Titan Machinery closing 12 dealerships to reduce expenses
April 13, 2017
The largest Case IH dealer in North America recently announced it will be closing 12 dealerships in five Midwestern states, specifically Nebraska, North Dakota, South Dakota, Iowa and Minnesota.
Titan Machinery is undergoing a restructuring, which led company officials to call for the closures designed to "significantly reduce" expenses. Locations being closed are in Anthon and Cherokee, Iowa; Redwood Falls and Thief River Falls, Minnesota; Broken Bow and Wahoo, Nebraska; Arthur, Kintyre, Kulm and Mayville, North Dakota; and Milbank and Redfield, South Dakota. One store closed at the end of January, while the remaining will close during the first half of the year. The restructuring plan will reduce expenses by approximately $25 million.
Cindy Feldman, marketing director for the Iowa-Nebraska Equipment Dealers Association, said the industry wasn't surprised by the restructuring announcement.
"Everyone knew this was coming. They grew too big and too fast. We knew at some point, because the economy is cyclical, that they'd have to downsize and restructure," she said.
“Everyone knew this was coming. They grew too big and too fast. We knew at some point, because the economy is cyclical, that they’d have to downsize and restructure.”
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Titan company officials say sales and service departments, as well as rental services, at the locations to be closed will be absorbed by other area stores. However, that could result in a drive ranging from 25 to 50 miles one way for some farmers.
Feldman said the farm machinery industry in general tries to have a service center located within a 30-mile radius of a farming area.
Jeff Bowman, chief marketing officer for Titan Machinery, said the company aimed to keep open stores within 35 to 40 miles from heavy agriculture areas to minimize the impact on producers.
"There have been some upset producers, but most of the stores we're closing are very much on the small side of our operation. So they may have a few service bays and only three or four service technicians, whereas larger stores have 20 or more technicians," Bowman said. "Also, the technology in machinery is getting bigger and trickier with all of the hardware and software. The telematics is getting harder and harder to understand. So if you're trying to serve a customer with only three or four technicians out of a couple service bays and they come at you with anything in the product line, it becomes more difficult to serve the customers and we want to offer them the best possible service and our precision ag specialists who can take care of them much better."
The employees at stores being shut down will have the option to seek employment at other stores. Bowman said some do not want to commute 30 miles though.
"There will be layoffs and self-selection," he said.
SMALL TOWN IMPACT
Loren Lindholm, mayor of Wahoo, said the closure of Titan's shop in his town will have impact many levels.
"I think they said there'll be 29 employees affected here. Some will find employment at Fremont, but others won't. That obviously has a huge impact on a smaller-sized community like Wahoo," Lindholm said. "We don't like it, but it's not our decision to make and there's not much we can do to stop it."
City officials hope that another business moves into that spot and helps generate more jobs. They also hope the Titan employees will find employment locally.
"We want to keep these families here in town," Lindholm said.
The city will continue to receive property tax income generated off the Titan site as long as it remains in ownership of a private entity. But the sales tax stemming from the sale of items at Titan will be a big hit.
"There were items subject to the sales tax and that has a multiplier effect on the people who work here and live here and spend money on local goods and commodities and services," he said.
To help make the transition to another store located further away easier for producers, Bowman said the company will offer customers transportation cost offsets through March 2019, if they need a service truck to come to them on site or if they're shipping something to the service shop.
"We don't want them to pay anymore after the closures versus what they would've paid at their old stores," he said. "We're also setting up a series of parts drop-off locations where producers can pick up parts closer to them. We'll also have a parts runner out once or twice a day, so we're doing the driving for them as much as we can. People are accustomed to ordering things online and having them shipped to their door, so we want to move more in that direction."
Mark Othmer, Nebraska field representative for the Iowa-Nebraska Equipment Dealers Association, said farmers were talking to him about the looming closures in December.
"There is unrest among farmers in the area," Othmer said. "I went through the '80s and we were closing down locations every other day then every week for the entire year in 1983. That was a fearful time. What we have going on now is a minor inconvenience."
Titan Machinery has 89 locations in North America and an additional 20 locations in Europe. ❖
— Danley-Greiner has spent more than 20 years as a journalist covering local, state and national issues important to agriculture and those dedicated to farming.