created a different model by breaking the rules. If all NH dealers could magically switch to the Corriher model overnight, Corriher wouldn't have an advantage. The key is, from NH perspective, would NH sell more tractors? Obviously they decided they wouldn't.

 

[jimg]

It wasnt unclear to me. What I dont understand is the logic of buying from you b/c they had service problems w/ the local dealer. I dont think you can answer this question. I was just thinking out loud.

I suppose some folks dont have a good idea what it takes to run a business and/or deal w/ people. They arent cut out for it. NH should let them go out of business so they can find their niche in life. It would benefit everyone. OTOH an otherwise very good dealer may not have the latitude to compete pricewise w/ you. Its a tough call, theyll loose the tractor sale but still have parts/service and perhaps implement sales. Is that really enough for them to stay in business? I think probably b/c not every one is computer literate or willing to buy online. Theres a fairly large segment who prefer to deal face to face rather than over the wire. I guess I tend that way, if I have a good local dealer then Id like him to have my business. I might pay a bit more but in the long run it helps us both. I know he'll be around when I need the help/advice/etc.

 

[MessickFarmEqu]

The real issue here is service related. As a whole, dealers loose money on warrenty work. We have factory trained tech's who have been in the business 30 years who still miss the flat rate schedules for warrenty jobs. The way these dealers did business pushed the expense of providing service to other dealers and creates alot of bad blood with the customer stilling in middle. Many of the tractors they sold literaly went out with $300-400 profit margins. They could do this because they did not have the expense of providing service after the sale.

This is VERY different from the car and truck business where warrenty work is their bread and butter of their shops.

 

[Harold_J]

The real issue here is service related. As a whole, dealers loose money on warrenty work. We have factory trained tech's who have been in the business 30 years who still miss the flat rate schedules for warrenty jobs. The way these dealers did business pushed the expense of providing service to other dealers and creates alot of bad blood with the customer stilling in middle. Many of the tractors they sold literaly went out with $300-400 profit margins. They could do this because they did not have the expense of providing service after the sale.

This is VERY different from the car and truck business where warrenty work is their bread and butter of their shops.

Why do you think warranty work is a money loser in ag equipment yet "bread and butter" for autos and trucks? To me it seems there's some shortcomings with the ag industries flat rate scheds or reimbursement policies. If 30yr experienced techs are consistenly missing the book either they're incompetent or the schedules are unrealistic; these things should average out in the end.

 

[MessickFarmEqu]

Diagonstic time is one problem. They don't really allow much for it at all, and some of these complicated machines can take some real work to get down to the actual issue.

Flat rate is aggressive, but it should be really. They come up with those times assuming that your standing by the machine, tools in hand and ready to go. They don't account for the fact that the guy was loading chicken manure with the machine and it really needs washed off first.

Then there is "the system". To get credit consistantly you need to know how to word things and provide the right proof of what was done to get credit. We have a full time guy who does this, but at most dealers its the parts or service manager who has to squeze this into his day and they don't have the time to go into the depth required to get full credit.

Some brands are better than others. New Holland is about average, there are some who just decide to send back half of what you file for, but there is also others who don't question much of anything and trust that your being honest. This is not unique to this brand, its the norm in our industry.

 

[jimg]

# of tractors bought from cut rate dealer - # of those that broke - # you serviced - # of services over book time = very small number

Is this incorrect??

 

[Harold_J]

IMO, anyone who breaks the established rules in any human endeavor gains an advantage over those who do not and this applies in all aspects of human interaction, not just in business. IOW, it's not new versus old model or round versus flat model and it's got nothing to do with other dealers whining, as some in the thread have accused.

Not knowing the details of the rules makes it difficult to evaluate but based on comments from trueblue, NH has a territory based contract with it's dealers. Corriher and Tarheel broke those rules by selling on eBay, posting prices on the Internet, etc., and attracting customers from other NH territories. Yes, some of those sales went to customers in areas without a NH dealer, but some did not. By breaking the rules, they gained an advantage over dealers of other makes but also over other NH dealers.

