The Rural Voice, 1981-12, Page 11Machinery dealers
feeling the pinch
by Adrian Vos
Farm women in Bruce County beseech
Ag. Minister Eugene Whelan to do
something to help them survive this
depression of the eighties.
Ontario cattlemen have formed an
action group to promote changes in the
beef marketing system, a system that
appears to have failed them in most of the
last ten years.
Ontario pork producers are scouring the
province to solicit support for a supply
management system that will possibly
help the industry.
But not only farmers are hurting.
Members of the Ontario Retail Farm
Equipment Dealers Association
(ORFEDA) say they also are in serious
trouble.
John Radford, president of Radford's
Garage Ltd., in Londesboro , who has one
of the largest White dealerships in
,Ontario, predicts at least six equipment
dealers will have to close their business in
Huron County alone. Some because they
will be bankrupt.
ORFEDA told the Emergency Task
Force of the OFA in London, they are in
exactly the same boat as farmers, a
statement echoed by Radford. But Rad-
ford goes a step further and claims that not
all have problems caused by the economic
depression. He said that dealers should
have seen the handwriting on the wall and
decreased their inventory which is
hanging around their necks like a
millstone.
Just as many farmers expanded their
operations, thinking there would be no
end to high prices, he says the same thing
happened in the equipment supply
industry.
The association stand is that the dealer
must take in high-priced used equipment
in order to sell new machinery, but
Radford disputes that. He says he paid for
trade-ins only what he thought they were
worth, including thr cost of holding the
equipment for an extended period.
Not that he claims infallibility. He says
he sold some tractors last year at a loss.
That sacrifice paid off, for if he had kept
them the cost of the carrying charges at
the bank would have made the loss even
greater.
Holding longer than warranted has
been citicized by the Canadian Cattle-
men's Association (CCA) in addressing
some beef producers.
For many years, the general farm
organizations, with the OFA in the
vanguard, have fought for an adequate
supply of spare parts. Year after year
farmers were stopped in their tracks in the
middle of a busy season, because a piece
of farm machinery broke down and spare
parts had to come from a long distance.
This problem has largely been overcome
in the last few years. But ORFEDA fears
the problem may return, not only because
of the cost of carrying parts for long
periods, but partly because of the action of
the OFA. The OFA farm machinery
agency sells the fast moving items,
according to ORFEDA, and leaves the
slow-moving, interest -carrying items for
the dealers. They appealed at the OFA
London hearing for more co-operation.
But John Radford is not concerned
about that; he thinks it only a minor
irritant. The culprit is the high interest
rate.
However, ORFEDA stated: "The
legitimate TOTAL SERVICE Farm
Equipment Dealer and Manufacturer has
no alternative but to increase the price on
the slow moving items to retain profit
margins."
They claim the trend to stock less of the
slow-moving items had already started.
It appears machinery manufacturers
are closing all loopholes that might allow a
dealer to evade responsibility in time of
bankruptcy.
White also wanted his wife
to sign a personal guarantee, he says
There is no way he or she are going to sign.
When the company threatened to take
away his dealership he stood firm. Even
the president of the U.S. part of the
company, I.T.C., called him, but Radford
told him he would rather return all
equipment to the company than give up
his family's protection.
Radford insists White has an obligation
to its Canadian customers by reason of the
$30 - million in government funds it
received when it was in trouble last year.
White supplies equipment interest-free
for the first six months. After that the
contract is sold to a finance company and
the squeeze may be on. Radford thinks the
finance company is pressuring the White
company to put pressure on the dealers
with demands for personal guarantees.
Nevertheless, he feels little sympathy
for the managers who have to go out of
business. For some, it is just bad
management, he says. They are badly
overstocked. That was all right two years
ago, but no more. Some have an inventory
of S300,000 and they pay twenty-four per
cent interest, or S6,000 every month. That
while sales, and thus incomes, are down.
However, Joseph Lobb, sales manager
for H. Lobb and Sons, in Clinton, says that
the Case Company has not changed its
policies. He knows Case is working on
some way to be of more help to equipment
dealers.
Lobbs, too, have seen their sales drop
off dramatically. New manure spreaders
and feed milling and mixing equipment
haven't been moving at all for the last
twelve months, he says.
Lobb has heard rumors about a number
of Huron County equipment dealers who
are supposedly "going under". He claims
this must still be confirmed. Apparently
an economist has made predictions on the
basis of calculations that 30 per cent of all
deaiers would close before this year is out.
Lobb, who has a large inventory of used
equipment, says he will have to look for
markets for the used stuff outside Ontario,
possibly as far away as the Atlantic
provinces. He hasn't sold any machinery
at panic prices and he doesn't think he will
have to.
Some farmers are buying new
machinery now, he says, because seldom
have they been offered such good deals.
Nevertheless, repair shops are busy,
which seems to indicate at least a number
of farmers are still fixing their older
equipment. This is not always profitable,
Lobb says, because repair is often given to
a good customer as a service.
Joseph Lobb says "I've sold equipment
for a lot of years, but this is the toughest
time ever."
ORFEDA states in its presentation to
the Task Force: "There is no incentive
program to purchase used equipment and
THE RURAL VOICE/DECEMBER 1981 PG. 9