JOHN DEERE closes local dealership!!..

I don't know if this is true to the current day but Deere's goal was once in Iowa to have 4 main dealerships. One in the NE, SE, SW, and NW. Each of these dealers would have multiple satelite stores around. The problems I see that is distance to get parts and sevice and "Good ol competition".
Just think if you lived in SW Iowa and the SW dealer was a crook or provided poor parts and service. You would have to travel halfway across the state to get parts and service from another dealer. The worst thing that I can see is that those 4 dealerships could come together on what to sell their new-used equipment for and along with shop rates. This would cause a severe monopoly in the marketplace for buying new or used JD equipment.

Everybody that has said that JD is only worried about their bottom line is very right. I heard from a dealer during the intoduction of the 20 series tractors. When the new CEO was talking to the dealers at the dealer meeting he was is only worried about the shareholders and how much money needed Deere for profit to make the sharholders invest more money into Deere. The CEO never talked about product demand or trend or what product should the dealer should be pushing harder on and not so hard on. Overall this dealer felt he was in a stockholder's meeting not a dealer's meeting.

I was wanting to work for deere. But the CEO's idea worrying about stockholders more than employees seems to me not to be a good place for a long term career. When the company shows a loss that's no big deal, layoff some employees for cheaper ones, then we (Deere) will show a profit and that will make our stockholder's happy.

I think the CEO's Thinking could hurt Deere in the long run. Deere could loose good engineers which could lead to a crap product. If they keep on eliminating good dealers it would be hard to sell their products in certain areas.

Deere has to remember what makes their company is the dealers and the farmers and other people that go into those dealers to buy John Deere products and services. It would be hard to show a profit to the stockholders if Deere lost their Dealer and customer base.

We haven't though. Crop prices have stayed the same for what.. 10 to 15 years? Try selling that program to your local medical insurance company. The farmers who survive have generally done so by getting bigger and more efficient -- and travelling all over creation. The number of USA farms has decreased about 3 per cent per year over the past 40 years. How can you expect the number of Ag dealers to stay the same when their market keeps shrinking? 40 acres and a tractor has become 400 acres and 2 or 3 tractors. Not 10 tractors. 50 years ago, nearly 100% of JD's sales were Ag equipment. Now it's only 44%. Industrial and lawn care stuff is over half the company. Things change. I'm not always happy about it either. JD stock lost 2.63% of its value today. A quarter of a billion dollars of JD's value gone in ONE day! Don't like that either. Guys in Moline are probably nervous. There's more pressure than ever to grow and get those payments collected from dealers. Nobody in their right mind wants to put people out of business. But nobody stays in business if they don't get paid.

I'd much rather be living on a 160 acre farm like my Grand Dad, and doing business with the small local JD or IH dealer. But there isn't a small farm there anymore, the local JD dealer has disappeared, and new Farmalls don't exist. I don't think it can ever be that way I remember again. Last car I bought was from a "dealer" that owns 123 stores in the USA and 66 stores in England. They were all bought from family owned dealerships. Our JD dealer owns 5 stores spread out over 100 miles or so. Same story, smaller scale. What do they say? .. success has many parents but failure is always an orphan.

I doubt this consolidation trend is going to change anytime in the near future. And if you think the Ag business is changing way too fast, you haven't talked to anybody lately who's spent the last 30 years in the electronics or computer business. Sorry for another sermon, but sitting here doing this is better than watching the stock market melt down.

Steve

I'm probably making too much of this, but it's interesting. We have an ever decreasing part of our population using an ever decreasing portion of the country's land and producing more than enough to feed an ever increasing number of people. That's the biggest success story in human history. Yet we're griping about it.

I'm afraid that even if we did wall off imports, we're too good at farming for it to make much of a difference. Farm productivity increases could still supply enough to still keep the prices down. There's not a lot of political support for farm subsidies now much less tariff barriers. Farmers are a decreasing population. Those urban SUV owners have more voting power any day. Other problem is, big tariffs just generate retaliation from other countries. Case in point: 1930 Hawley-Smoot tariffs. Biggest tariffs ever in US history. Result was more foreign tariffs in retaliation. So a little depression in 1930 grew to be a much bigger depression throughout the 30's.

If we could get other countries to be honest and lower tariffs like we do, there would be far less of a problem. Case in point: Japan. Lots of little farms tiny farms, probably lots of little Kubota dealers as well. The Japanese made it a political problem to import rice or much of anything else, including John Deeres. So they still have bunches of tiny inefficient farms -- and they pay 5 times what we pay for a bowl of rice. Another example is Europe, the EU. Food costs about the same there in absolute terms, but they have huge farm subsidies and government production limits. The result is more taxes. A gallon of gas there costs 6 bucks. Their crude oil costs the same as ours, the big difference is in taxes. Plus, you get 70 and 80 per cent income tax rates and 15 per cent sales taxes. And we think we're screwed up? You might remember how they were fire bombing McDonalds joints in France over tariffs we put on their truffles. Truffles. Who cares? Guess that's the thanks we get for pulling their bacon out of the fire twice last century.