A contemporary sports analogy is Barry Bonds, assuming the accusation of steroid use are true.

The established rules (model) of baseball prohibit steroid use. Bonds used steroids and gained an unfair advantage, both for him (homerun record) and the Giants (more wins). However, he did it at the expense of the other teams as well as baseball in general. Most Giant fans love Bonds, fans of other teams do not nor do fans of baseball, hence the push to put an * behind his name when he breaks Aaron's record.

Bonds and the Giants gained an advantage because they broke the rules not because they adopted a new model.

Baseball can react in one of 2 ways, change their rules (model) to allow performance enhancing drugs or enforce the rules of their existing model. The deciding factor should be what's best for baseball, not what's best for Bonds, the Giants or fans of the Giants.

Replace

• Bonds with Corriher
• Giant fans with Corriher customers
• Other teams with other NH dealers
• Baseball with NH

and it describes the topic of this thread.

Is a business model not based on dealer territories better or worse for NH? Who knows. It'd sure cost a lot of money to replace it but assuming it's better based on Corriher breaking the rules is a bad idea. Corriher didn't sell more tractors because of a better model, they sold more tractors because they created a different model by breaking the rules. If all NH dealers could magically switch to the Corriher model overnight, Corriher wouldn't have an advantage. The key is, from NH perspective, would NH sell more tractors? Obviously they decided they wouldn't.

I'm not one to advocate breaking agreed upon rules, but in the CNH situation it seems the rules changed after the season started as a reaction to complaints from other players. I don't know what you were reading into Trueblue's posts but he explicitly said

There are no territories in that agreement...Tarheel and Corriher never broke the rules...

He goes on to say NH "issued a statement" relating to price advertising, ie. they changed the rules.

But you know the old saying "He who has the gold, makes the rules". Maybe some of the whiners were high enough profile dealers that they could make a valid threat to jump ship.

I believe if the manufacturers could have their way in the future they would want nothing more than to sell everything at a fixed price and the dealers would be turned into little more than service agencies. I think someone posted on the JD boards recently that list prices have been lowered closer to dealer cost. And NH has the "lean and mean" pricing with little bargaining room. In my opinion only, that's where it's going. GM tried it with the Saturn auto and it really didn't work out (yet anyway) but in machinery they just might pull it off and I think it's already happening.

 

[Robert_in_NY]

TrueBlue, how many other New Holland dealers do you have in your area?

I have been told by managers of two different New Holland dealers that they can not push their tractors in the other dealers area. If someome comes down and buys one they can sell but they can not purposely advertise in the other dealers area. Up here there are territories for New Holland dealers in regards to advertising.

 

[Robert_in_NY]

Why? If the wiki page is a good representation of the book save yourself the time and $$. Its laughable! Wishing the world was 'flat' isnt the same thing as it being that way. The commies and socialist have been at this task for decades.

I have come to trust a few guys on here and if they recommend something then I will listen. You can always gain by learning something new.

 

[Robert_in_NY]

# of tractors bought from cut rate dealer - # of those that broke - # you serviced - # of services over book time = very small number

Is this incorrect??

Even if it is a small number at the time the situation was going on, it was a potentially large problem if allowed to continue since a lot of the tractors were being shipped into the North East and Messicks is in the North East. The dealers and New Holland addressed the problem before it became a bigger problem.

 

[trueblue]

It wasnt unclear to me. What I dont understand is the logic of buying from you b/c they had service problems w/ the local dealer. I dont think you can answer this question. I was just thinking out loud.

