GLOBAL HARVEST TRACTOR PULL

HOW BRANDT HOLDINGS TURNED A DOMESTIC CHALLENGE INTO A GLOBAL BUSINESS OPPORTUNITY

[By Paul Brennan], Global Trade Magazine, June-July, 2012

You remember those grade-school maps, the ones that marked places with icons depicting chief industrial output—iron for good-old Pittsburgh, a film reel next to Los Angeles, an automobile for Detroit, oil wells across Oklahoma and Texas, steer for Chicago’s stockyards, maybe?

North Dakota would have been stamped with geologically significant sheaves of wheat or monstrous loaves of bread. Today, while still a major grain exporter, North Dakota’s No. 1 export is tractors. And one of the leading agricultural equipment exporters is Brandt Holdings Company of Fargo.

For most Fargoans, Brandt is probably best known as the owner of the local hockey team, the United States Hockey League’s Fargo Force. But internationally, it’s Brandt’s agricultural division that attracts the most attention. So much so, that last year the company received from the Commerce Department’s International Trade Administration the Presidential “E” award, which was established in 1961 to honor “persons, firms, or organizations which contribute significantly in the effort to increase United States exports.”

Still, Brandt’s international sales make up only 5 percent of its overall sales. But it’s precisely because Brandt’s domestic sales are so large, that its international sales are so necessary.

The company was founded in 1992 by Ace A. Brandt. Brandt, the son of an agri-businessman, grew up on the family farm in North Dakota, and his company’s reach now extends from the needs of farmers to real estate development and the gap-toothed smiles of junior-league hockey players. Importantly, Brandt Holdings owns 23 John Deere dealerships over five states.

John Deere is an iconic brand, of course, both here in the United States and abroad. Its   green and yellow color scheme is familiar to people who have never been any closer to a farm than their supermarket’s produce department. Its name is synonymous with agricultural equipment from riding movers to massive combines. But with all the inbuilt advantages that come with owning a dealership of any sort, there are certain constraints as well. And it is in those constraints that Brandt Holdings has found opportunities.

First, John Deere does not allow its independent dealers to sell new equipment to foreign customers. Deere, naturally enough, doesn’t want to be competing against its own product for international sales.

Second, just as a new car dealer inevitably ends up with an inventory of used cars as well, a John Deere dealer ends up with used equipment. And when you have 23 John Deere dealerships you end up with a lot of it. Unfortunately, there’s virtually no market for used John Deere farm equipment in the United States.

It’s not that used Deeres aren’t reliable. It’s that the evolving state and federal regulation of farming practices, and tax incentives, make the purchase of new (rather than used) equipment the logical choice for an American farmer. That’s why, according to Stacy Anthony, Brandt Holdings’ international sales manager, “a dealer needs to adopt a global mindset.”

Anthony, who has worked in agribusiness sales since leaving the southeastern Kansas family farm where he grew up, was a natural choice to head up sales when Brandt expanded into the international market in 2006. With more than two decades of experience, Anthony, who had owned his own Deere dealership as well as having worked for a multi-dealership chain, had given a lot thought to the opportunities for domestic dealers overseas.

If you can’t sell new equipment abroad, and you can’t sell used domestically, finding markets for your used stock abroad both turns a dead weight into a valuable commodity and creates a revenue stream that bypasses the constraints the manufacturer has placed on you.

Assuming such markets exist. And they do.

The most obvious advantage to buying used equipment is the savings. For example, depending on the model, a new combine costs between $350,000 and $500,000. Brandt, on the other hand, offers a top of the line 2009 John Deere combine for $269,500. And naturally, the older the piece of equipment, the greater the savings. “Most of our inventory is 15 years old or less,” says Anthony, although there are a few outliers. Brandt’s inventory includes a 1959 International Harvester tractor for $4,500. For those whose taste in farm equipment runs more to the era of Mad Men, instead of the Eisenhower years, there’s also a 1962 John Deere tractor for $6,500.

Another factor that makes used American farm equipment attractive is the relative definition of “used.”

“An American farmer will typically put 300 to 500 hours of use on a piece of equipment each year,” Anthony explains, “while the same piece of equipment in one of the vast farming enterprises overseas will get between 10,000 and 15,000 hours of use a year.” What’s thoroughly used to an American is much closer to new in, say, Ukraine.

So say you’re a Ukrainian agri-businessman, and you’ve bought a combine from Brandt. Now what? You can’t exactly drive it home. That’s where customer service comes in. And according to Stacy Anthony, that’s the real secret to Brandt’s success: “Service, and our people, are what make us really stand out,” he says.

Brandt offers a disassembly service. So, from the dealership your combine goes to a disassembly center in Illinois, after which it will fit into a conventional 8×40 shipping container. Then it travels by ground—truck or train—to the appropriate port, and is loaded on a cargo ship. Even when shipping to Mexico, it’s still less expensive to send it by water.

