Handing over the keys
For more than 100 years, Linder Equipment has served the agriculture community of Tulare, California. An area where cotton was once king became a popular place for dairies. As row-crop farmers moved away from cotton, forage acres increased, and more and more nut trees began to replace the formerly dominant crop.
During that time, the dealership evolved with the ag landscape. But for as much as it has revised its machinery lineup to accommodate its clientele, it has also reached a fork in the road.
“This is not a good location, and it's really an old school location,” says general manager Jim Dokken. “We've outgrown this facility. When you reach that point, the decision has to be made on whether you want to continue with the business. If you do, you have to make a big commitment.”
While he knows the reality of the situation, Dokken's hands are tied.
At 95, Frances Linder oversees the family business that her husband, David, and their son, Robert, once ran. The two men carried the dealership through good times and bad with an eye to the future.
When David was at the helm, he took the company his grandfather built and further developed that business with deep roots in the local community. Known for running a tight ship, he was a visible owner who had a genuine interest in his employees.
After David's death in 2001, Robert took over. Back then, Robert knew the business was headed toward a critical juncture. But any plans for growth faded away in 2011 when he suddenly died.
“We were making real progress with Robert,” notes Dokken. “He understood that in order to stay competitive, we had to look at expansion.”
Even with projected earnings at about $24 million in 2012, the door that was once open to expanding the business has been closed.
The dealership not only has outgrown its current space, but also is the sole site in a world where multistore locations are becoming the norm.
“The old days of the single-location dealership are pretty much a thing of the past,” says Dokken. “This is a family business, but those days are numbered because it's all about economies of scale and keeping the numbers up.”
As major iron makers reshape their dealer networks, owners are forced to take a long, hard look at their future and what it will take to survive.
“We're not doing it because we want to be a pain to our dealer network,” says Alistair McLelland, AGCO. “We believe small single-store dealerships – and there will always be exceptions – will have to expand into or become part of multistore operations to achieve the critical mass required so they can make investments in the business.
“Dealers recognize that a business with a portfolio of $5, $7, or $10 million is going to struggle to be seen as a viable alternative to a $100-million dealership. They just can't keep up with the investment requirement there,” he says.