My answer to your question is the following scenario: 1) Customer takes tractor to local dealer. 2) Customer gets bent over by local dealer over some aspect of their relationship-warranty work, for example. 3) Customer is irate with local dealer and vows to never do business with that dealer again. 4) Customer still really likes the NH brand, but there is no other local dealer. 5) It's time to buy another tractor, NH is the preference, but where can he go? 6) Customer remembers seeing ad for Tarheel Tractor in the Heavy Equipment Trader, so why not give them a call? It doesn't have to be a service issue necessarily that makes people stop the business relationship-it could be that they were lied to about getting a full tank of gas with purchase. Who knows? My service example was just a common reason we had people calling us. No more. No less.

Any experienced dealer will tell you the goal is to have parts and service absorb the expenses associated with running the dealership. Afterall, your margins are WAY higher in those profit centers. Sales is supposed to be the "gravy" money and what drives traffic to your parts and service. It's hard to get to that point as a dealer and it doesn't always work out that way, but that approach has proven effective over time.

Our stores are in what is jokingly referred to as "Tractor H*LL." The entire area is cut-throat, although it's getting better. BUT the days of making $3,000 off a $10,000 compact tractor are long gone-at least around here. If dealers up north or out west can still do that (and I know some of them try), then that's up to them. If the customer wants to (in some cases) pay more to be on really great terms with their local dealer than that's what I would rather them do. An unhappy customer, either in NC or NY, is the last thing any dealer wants.

One thing I have a hard time apologizing for is being more aggressive than the next guy who could have done the same thing and WITHOUT breaking any terms of the dealer's agreement. We fell back in line with the status quo when it was the most financially responsible to the company to do so, but I think it all comes down to capitalism in the end.

 

[Harold_J]

...Our stores are in what is jokingly referred to as "Tractor H*LL." The entire area is cut-throat, although it's getting better.

trueblue: In your area did some of the Tractor H*LL come about because of CNH/Fiat mergers? I know in some places you had the old Case dealers starting to sell IH after the merger and they were right up the road from the existing IH guy.
Or was business always very competitive near your store?

 

[MessickFarmEqu]

I have been told by managers of two different New Holland dealers that they can not push their tractors in the other dealers area. If someome comes down and buys one they can sell but they can not purposely advertise in the other dealers area. Up here there are territories for New Holland dealers in regards to advertising.

There are particular products where this is the case. New Holland AG is starting to clamp down on skid loaders going out of territory. Largly though, our territories are not enforced. Its important to have good working relationships with other dealers. We have to transfer in alot of equipment from other dealers. If we **** them off, we then have to go to New Holland (or whoever) for that machine and spend more $$ and time in the process. I will not undercut certian dealers because my relationship with them is important.

 

[trueblue]

trueblue: In your area did some of the Tractor H*LL come about because of CNH/Fiat mergers? I know in some places you had the old Case dealers starting to sell IH after the merger and they were right up the road from the existing IH guy.
Or was business always very competitive near your store?

For the most part the merger didn't have much affect in our area. I don't want to make it sound like a soap opera, but there was some bad blood between dealers that created an environment where regardless of brand we had to go way low on price. Since we walked into the situation by buying out the dealer that was already here, the stage was set and most of our pricing became reactive. Sometimes other dealers would forgo better financial judgement and take a losing deal just to say "I won." There's more to it, but I'll leave it at that.

Another bit on the merger: The top people from Fiat have been upset with New Holland's decline in overall marketshare. They basically fired the people on top and took over themselves. They've been giving the dealers more incentives to pass on to the customer in an attempt to regain marketshare. For this area solid marketshare is 17% or more. Our average has been around 26% but lately it's just under 40%. I don't know how Messick feels, but for us it seems to be working. July is usually very dead with all the vacations, etc., but we actually had an extremely good month.

Messick is right though-the skid steers and track machines are controlled by New Holland Construction and we are New Holland Ag. dealers. The construction side got VERY sensitive about out of state sales and from what I'm told they do pay attention to where the machines go. The thing is, it's still not a violation of the dealer's agreement and since the Ag. side sells 70% of all NH's skid steers and track loaders, I don't think too much has been said.