But savings become much less important if you find yourself staring at shipping container full of combine parts like a baffled father trying to assemble toys on Christmas morning. That’s why Brandt offers to arrange for either a reassembly service to handle matters at the end user’s location, or to train the purchaser’s employees to turn the parts back into the whole.

Reassembly training isn’t the only training Brandt offers its international customers. It offers a full-range of training in the use and servicing of the equipment it sells, either in the customer’s home country or at one of its training facilities in North Dakota, South Dakota, Illinois and Minnesota.

Likewise, Brandt is ready with spare parts, an important consideration for the purchaser of used equipment. “We try to direct our customers to local sources,” Anthony says, “but if those aren’t available—whether it’s because the country doesn’t have a developed network of suppliers or because local dealers prefer to concentrate on new equipment—we can sell them the parts they need.”

That attitude of putting local sources first is, no doubt, another reason for Brandt’s success. Instead of just trying to barge into a new market, Anthony and his team carefully consider what would be the best approach for each country, whether it’s partnering with established local dealers or selling directly to end users.

Partnership is working. Working out of Brandt’s international sales office in Sioux Falls, South Dakota, Anthony and his sales staff (five employees in Sioux Falls and another three at the corporate headquarters in Fargo) now have customers in 18 countries, with their biggest markets in Mexico and Ukraine. Sales have grown steadily since 2006, with the exception of the generally disastrous years of 2008 and 2009 (which, of course, saw sales drop in almost ever sector of the economy, except perhaps for retailers of antidepressants). Anthony predicts sales will grow again in 2012. And Brandt is looking to expand into more countries, particularly in the southern hemisphere: because farm equipment sales follow the seasons, and the seasons south of the equator are opposite those in the north, more customers in the south will produce a more consistent sales profile.

“You have to treat the customer the same whether he’s five miles down the road or 5,000 miles across the ocean,” is how Stacy Anthony sums up the attitude of Brandt Holdings. It’s that sort of mindset that allows a business to turn a local liability into international success.

 

Advertisements

About Alexander Gordin
An international merchant banking professional with over twenty years of business operating and advisory experience in the areas of export finance, international project finance, risk mitigation and cross-border business development. Clients include foreign governments, municipalities and state enterprises as well as Fortune 500 and small/medium enterprises. Strong entrepreneurial instincts, combined with leadership and strategic skills. Transactional and negotiations experience in over thirty five countries. Author of the highly acclaimed "Fluent in Foreign Business" book and creator of the "Fluent in OPIC", "Fluent in EXIM","Fluent In Foreign Franchising", "Fluent in FCPA",and "Fluent in USTDA" seminar/webinar series. Currently developing "Fluent In ......" seminars and publications. Co-author of the Fi3 Country Business Appeal Indices. Extensive international business development and project finance transaction experience in healthcare, aerospace, ICT, conventional and alternative energy infrastructure, distribution and hospitality industries. Experience managing international public and private corporations. Co-Founded three companies abroad. Strong Emerging and Frontier Market expertise. Published and featured in numerous publications including: The Wall Street Journal, Knowledge@Wharton, NBC.com, The Chicago Tribune, Industry Week, Industry Today, Business Finance, Wharton Magazine Blog, NY Enterprise Report, Success magazine, Kyiv Post and on a number of radio and television programs including: Voice of America, CNBC, CNNfn, and Bloomberg. Frequent speaker on strategy, cross-border finance and international business development. Executive MBA from the Wharton School at the University of Pennsylvania. B.S. in Management of Information Systems from the Polytechnic Institute of NYU. Specialties Strategic Management Advisory, Export Finance, International Project Finance & Risk Management, Cross-border Negotiations, Structured Finance transactions, Senior Government and Corporate officials liason

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Site Title

“Love recognizes no barriers. It jumps hurdles, leaps fences, penetrates walls to arrive at its destination full of hope.” — Maya Angelou

Museum of International Trade & Merchant Banking (MoMBIT)

chronicling the importance of international trade and merchant banking in the global development

Fluent In Foreign Business

Helping To Grow Your Business Abroad

Emerging Market Insights

How to make a killing in Emerging Markets without losing your shirt?

Ideas That Work @ GIDASPOV.COM

Strategy | Creativity | Innovation | Fundraising | Marketing

Nu Leadership Revolution Blog

“Helping Emerging Leaders Gain the Competitive Advantage in the Future"

Mike Z's Blog

Exploring the causes of cancer throughout the world

Bucket List Publications

Indulge- Travel, Adventure, & New Experiences

FranchisEssentials

Sharing Information, Insight and Perspective about Franchising, Small Business and Entrepreneurship

bizrisk.wordpress.com/

We Help Insurance Agencies Stand Out

The WordPress.com Blog

The latest news on WordPress.com and the WordPress community.

%d bloggers like this: