The Quarterly Messick's Report

[Cahaba Valley Farm]

 

[Hay Dude]

I would think Messicks themselves would be forced to pass a pretty substantial price increase along to their customers with the new facility they built. I was just there. It’s HUGE

 

[Cahaba Valley Farm]

I would think Messicks themselves would be forced to pass a pretty substantial price increase along to their customers with the new facility they built. I was just there. It’s HUGE

Yeah he left that part out didn't he

 

[5030]

Usually, the bigger they are, the harder they fall.

 

[Milo]

I would think Messicks themselves would be forced to pass a pretty substantial price increase along to their customers with the new facility they built. I was just there. It’s HUGE

I would not expect that at all, the idea behind expanding their operation is to gain efficiency in sales, service, parts, inventory management, etc. Most of the cost is deductible.

 

[Hay Dude]

I bet that new place cost 10 million

 

[Milo]

You were there so I imagine you're right. Did this new facility replace a smaller, dated place or is it an additional facility?

 

[Hay Dude]

You were there so I imagine you're right. Did this new facility replace a smaller, dated place or is it an additional facility?

The old place was really big. Didn’t seem that dated to me.
The new place dwarfs the old place and is much more modern.
I dont begrudge Messicks. I buy stuff from them all the time and they have done some significant repairs for me, too.

 

[Snobdds]

Usually, the bigger they are, the harder they fall.

Quite the opposite, actually.

Companies that get a place that big, turn into a clearing house for a lot of companies and their ancillaries. So much so that they turn into, to big to fail. Kubota probably floor plans their inventory, instead of private capital, and as long it moves product...they can operate at marginal cost instead of marginal revenue with economies of scale.

It just means the high volume sales can subsidize the low volume products and still be profitable.

 

[Milo]

What I was trying to determine is if they will they be selling (or have sold) the old property and applying the proceeds towards the new facility? Or is this in a different market area and they plan to keep both?

 

[buckeyefarmer]

It’s just down the road, can’t see them keeping the old place.

 

[Cahaba Valley Farm]

I bet that new place cost 10 million

I would put it at 30 million.

 

[MHarryE]

Like Neil from Messick's says in the video - manufacturer's costs of doing business are down because majors floor plan the equipment on the dealer's lots and pay interest on that money. Since so many of the tractors are moving off the lot, their expenses are reduced therefore the ability to keep giving 0% for 60 months. Neil also said 0% for 60 months comprises most of their tractor sales, at least in the under 100 HP range. Messick's is also expanding their Internet parts sales and is my go to source for Kubota, New Holland, and CaseIH despite living so far away. Seldom do my dealers have the parts I need in stock so Messick's direct beats my dealers ordering, receiving, then shipping to me.

 

[houska]

While interest rates are trending up, they're still pretty darned low. If Messicks was smart/lucky, they will have secured financing a while ago at even more favourable rates, and hopefully secured some tax incentives too. In other words, that $10/30mm/whatever may cost them much less than one would think on a yearly basis.

I also think Messicks is onto something with the whole mega-dealer, strong parts channel, internet presence, strategy etc. I really like my small local dealers. But their turnover is not huge at all, and it's actually a very inefficient sales model. Precisely how it will percolate through the commercial arrangements of dealer <- manufacturer I don't know, but I expect economies of scale in the dealership will become more and more important. Sooner or later, we as customers will benefit and small local dealers will suffer.

 

[Cahaba Valley Farm]

While interest rates are trending up, they're still pretty darned low. If Messicks was smart/lucky, they will have secured financing a while ago at even more favourable rates, and hopefully secured some tax incentives too. In other words, that $10/30mm/whatever may cost them much less than one would think on a yearly basis.

I also think Messicks is onto something with the whole mega-dealer, strong parts channel, internet presence, strategy etc. I really like my small local dealers. But their turnover is not huge at all, and it's actually a very inefficient sales model. Precisely how it will percolate through the commercial arrangements of dealer <- manufacturer I don't know, but I expect economies of scale in the dealership will become more and more important. Sooner or later, we as customers will benefit and small local dealers will suffer.

The only problem is you can't purchase equipment from Messick's unless you are in their territory so guys like us who live in the less densely populated states will still be beholding to the small mom and pop dealers which isn't always a bad thing.

 

[finn1]

While interest rates are trending up, they're still pretty darned low. If Messicks was smart/lucky, they will have secured financing a while ago at even more favourable rates, and hopefully secured some tax incentives too. In other words, that $10/30mm/whatever may cost them much less than one would think on a yearly basis.

I also think Messicks is onto something with the whole mega-dealer, strong parts channel, internet presence, strategy etc. I really like my small local dealers. But their turnover is not huge at all, and it's actually a very inefficient sales model. Precisely how it will percolate through the commercial arrangements of dealer <- manufacturer I don't know, but I expect economies of scale in the dealership will become more and more important. Sooner or later, we as customers will benefit and small local dealers will suffer.

Automobile and heavy truck sales went the mega dealer route years ago, as did Deere and Cat, among others.

The mom and pop dealer is rapidly becoming extinct, just like the local auto parts or corner grocery.

Messick sees the handwriting on the wall, and chose to participate, rather than wither.

 

[Hay Dude]

Automobile and heavy truck sales went the mega dealer route years ago, as did Deere and Cat, among others.

The mom and pop dealer is rapidly becoming extinct, just like the local auto parts or corner grocery.

Messick sees the handwriting on the wall, and chose to participate, rather than wither.

Oh geez….believe me…Messicks was no “mom & pop dealer” before the move, either.
They are one of the biggest single dealers in the country pre or post move.

 

[Milo]

The only problem is you can't purchase equipment from Messick's unless you are in their territory....

Messick and Tractor Tim both published videos of TT (from somewhere else maybe Indiana?) doing a road trip to Penn to buy an LX3310 from Messick.

 

[buckeyefarmer]

Messicks purchased a few smaller dealers near me a few yrs back, so they are now local to me.

 

[finn1]

Messicks purchased a few smaller dealers near me a few yrs back, so they are now local to me.

That’s what happened in the car, truck, and construction equipment business.

Manufacturers really don’t want to deal with small dealerships if they can avoid it. It’s not very efficient. Thus the evolution of the mega dealers.