[Author: Andrew Goodman, 03.2016 | Keywords: Executive Insight, Industry Relations]
In the May 2000 issue of The Retailer, I wrote about the relationships between dealers and manufacturers and factors affecting those relationships. At that time, manufacturers had become much larger and more diversified, resulting in a wider range of interest with less focus on equipment dealers. As a result, manufacturers were more focused on results for stockholders. In 2000, top management at these companies came from professional fields, not the equipment industry. So the larger the manufacturer, the more difficult it was to have a good communication system and fair negotiating process in place with independent dealers. In addition, when there is such a disparity in size between the manufacturer and dealer, the manufacturer has the ability to affect dealer profitability through more than just the price of the product.
One factor affecting the dealer-manufacturer relationship today is the rapid speed at which business and society continue to change. Today it is far more difficult for businesses to conduct long-range planning. Those of us from the Baby Boomer generation think we still understand what long-range planning is all about. On the other hand, many of those from Generation X (born between 1965 and 1983) feel they don’t need to understand long range planning because in their fast moving world by the time they plan, it becomes obsolete. If we can’t effectively plan, how can we make adequate capital investments to be amortized over the long term?
Since 1997, I have served on the Equipment Association Executives Dealer-Manufacturer Relations Task Force. This task force meets individually with major manufacturers and shortline manufacturers regarding their specific manufacturer issues, in addition to groups of manufacturers through the Association of Equipment Manufacturers (AEM) and Farm Equipment Manufacturers Association (FEMA) to address industry-wide issues. This Task Force has worked in conjunction with manufacturers to remove some of the communication barriers that previously existed between dealers and manufacturers. In many cases, we created a dialogue that encourages an open discussion of contract issues with manufacturers. In some situations we helped manufacturers review dealer contracts, while in others we helped improve communications between dealers and manufacturers on conflicting issues.
Neither dealer nor manufacturer representatives want to be forced to resolve issues through the legislative/court systems. Our goal is to resolve many of these issues through open, face-to-face discussions with decision makers. This doesn’t mean that we have solved all of the issues with every manufacturer, but we have had positive results.
Much of this work is done quietly without any fanfare and very little publication. While it wouldn’t be appropriate to discuss individual dealer manufacturer issues publicly, it is important to recognize that a good portion of Association time is spent on these issues. We continue to actively work as a dealer advocate for all brands of agricultural, construction, industrial and outdoor power equipment. Some issues discussed include areas of responsibility, contract terms, dealership purity, dealer standards, dealership succession, market share demand, termination rights, warranty reimbursement and dealer profitability.
The true gauge of our effectiveness as a group lies in the results each individual dealer sees in the changing relationships with their individual manufacturers and ultimately, the profitability of their dealership.
Mark Your Calendars
The I-NEDA Annual Conference will take place July 11-12 at the Embassy Suites in LaVista, Nebraska. From informative speakers and plant tours, to networking opportunities and more, this is an event you won’t want to miss.
About the Author
Andy has worked in the equipment industry for 47 years; 22 of those leading I-NEDA. His extensive knowledge and experience helps Andy guide our members through dealer-manufacturer relationships, complicated mergers and acquisitions, and legislative issues. When he’s not working, Andy enjoys riding his motorcycle, fishing, model railroading and spending time with his wife and grandchildren.