If the playing field was level in the rest of the world, US farmers could probably come close to feeding the world's population. We wouldn't solve the buy retail and sell wholesale problem. But US taxpayers would still have cheap food and little or no taxes for farm subsidies. Farmers wouldn't have government types in their face ( but they'd probably have just as many people employed at USDA). Also, you wouldn't see charities moaning about hunger in XYZ country. Nobody could claim their wasnt enough food in the world. They're starving there because of the clowns who run XYZ country and steal people blind in the process. It has nothing to do with the zero growth or "sustainable" growth idiots. The only people who think that are the ones who never understood that Thomas Malthus, the original starvation economist, was proven wrong by John Deere himself 150 years ago.

Besides import tariffs and local politics elsewhere, our other problem is the strong dollar. That shouldn't be. We have huge trade deficits, the dollar should go way down and our farm exports should be much cheaper. By all rights we should drive South American, Japanese and European farmers out of business. There'd be fewer Mercedes and Lexus SUV's coming in but more John Deeres and Chevy's and Nebraska corn being exported. Heck, Moline could probably afford to float a lot more local JD dealers thru tough times on what they'd make in increased exports! The thing is though, capital keeps flowing in to the USA. Other currencies get traded for US dollars and the dollar stays strong. Most efficient and stable economy, best growth rates, and most open and honest accounting system keeps money flowing in here. The recent scandals here are a drop in the bucket compared to the way they cook the books offshore. By US standards, half of Japan should be in bankruptcy. An Enron or World Com can't hold a candle to the messes and bad loans they cover up in Japan, S. Korea, and a lot of other counties.

All the above boils down to politics offshore screwing up our economy, and us not doing enough in our own self interests here at home. Those urban eaters you talk about don't want to pay taxes for farm subsidies, and they surely don't want to pay more for food. They vote. It's not going to happen. Some enviro types would just as soon see all the food imported. Just like some don't mind if all the oil is imported. Oil imports have generated rich fanatics trying to kill us. All imported food would be an even greater weapon.

I don't think we'll ever change the rest of the world into the USA. In a way we're victims of our own success. The most efficient farmers in the world -- here in the USA -- still need subsidies because the far less efficient farmers in other parts of the world are effectively getting much bigger subsidies. Both directly from their governments and from our currency.

I guess you could have lots of local JD dealers like they have local Kubota dealers in Japan if you didn't mind living in a house the size of two of our size bedrooms, have an economy that hasn't grown at all in the past 10 years, and have the fastest growing suicide rate in the world. Or you could be a European and pay 6 bucks for a gallon of gas, and effectively lose the freedom of travel we enjoy. All in all, if it means giving up a few dealers or a few whatever else we remember from the past for the sake of the growth, prosperity and freedom we have now; we're probably still way ahead of the game. This is still the best place to live, still the shining city on the hill to the rest of the world. We do know that most of the rest of the world still wants to come here to live. Maybe guys like you and me shouldn't complain as much about it as we do. But then we were the first people in the world to realize we had a God given right to complain. A liberty like that needs to be exercised and held dear! More of a rant than a sermon this time. Maybe we should all go out and buy a tune up set for our JD poppers from our local dealer this weekend. Show our support -- two spark plugs at a time!

Steve

JD didn't own the dealership. They probably had little or no part in the decision you're upset about. In all likelihood, the dealer himself decided to close down. Like any other maker of things, JD needs to get paid for what it ships out on some kind of timely basis. But I seriously doubt that JD pulled the plug. They absolutely want to have good people like you describe giving good service and generating more sales for the equipment they make.

Maybe bad estate planning had the Feds end up owning 65% of the dealer's business after the owner died, so the heirs decided to throw in the towel. Happens on farms all the time. Why not a farm equipment dealer? Whatever it was, I seriously doubt JD management did it to hurt you.

What I do know for sure is that JD itself lost money for 6 of the last 9 to 10 months. Things have been tough in the Ag economy. A company that is shelling out more than it's taking in cannot afford to do things just to maintain its image. You know that's true from the way you run your own household. Any company is nothing more than a big household. Ultimately JD and that dealer have to do right by the people who own the respective companies just as you have to do right by your own family.

We've seen the same thing happen here in Indiana. Large population counties aren't the best places to sell Ag tractors. If they were, you'd see a JD dealer on every block in Manhatten -- New York, not Kansas. On the other hand, a good dealer from around there might move in and open up a branch in the same building to make a good income selling lawn and utility tractors -- and keep you supplied in JD parts and service for Ag tractors in the bargain. That's also happened here in Indiana -- really close to where I live. Market forces aren't always kind, and they aren't always immediately rational, if you farm, you surely know that ten times over. In the end they're the best way to allocate capital and resources.

Step back a bit and compare that long green line to CNH or AGCO or anybody else. It doesn't take much to see who has done the best job over the long haul. I'm not JD management, nor employee, or a JD dealer, nor a JD dealer empoyee. But I am a JD stockholder. So I am putting my money where my mouth is. Those guys in Moline have built one of the best run and most respected companies in America over the past 100 or more years. That one dealer may cause you some temporary pain, but in the long term, you're still on the right track.

keep the faith... end of "green" sermon...

Steve