Yes You Can! . . .

#983 - MAY 2009

Yes You Can! . . . Be Heard in Washington DC, Lansing and Columbus!

PO Box 68 43017 Dublin OH 32 6800-60 63 0463 988 4Fax: 61 a.org ed m .o w ww lcusa.com info@amgl

PO Box 68 Dublin OH 43017 800-606-63 32 Fax: 614889-0463 www.omed a.org info@amgl lcusa.com

AN MICHIG RY IRECTO D E IV T LEGISLA

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21 (202) 224-62 DC 20510 on ngt shi (D) rl Wa Levin, Ca Building, Senate Office contact/ 22 269 Russell ov/ (202) 224-48 levin.senate.g Web Form: 20510 (D) Debbie shington DC Wa ng, Stabenow, ildi Bu nate Office ail.cfm 133 Hart Se nate.gov/em stabenow.se Web Form:

OHIO LEGISLA TIVE DIR ECTORY U.S. SEN ATE Sherr

od Brown (D) 713 Hart Se nate Office Building Wa Web Form: (202) 224-23 shington DC brown.senat 15 20510 e.gov/contac t/ George V. Vo inovich (R) 524 Hart Se nate Office Building Wa Web Form: (202) 224-33 shington DC http://voinovi 53 20510 ch.senate.go v/public/inde x.cfm

USE igan 48640................................................(3(80013) 961-5670 U.S. HO 48226 ...... Midland, Mich -2936 e, Detroit , MI Ashman St., ) 342-2455

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E E OFFIC XECUTIV STATE ifeEr M. Granholm

nn 9 Governor Je Lansing, Michigan 4890 3, 5-6863 PO Box 3001 3-3400 Fax:(517) 33 37 Phone: (517) D. Cherry, Jr. 9 Gov. John 90 Lieutenant Michigan 48 3, Lansing, 1-3956 PO Box 3001 3-6800 Fax: (517) 24 37 Phone: (517)

U.S. HO USE

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STATE E XECUTIV

Governor Ted Strickland (D) Governor’s Office, Riffe Center, 30th 77 S. High St. Floor, , Columbus , OH 432156108 Lieutenant Governor Le e Fisher (D) Lt. Governor ’s Office, Rif fe Center, 30t 77 S. High St. h Floor, , Columbus , OH 432156108

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E OFFIC E

(614) 466-35

55

(614) 466-33

79

Email [email protected]

Website www.sisco-inc.com Phone (800) 762-1062

Fax (800) 917-4726

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DEALER ADVOCACY CENTER for grassroots legislative activity

OMEDA’s Dealer Advocacy Center provides instant grassroots access to your representatives in both the State Legislature and the U.S. Congress. By using “Get Active” you can send either pre-written or personalized email letters to your State Senator, your State Representative or your U.S. Senator or U.S. Representative -- without having to know their email address. The “Get Active” software automatically determines your legislative district and the sends your letter on its way. You can even print out a copy of the finished letter for your own records. It’s fast, it’s easy, and, most importantly, it’s effective. It’s really grassroots activism at its best!

OMEDA Home Page E-mail OMEDA Staff

Federal issues are monitored by the North American Equipment Dealers Association (NAEDA), and grassroots access to Congress is gained from the NAEDA website, www.naeda.com. State issues are monitored by OMEDA and grassroots access to your State Senator and State Representatives are gained right from this page on the actual website. For more information, contact info @ amgllcusa.com

OHIO TO USE $5.8 BILLION IN FEDERAL STIMULUS TO BALANCE BUDGET

HB 1, the state’s biennial operating budget for FY 2010-11, will use more than $5.8 billion in federal stimulus funds to help balance it over the next two years. This includes $1.8 billion for a state fiscal stabilization fund intended to provide fiscal relief and prevent tax increases or cutbacks in education, health care or other priority services. It also includes $1.482 billion to local school districts to prevent layoffs, reductions in services and for other purposes, and $461 million to assist states in educating students with learning disabilities and for economically disadvantaged students.

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The federal stimulus bill included several tax changes that could benefit Ohio businesses yet reduce state revenue collections. These include: • Allowing the deferral of recognition of income from discharging business indebtedness caused by “buyback” of a debt instrument; and, •

Permitting the deduction of 2008 net operating losses over a fiveyear rather than two-year period for businesses with gross receipts of $15 million or less.

While these tax changes could benefit Ohio businesses, the state can choose to “decouple” from federal tax law and thereby deny the deductions for state tax purposes. HB 1 also includes language that limits the vendor discount for remitting sales & use taxes. In her testimony before the House Finance & Appropriations Committee, OBM director Pari Sabety said inclusion of the changes to the vendor discount got into the bill by mistake. She said an amendment deleting the language and restoring current law will be included in the bill.

