Standing at a table in the concessions area of Winnipeg’s MTS Centre, I had a chance to have a beer and a candid conversation with Garrett Ganden, chief operating officer of Rocky Mountain Dealerships, Inc. With 38 Case IH and New Holland outlets in the West, Rocky is Canada’s giant in the ag equipment retail business.
Rocky is also a corporate sponsor of the Winnipeg Jets, and the company was holding a reception for some of its dealers and customers in a stadium conference room a few hours before the team took to the ice to host the Saint Louis Blues. A couple of members of the media were invited to attend the reception in order to get some one-on-one time with company executives and talk about how the big dealer sees its place in the ag equipment market.
Of course, the biggest question I had to throw at Ganden was, when will we see the next expansion, moving Rocky beyond 38 stores. Naturally, because Rocky is a publicly traded company, he couldn’t say much about that at anything other than an investors’ meeting. But I thought I noticed a glimmer of excitement in his eyes when the question arose.
Any future acquisitions need to be right for the company. “I don’t want to just buy businesses,” he said. All expansions—if there are any more—will be acquiring businesses that fit closely with the core business model all Rocky stores concentrate on: that is catering to mainstream producers. There won’t be any dabbling with something like opening “boutique” stores that could focus on selling equipment that appeals more to consumer or small-holdings owners, although they certainly will, and do, sell those products out of their existing locations. But that isn’t at the core of their activities.
Ganden’s comments echo what Rocky’s vice president Jim Wood said when I talked with him at Canada’s Farm Progress Show in June. Wood made it clear the company would like to continue to grow, but at a sensible pace and into the right regions. Over the past year, Wood explained, the company has been concentrating on ensuring the stores it already has are functioning as well as they should. That has included a program to standardize the appearance of all its buildings as part of an overall rebranding effort.
According to Ganden getting all the store fronts remodelled to their specifications has not gone as smoothly as expected, due primarily to delays in obtaining all the necessary building permits and approvals from local governments.
Keeping all 38 stores running has posed some other on-going challenges for Rocky’s management, especially when it comes to finding employees. Competing in the West’s tight labour market has forced the company to go abroad looking for skilled workers, like mechanics, in countries such as Poland, Mexico and Ireland.
But Ganden says they have been very selective about who they bring back to Canada, putting each potential employee and his family through a series of interviews before they’re hired. And to keep them, the firm has gone out of its way to support those workers through their transition to a new country and culture. The program has been successful, notes Ganden, with only one very homesick employee choosing to go back so far.
When it comes to the machinery market, Ganden says the backlog of used equipment, particularly combines, has eased. In fact, the company’s second quarter financial statement shows the value of its used inventory has fallen by $28 million. The report adds, “This (used inventory reduction) remains an area of focus for Rocky going forward”.
Ganden says management at Rocky sees demand for new machines slowing in 2014, something Jim Walker, vice president of Rocky’s equipment supplier, Case IH, expects to happen as well. The dealer network’s second quarter revenue this spring grew by 5.5 per cent, but earlier exceptions were that the growth would be higher, which may be an early indicator of that slackening demand trend. However, 5.5 per cent growth is still strong by any standard.
Although demand for new equipment will likely back off from the break-neck pace the industry has seen in recent years, Ganden expects it will probably settle into a more sustainable pattern of steady but relatively strong sales numbers. That will ease the industry-wide strain on all manufacturers and most dealer networks who, like Rocky, have struggled to keep pace with exceptional demand, giving everyone a chance to catch their breath.
That, said Ganden, is good news for the industry.