P.O. Bo Dublin, Oh x 68 io www.om 43017 eda.org 614-8891309 Fax: 61 E-mail: inf 4-889-0463 o@amgll cusa.co

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Michigan Update

Governor Takes Position on Tax Cuts Governor Granholm made it clear that any tax cuts the Legislature enacts must be paid for in a way that does not slash state revenues. The governor also suggested that cutting revenues at a time when there are critical needs in the state would be irresponsible. Governor Granholm made the comments at the end of a week which saw the Senate pass a number of proposals to cut property taxes. Governor Granholm also suggested she could back a graduated income tax to replace the surcharge on the Michigan Business Tax. (see stories below) But Ms. Granholm made it clear she did not back slashing state revenues. And the state has to be able to provide education, health care, especially to needy citizens, at this time. Senate Passes Property Tax Cuts Just a day after failing on a 23-11 vote, the State Senate passed a proposed constitutional amendment that would assure property owners do not pay any more property tax when their assessed values drop. It was approved on a 29-8 vote and, as it is a constitutional amendment, it needed at least 25 yes votes to pass. Eight Democrats joined all 20 Republican senators in passing the measure. Before the proposal can take effect it must also clear the House by a two-thirds majority, or 74 votes, and then be approved by the voters. Under SJR H, beginning in a year after 2009, if a property owner’s assessed valuation declined from the year before then the property’s taxable value could not increase. Critics of the measure blasted it as inflicting a major revenue cut on local governments, but supporters said it would provide some rationality to the property tax system at a time when real estate values have been plummeting. The Senate Fiscal Agency has estimated that the proposal could cost local governments and schools as much as $253 million if the real estate market continues its downward slide. MBT Replacement in the Works? Recently it surfaced that a proposal, made by Michigan State University economist Charles Ballard to repeal the entire MBT and replace it with a graduated income tax

(which would take voter approval), had been outlined to a number leaders and groups, including Governor Granholm. Governor Granholm noted that she has long supported a graduated income tax, and would support one to replace the surcharge on the MBT, but she did not back repealing the entire MBT, nor is there such a proposal on the table. House Speaker Andy Dillon (D-Redford Twp.) has called for a review of the state’s entire tax structure. No Income Tax on Unemployment Benefits A bipartisan bill set to be introduced in the House next week would eliminate the income tax assessed to unemployment benefit checks, but recipients of those dollars already are seeing relief under the federal stimulus package. The legislative measure would cost the state about $75-$100 million annually according to preliminary estimates. With the average period of unemployment lasting 15 weeks, the bill would save families about $46. But as part of the federal stimulus package, income taxes are not assessed on the first $2,400 in unemployment benefits a person receives this year. It isn’t clear if any other states provide the same kind of exemption for unemployment recipients, except for those states that have no personal income tax. The state’s jobless rate is now at 12.5%, tops in the country. Also, Metropolitan Detroit still holds the title for worst unemployment among the largest metro communities in the United States, at 13%. Stimulus Begins In Michigan The first portions of Michigan’s piece of the Federal Stimulus Package have been signed. Governor Granholm signed legislation authorizing the use of $873 million in federal stimulus funds for transportation purposes. According to some figures, those funds should help create or preserve some 25,000 jobs in the state. Governor Granholm also signed legislation authorizing expenditure of another $1.9 billion in federal stimulus money. The second appropriation includes funding for education, water programs, weatherization and other areas. As approved by the Legislature, the bill also includes a prohibition on any of the funding going to outside organizations for use for political purposes. The measure allocates about $1.9 billion of stimulus money, which is distributed according to federal formulas. Included in the funding is $900 million for public education in the state, which includes services to at-risk students; $248 million for sewer and drinking water improvements; $235 million for worker training programs including No Worker Left Behind; $190 million for community-based programs which will include food assistance for residents directly affected by the economic downturn; $244 million for weatherization programs to both help save energy and create jobs; and then $48 million for public safety programs.

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The Federal Legal, Legislative and Regulatory Summary U.S. to Toughen Its Stance On Trade

The Obama administration is aggressively reworking U.S. trade policy to more strongly emphasize domestic and social issues, from the displacement of American workers to climate change. Even as world trade takes its steepest drop in 80 years amid the global economic crisis, the administration is preparing to take a harder line with America’s trading partners. It will seek new benchmarks before supporting already-written trade agreements with Colombia and South Korea and is suggesting that it will dig in its heels on global trade talks, demanding that other countries make broader concessions first. The shift underscores the mounting pressures confronting any effort to expand trade during the economic crisis. Even before the global economy went code red late last year, talks aimed at expanding global trade stalled as Western countries warred with emerging giants like China and India over how to further open markets. Those divides appear to be more unbreachable than ever as world leaders move to protect their domestic industries from the ravages of the financial crisis, embracing new trade barriers aimed at imported goods and other measures meant to restrict the flow of capital outside their borders. In the United States, more Americans are blaming cheap imports for job losses at home and congressional leaders pressed successfully to include a “buy American” provision in the $787 billion stimulus program to give an edge to U.S.-made products. Yet the administration, analysts say, is also up against an American public that is increasingly blaming the open U.S. trade policies of the past as part of the toxic mix at the root of the nation’s economic problems. White House nails down budget, what this means for LIFO Recently the House and Senate approved budget plans that would trim President Obama’s spending proposals for the coming fiscal year and curb his plans to cut taxes. However, the plans do address the central goals of Obama’s administration: an expansion of health care coverage for the uninsured, more money for college loans and a cap-and-trade system to reduce gases that contribute to global warming. The budgets now move to a conference committee where negotiators must resolve differences between the two, a prelude to the more difficult choices that will be required to enact the administration’s initiatives.

NAEDA would like to note that although repeal of LIFO is not specifically referenced in either budget, the instructions are broad enough that any tax policies could be changed. The House included in its budget proposal reconciliation instructions to the Ways & Means Committee, instructing the committee to enact tax legislation by September 29 to raise revenue to reduce the deficit. The Senate budget does not include reconciliation language, but it’s expected to be added when the two Houses agree on a Budget Conference Report. There is reason to assume that LIFO could be included in a reconciliation tax bill.

Vilsack provides EPA and USDA updates

Recently Agriculture Secretary Tom Vilsack, a longtime supporter of corn-based ethanol and other renewable fuels, speculated that the Environmental Protection Agency could raise the level of ethanol allowed in the U.S. gasoline supply from 10% to 12 or 13% in the near future and again later to 15 to 20%. He also announced his plans to work with the Energy Department to encourage the construction of transmission lines that would allow energy produced in rural states to be used in urban areas. Vilsack reported President Obama’s top three priorities for the USDA: improving nutrition for children, developing renewable fuels and weaning farmers from their reliance on fossil fuels. The USDA will receive a $28 billion portion of the stimulus package, which will reportedly break down as follows: •

The Supplemental Nutrition Assistance Program benefits will go up 13.6% per month beginning April 1. The package also provides nearly $300 million to help states process additional applications.

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Commodity distribution will be increased, including on Indian reservations.

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The USDA Farm Service Agency will immediately use $145 million provided in the bill for a direct operating loan program for lower-income farmers to buy farm equipment, feed, seed and fuel.

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The USDA Rural Development Agency will initially provide nearly 10,000 rural families with $14.9 million for homeownership financing and release funding for more than $400 million in pending applications for water and waste water grants, on top of $140 million in pending applications for water and waste water direct loans.

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$2.8 billion in stimulus money will be used to bring high-speed internet to underserved areas in rural states.

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OMEDA Financial Solutions

WE GO BEYOND OMEDA Financial Solutions team strives to go above and beyond your expectations. We go out of our way for more of your business. Call us day or night and put us to work for all your finance needs. Think Association 1st and utilize your OMEDA Financial Solutions team for your dealership and customers finance needs. QUESTIONS? Rick Niehaus ............(614) 361-3510 OMEDA FINANCIAL SOLUTIONS is your Association finance partner. s Premier Service s Ag Finance Expertise s Installment Contracts s Lease Options s Physical Damage Insurance s Rentals

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NAEDA board approves new policies

The NAEDA board conducted its annual meeting in March. During the meeting, the board approved several new policies, including one to support legislation to allow tax credits for technicians who purchase tools as a condition of their employment. The board also set its legislative priorities for the year. In addition to technician tool reimbursement, NAEDA’s legislative agenda will include defeating card check, pursuing approval of association health care plans, working to open up the credit market, and preventing repeal of LIFO. Another significant action was the approval of an expenditure from the Industry Relations Fund to support Farmtrac dealers. Money from the fund has been designated to pay legal expenses incurred to date in the continuing battle of some Farmtrac dealers to obtain proper treatment for parts supplies, warranty claims and reimbursement, and handling disputes over interest payments for unwanted inventory. The board also approved several recommendations from the NAEDA OPE Dealer Council. Perhaps the most significant was adoption of a position paper supporting expanded warranty reimbursement policies and the clarification of each party’s role in the process. The paper will be shared with all major OPE manufacturers. Plus, the board gave its approval to a special price for multilocation dealerships that submit Power Pro applications. The special pricing is in effect until the end of the year. If you have questions, please contact Joe Dykes at 636/349-6205 or send an email to [email protected]. In addition to serving as executive vice president of the Mississippi Valley Equipment Association, Dykes is director of NAEDA’s outdoor power equipment programs. Other notable actions taken by the board include: • Approval of a resolution presented by the SouthEastern Equipment Dealers Association calling for federal legislation to create national equipment registration. The resolution was presented because of the importance manufacturers place on market share. Alternatively, the resolution asks the NAEDA board to consider developing its own market share statistics. The resolution is now board policy. •

Approval of the association’s Plan of Work for 2009-10.

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Approval of NAEDA’s endorsement of AEM’s new international ag equipment show, Ag CONNECT EXPO 2010, to be held in Orlando, Fla., in January 2010.

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Approval of a dues increase, the first since 2003.

AEM: Farm Equipment Exports Grew 26% in ’08

U.S. exports of agricultural-related machinery totaled $10.4 billion dollars in 2008, an increase of 26% compared to the previous year, according to the Assn. of Equipment Manufacturers (AEM).The trade group consolidates U.S. Commerce Department data for offroad equipment with other sources into quarterly export trend reports. U.S. farm equipment exports to Australia/Oceania totaled $794 million, a 59% increase for 2008. Exports to Canada grew 31% in 2008, with purchases totaling $2.8 billion. South America took delivery of $888 million worth of American-made agricultural equipment in 2008, a gain of 29%, and exports to Europe increased 23% and totaled $4 billion. Asia bought $793 million worth of U.S. agricultural machinery, a 12% increase, while Central America’s export purchases of $813 million represented a 13% increase. Africa’s farm equipment export purchases were $299 million, a gain of 21%.

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FIRE at Bader and Sons Co. IN MT. PLEASANT Just about all that was left at Bader and Sons Co. on Pickard Street in Mt. Pleasant Sunday, March 30 was portions of metal walls and charred remains of tractors and other equipment.

Inside the John Deere dealership, a blackened forklift, tires melted to the floor, stood among the debris with a charred piece of wood, possibly a portion of a truss. Fire destroyed Bader and Sons Co. and the store’s contents, but some equipment that was stored behind the building was saved, store manager David Meyers said early Sunday afternoon as Mt. Pleasant firefighters were investigating the cause of the blaze.

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HAZMAT Training

Releases of flammable or combustible liquids and corrosive materials are involved in many HAZMAT transportation incidents. Communication while hazardous materials are in transit is vital to prevent releases and to provide details to cleanup crews in case of any accident. Shipping even a small amount of hazardous material may require special handling - especially during air transport. The ability to transport hazardous materials safely can affect the stability of a business. Manufacturers and distributors are reluctant to provide materials identified as hazardous unless the people shipping and receiving these materials are adequately trained according to the Department of Transportation rules.

“The fire guys did a good job,” Meyers said, while watching the beginning of the investigation as cleanup workers began their tasks. “They moved a lot of it. We had a lot (of equipment) against the building.”

•

Where can you find information for training employees about transporting hazardous materials?

•

What does a business need to do before shipping hazardous materials?

Owner Paul Bader also has dealerships in St. Louis, Grand Ledge, Portland, Tecumseh and Linwood, but the Mt. Pleasant store could not be saved, Mt. Pleasant Fire Chief Greg Walterhouse said.

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How do you develop a hazardous materials transportation security plan?

With the building fully engulfed in flames when firefighters were called to the scene at about 6 a.m. Sunday, they immediately began spraying water on an adjacent businesses. “There was nothing we could do to save this,” Walterhouse said. The building also housed the Jeff Brandt insurance agency, which was destroyed. Hours after the blaze, several firefighters were digging through the rubble as freezing rain fell. It took about 30 to 35 firefighters approximately two hours to put out the blazer. Paul Bader let the OMEDA staff know that they have rented a building behind the Home Depot located at 5650 E. Pickard in Mt. Pleasant, they will operate from that location for six months and maybe longer. They are not sure how long it will take to rebuild the location that burned or if they will relocate to another site in Mt. Pleasant.

Although various resources are available, gathering specific information is often time-consuming. To simplify this process, Federated has consolidated information from many sources into one risk management tool-an informative multimedia HAZMAT Training CD-ROM. The CD includes group presentations and interactive individual modules and tests with records of training. A companion booklet outlining all ofthe training requirements is also provided with the CD. Contact your Federated marketing representative for more information on this valuable resource. Policyholders can order this CD directly by logging on to www.federatedinsurance.com. Choose Insurance Solutions> Risk Management Services> Request Materials> Packaged Materials. Then request the “Hazardous Materials Transportation” CD. 11

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Playing Favorites

It’s tempting to feel grateful for every customer you have. You should fight that feeling. Ready to meet the new Chief Profitability Officer? OK, then, grab a mirror: you’re it. No need to have new business cards printed, you’re still the CFO as well. But you now have additional duties in line with the company’s new recessionfighting strategy: use profitable customers to drive corporate value. By pinpointing your profitable customers and looking for more ways to serve them, you may be able to coax new life into the bottom line. Once those favored customers are defined and divided into homogeneous groups, CFOs will be expected to track their value like any other asset on the balance sheet. By overlaying certain metrics — such as buying needs, cost to serve, and strategic value — management can gain insight into exactly which group of users it should be courting and keeping. It might aim its promotions toward upper-middle-class women, for instance, or younger married males with a fondness for fancy gadgets. It won’t be going after everybody anymore; value-crushing customers, who just buy what’s on sale, won’t get any special attention at all. “In a time of limited resources, management has a desperate need to figure out its priorities,” says Larry Selden. “Now is the time to segment your customers.” Selden, professor emeritus at Columbia University and coauthor of Angel Customers and Demon Customers, contends that the bottom 20% of customers can drain profits by at least 80%, while the top 20% can generate 150% of a company’s profit. So why not study that upper crust, delicately breaking it into subsegments that share the same needs? Categorizing customers by demographics or geography or product purchases, as many companies do, doesn’t give managers a clue as to where the high-opportunity needs are lurking. In the long run, precision targeting will generate profits far in excess of any incremental cost. Unfortunately, that won’t be the case in the near term, because such intensive analysis is time-consuming and expensive. Furthermore, there are likely to be expenses associated with reorganizing operations and training frontline employees in how to look at the data so that they know, right on the spot, that the customer in front of them would be receptive about an extended warranty. As much as spending money on the analysis may irk CFOs, Selden reasons that “now is the time to do it. Expectations on earnings are low, so in the short term it’s not going to make much difference if you spend the money on customer segmentation.”

That’s probably a much more engaging task than what most CFOs have their staffs doing now — monitoring the cash cycle and modeling what-if scenarios to make sure there’s enough working capital on hand. That can be pretty routine work. If days sales outstanding is stretching out — the average DSO increased from 39.7 to 41 between 2006 and 2007, according to consulting firm REL — it’s time to sic corporate counsel on the worst offenders. If your revenue model presumes that 10% of customers will pay late, it’s crucial to work the spreadsheet, updating projections to account for the fact that that number may be inching toward 20%. But to move the company beyond mere survival, what they should do, says Selden, is “change the company from being product-centric to being customer-centric. In an economy where there are real cost constraints, you can’t serve everybody to the same degree.” As companies realize this, “the most capable customers and the most capable suppliers will get together and get bigger and better,” predicts Jonathan Byrnes, a consultant and a senior lecturer at Massachusetts Institute of Technology. Every CFO, says Byrnes, should start acting as “the chief profitability officer, in charge of making more money from existing customers without adding any costly initiatives.” The Un-chosen At most companies, about 30% of customers aren’t profitable — and two-thirds of those aren’t ever going to be, according to Byrnes. Some have been plied with discount upon discount over the years, surrendered by quota-driven salespeople and approved by sales managers whose compensation depended on volume. But armed with further insight into your customers, “you don’t have to discount, because you know you have something they value,” says Selden. Such selectivity means that, like bouncers at glitzy nightspots, executives will almost certainly have to “fire customers,” as management gurus put it. “With less business to go around, a company has got to know where it can contribute the most value,” says Barbara Bund, author of The OutsideIn Corporation. “That’s where its future growth is going to come from.” Splitting with unprofitable customers is far less dramatic than, say, any Hollywood bust-up. It may simply entail having a frank conversation about what you can and can’t do for them. Is there a more cost-effective way to handle their account? Maybe replacing customized items with a standardized version, or asking them to rely on Web-based support, or helping smooth out erratic ordering patterns. By Selden’s estimate, it takes about six months to produce a customer-profitability analysis and segment the results into a portfolio of needs-based customers. Using software analytics, Selden sifts through cost data, records continued on page 15 13

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continued from page 13 of individual transactions, and customer demographics. Selden’s consulting firm, Selden and Associates, has developed a process to perform this function — a much more comprehensive approach than CRM software systems. He first ranks money-making customers on a spectrum from least to most profitable. He splits that list into subgroups of customers that share certain needs based on their buying patterns, behaviors, or other information. The company also talks with customers. Once a company is armed with such information, it’s in a good position to calmly explain to certain customers why it can’t continue serving them in the same way. But rather than issuing an ultimatum, it can indulge in a dialogue with unprofitable customers, showing them why prices have to go up, but also offering suggestions as to how they can cut corners. For instance, customers often request overnight delivery because they don’t trust their suppliers. Why not settle for a slower, cheaper route? Retailers can discourage profit-puncturing customers by cutting off their coupon supply, or adding a restocking fee on returned merchandise. These moves may foster a “you can’t fire me, I quit” attitude among unprofitable customers. Your company’s newfound mission — the one that will serve as a competitive advantage, long after the word bailout has returned to its maritime roots — is to devote all of your resources to fulfilling and expanding your relationship with your profitable accounts. For certain retailers, that means crafting bundles of products that will be both appealing to customers and profitable — promoting an entire outfit, for instance, rather than just one discounted sweater. From Customer to Partner As you get closer to your profitable customers, the relationship may take one more step: collaboration. By helping those customers increase their profitability — working on longterm planning, say, or winnowing the supply chain — you can become about as close to indispensable as possible. “Companies exist within four walls,” says Byrnes. “What a company should do is create a bigger box around the business by moving the boundaries.” The ultimate alliance is what Byrnes calls “customer operating partnerships,” which can easily boost business by at least 25%. In these pacts, vendors and their valued customers braid the separate strands of their supply chains together. The customer isn’t just strategically positioned to pick up additional business; operating deep inside the business, it has now built a barrier to entry for potential rivals. “It makes it very hard to displace,” says Byrnes. The

companies naturally broaden their contact with one another. So, for instance, instead of dealing exclusively with a pricedriven purchasing agent, the supplier’s management team will interact with higher-level executives, who tend to be oriented more toward value. They are likely to be more receptive when you pitch them on the idea of crowning you “a master supplier” and offer to manage their inventory. By streamlining the inbound product flow and consolidating their billing, you’ll save them money. Your own profits will fatten as you find opportunities to make the supply chain more efficient, cutting out any redundant or disjointed steps. Providing close-to-the-market data can also create a bond. In consumer electronics — or, for that matter, any product with a short life-cycle — a supplier can be a valuable source of information about when the item’s profits have begun eroding, suggesting that shipping should be winding down. Such data is more valuable than ever, given the pressures on margins. “Customers are going to be receptive to help now because they are under so much financial pressure,” says Byrnes. But before you shift any resources in their direction, try to look beyond the data, assessing their overall strategy and sizing up their leadership team. They may be profitable for you now, but what are their prospects? “In this economy, we are being very cautious about who we develop relationships with,” says Linda Booker, CFO of IDI, a $2 billion commercial-real-estate developer in Atlanta. “Before we work with anyone, we’re paying utmost attention to their balance sheet. We ask them about their relationship with their bank, what debt is maturing over the next five years; we explore their ability to refinance. We’re extra-careful.” Relationships Take Work CFOs have to be extra-careful too, monitoring the performance of the company’s “portfolio of customers” on a regular basis, says Selden. If that sounds like a lot of work — well, it is. “This is not a trivial undertaking,” warns Selden. “But the fact that it’s really, really hard is great. Segmentation becomes a competitive weapon.” It just takes time. “This is a fundamental rethinking of a business,” says David Reibstein, a professor of marketing at the University of Pennsylvania’s Wharton School of Business. “We’re going to see more companies investing in this, finding out the value of their customers and paying more attention to some of them.” The ultimate goal: to have more value-laden relationships with fewer customers. Not that any company will execute with 100% accuracy. “The truth is,” says Bund, “you never know as much as you want to know.” But you may soon come to know a lot more than your competitors do. Josh Hyatt is a contributing editor of CFO. 15

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Ag Census: Diversity in U.S. Farming

The number of farms in the U.S. has grown 4% and the operators of those farms have become more diverse in the past five years, according to results of the 2007 Census of Agriculture released by the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS). The 2007 Census counted 2,204,792 farms in the U.S., a net increase of 75,810 farms. Nearly 300,000 new farms have begun operation since the last census in 2002. Compared to all farms nationwide, these new farms tend to have more diversified production, fewer acres, lower sales and younger operators who also work off-farm. In the past five years, U.S. farm operators have become more demographically diverse. The 2007 Census counted nearly 30% more women as principal farm operators. The latest census figures show a continuation in the trend towards more small and very large farms and fewer midsized operations. Between 2002 and 2007, the number of farms with sales of less than $2,500 increased by 74,000. The number of farms with sales of more than $500,000 grew by 46,000 during the same period. The Census found that 57% of all farmers have internet access, up from 50% in 2002. For the first time in 2007, the census also looked at high-speed Internet access, 58% reported having a high-speed connection.

DEMOCRATIC HOUSE LEADER OBJECTS TO DIRECT PAYMENT LIMITATION

House Ag Committee Chairman Collin Peterson says he’s told President Obama, Vice President Biden, Secretary Vilsack and others that he would conditionally support the administration’s budget proposal. “People that had over $500,000 gross income would not be able to get direct payments, provided that we extended that to everybody in the United States for any government program including the banks,” Peterson said at the National Farmers Union Convention in Washington, DC in early March. Peterson says the Farm Bill reforms payment limits for the first time since 1987, “I told the Secretary at noon, ‘you would be doing a huge change in policy if you just implement aggressively what’s in the law’.” While the Farm Bill provisions “aren’t perfect,” Peterson says they need to be given a chance, “You know, I would have liked to have seen us gone further than we did to get non-farmers out of the system, but we put tighter controls on them than we did on farmers.” Peterson suggested to reporters at the NFU Convention in Washington that “some bean counter” likely came up with the payment limit idea, saying it didn’t come from anyone in ag.

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Best of Bytes

OMEDA members Best of Bytes - Make sure you check these out... Best of Bytes - Make sure you check these out... Senate Passes Budget Resolution with Lead-safety law could cover ATVs Estate Tax Amendment Staff members at the Consumer Product Safety Commission AEDNews reports that the Senate and the House passed have decided against recommending an exemption for alltheir budget resolutions for the next fiscal year. While not terrain vehicles and dirt bikes. They can have higher-thanbinding, the budget resolution does provide a blueprint for allowed levels of lead in the brake and clutch levers, the congressional spending for the year. valve stems on tires, the battery and the steel molding that Recently, death tax foes scored an important victory when the holds the engine together. Senate voted 51-48 in favor of an amendment to resolve the The new law, called the Consumer Product Safety uncertainty surrounding the estate tax. The amendment would Improvement Act, was intended to keep lead away from increase the estate tax exemption to $5 million and establish a young children by banning the metal, except in small 35% tax on the value of decedent assets over the exemption. amounts, from products for kids 12 years and under. Lead The House budget resolution, similar to President Obama’s can cause irreversible learning disabilities and behavioral proposed budget, would extend estate tax exemptions at 2009 problems. The motorcycle industry says some bike parts do levels, and index the exemptions for future years. Current contain small quantities of lead but that the risk of children estate tax rates are 45% with a $3.5 million exemption. The ingesting the lead is minimal. The commission usually adopts estate tax will be repealed entirely in 2010, but is scheduled staff recommendations. to return in 2011 with a $1 million exemption and 55% top rate. Summer hiring season is approaching

Biodegradable motor oil achieves API certification Green Earth Technologies recently received the American Petroleum Institute’s (API) “donut” designation for its 5W-30 motor oil, the first biodegradable motor oil of its kind to earn API approval. G-Oil 5W-30 will be available in retail outlets as early as June, with bulk oil being made available for quick lube chains and the like. Green Earth Technologies expects to finalize the testing and certification process for its 10W-30 and 5W-20 products by this summer. The oil is made from American-grown animal fat, of which one barrel is needed to produce one barrel of G-Oil. By contrast, it takes three barrels of crude oil to make one barrel of regular oil, and it boasts a “Made in the USA” label. For more information, visit www.getg.com. New COBRA model notices released The Department of Labor has issued the new COBRA subsidy model notices for employers to send to employees terminated between Sept. 1, 2008 and Dec. 31, 2009, as required under the American Recovery and Reinvestment Act. The notices are available at www.dol.gov/ebsa/COBRAmodelnotice.html.

In anticipation of the summer hiring season, you might want to review the Minor Labor Laws in your state. Regulations for Indiana, Kentucky, Michigan, and Ohio are located in the Association’s FastFacts online database. Log onto the Member Only section, and click FastFacts. If you need your User ID and password, contact the Association.

Ag stimulus spending to begin shortly Agriculture Secretary Tom Vilsack said USDA will begin making $145 million in direct operating loans to farmers as one of the first steps in distributing the $28 billion earmarked for the Department in the American Recovery and Reinvestment Act of 2009. Vilsack said the $145 million will go out almost immediately to 2,042 farmers as the first installment of $173 million designated for USDA’s direct operating loan program. He said 50% of the recipients are beginning farmers and 10% are socially disadvantaged producers. “These loans will be used to purchase items such as farm equipment, feed, seed, fuel and other operating expenses and will stimulate rural economies by providing American farmers funds to operate,” he said. More information about the Federal government’s efforts on the economic stimulus is available at www.recovery.gov.

The “bytes” emails are available every Tuesday from your association. Make sure we have your current email address. Corrections can be emailed to [email protected].

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Toro results hit a rough patch

2009 from 2008. To minimize its effects, Osterman said Blount is permanently closing a manufacturing facility, cutting worldwide headcount by 8% and freezing “certain” salaries.

The Bloomington-based maker of lawn and garden equipment for residential and professional customers, said it earned $6.7 million, or 18 cents per share, on net sales of $340 million in the quarter. In the same period of 2008, Toro earned $18.6 million, or 47 cents per share, on net sales of $406 million.

The company also projected that 2009 sales would be well below Wall Street’s view. “The stock probably deserves to get whacked here because of the significant shift in performance and the guidance revision,” Longbow Research analyst Mark Rupe told Dow Jones Newswires.

The Toro Co. reported a 64% drop in earnings and 16% drop in sales during its first quarter of 2009, which ended in January.

The 2009 profits included a charge of $1.3 million, or 2 cents per share, related to a previously announced restructuring. Toro said Feb. 11 it was going to cut 100 jobs and reduce the salaries of certain officers by 10% in 2009. Toro is managing its production volumes and reduces expenses companywide. It also has reduced inventories and cut its shortterm borrowing by $60 million compared to the same time last year. The professional segment, which supplies landscape contractors and golf courses, was the biggest drag on Toro’s sales in the quarter. The company had $229 million in professional segment sales, down 22% from $295 million a year ago. Professional segment earnings were $30 million, down 40% from last year. Worldwide demand for of golf-course maintenance equipment and irrigation systems “were down significantly” as investments in golf courses slowed, Toro said. Residential sales of $107 million were up slightly from $106 million last year, aided by strong worldwide demand for snow throwers and improved product placement of a new and broader line of walk-behind power mowers that boosted preseason orders. Residential segment earnings were $4.8 million in the quarter, up 27% from last year. Toro expects fiscal 2009 revenue to decline about 15% from fiscal 2008 and it expects net earnings per share to range between $1.75 and $2 per share.

Blount Off Sharply On Weak 4Q; ‘09 Sales View Below Views

Shares of Blount International Inc. fell as much as 36% recently to their lowest point since August 2003 after the industrial manufacturer reported fourth-quarter results below expectations amid lower sales volumes and higher steel costs. In addition, Chief Executive James S. Osterman projected comparable unit volumes will decline in the first half of

Shares were down 33% in recent trading to $4.82. Earlier, they hit a low of $4.62, where the stock hadn’t traded since August 2003. The shares are now down 49% year-to-date and haven fallen 60% from a year ago. Blount, which has a market capitalization of $225 million, makes chains, bars and sprockets for the chainsaw industry, as well as yard-care accessories and concrete-cutting saws. Longbow’s Rupe said the company has historically been less exposed to economic downturns, and noted it even raised guidance several times in 2008. “All indications were that Q4 would be another solid quarter,” he said. Blount said its fourth-quarter net income fell 61% to $6.9 million, or 14 cents a share, from $17.6 million, or 37 cents a share, a year earlier.

MAHINDRA SCALES BACK PRODUCTION OF COMPACT TRACTORS IN GEORGIA

Mahindra USA says it is scaling back production at its Calhoun, Ga., assembly plant to bring output in line with the current demand for compact tractors in the U.S. market.

Mike Hilderbrand, vice president of marketing for Mahindra, headquartered in Tomball, Texas, told Farm Equipment the industry-wide slowdown in the sale of small tractors necessitated downsizing at the facility, but the planned workforce reduction has not affected a large number of workers in Calhoun. “We’re still assembling and shipping tractors from the plant at a pretty good rate,” says Hilderbrand. The company’s primary assembly plant in Houston, Texas, was not affected. 21

2009 Mileage Drop Likely After Record 2008 Plunge

Situation, far below any previous measure recorded by The Conference Board since it began monthly readings in 1967.

“Mileage by all types of vehicles on U.S. roads dropped a record 3.6% during 2008, smashing the previous-high 1.4% driving deficit set in 1974, during the first oil embargo.”

The unemployment rate, rising to 7.6% for January, is expected to peak at approximately 10% for the year and remain high well into 2010.

“The 2008 mileage plunge is different from any of the three earlier post-World War II annual mileage reduction in terms of its magnitude and causes. A 2009 drop in driving is a virtual certainty (January and February results are not yet available) given what Lang Marketing believes are currently the two factors most important in determining miles driven.”

Gas prices at the pump, given the 2009 economic slowdown, should average below last year’s levels. However, a crisis in the Middle East or events in a number of other countries (Mexico, Venezuela, Nigeria, etc.) could rocket crude oil prices upward, driving U.S. retail gas prices back toward record levels.

Government Revises 2007 Miles: No Drop -- What was originally reported by U.S. government data as a 0.36% reduction in 2007 mileage has been revised to a modest 0.51% mileage increase by the latest 2007 government driving statistics. This means that prior to 2008, all three post-World War II annual mileage declines were caused by a combination of higher pump prices and spot gas shortages at the pump. Key Differences In 2008 Mileage Plunge -- The 2008 mileage drop is dramatically different from any previous year because of the momentous size of the mileage decline (over two and a half times the 1974 previous-record 1.4% drop), the lack of gas shortages at the pump during 2008, and the 49% reduction in retail gas prices between January and December 2008. Gas Prices Not Current Mileage Driver -- Retail gas prices declined more than 60% during the last six months of 2008. At the same time, mileage by all types of vehicles plummeted at a 4% average monthly rate: so much for lower pump prices leading to higher driving levels. Consumer Factors -- Mileage on U.S. roads is currently determined by two interrelated factors: Consumer Confidence (as measured by The Conference Board) and the unemployment rate. As both of these factors turned strongly negative during the second half of 2008, monthly driving and gas prices fell. One can only imagine what would have happened to mileage levels had gas prices risen during the last six months of 2008. The 2008 annual mileage decline would have been substantially greater. 2009 Mileage Decline: A Virtual Lock -- Consumer Confidence for 2009 is expected to remain low and unemployment rates for the year are projected to increase significantly. Neither of these developments will be positive for 2009 driving on U.S. roads. February Consumer Confidence (measured by The Conference Board) fell to a record low, 21.2 for the Present 22

Size of 2009 Mileage Reduction -- Barring an international incident spiking oil prices or a drastic economic downturn, the 2009 mileage decline will likely be less severe than the 2008 percentage reduction: ranging between a 1.5% and 2.5% annual decrease. We will have a better feel when January and February driving data are available. Chances that 2009 mileage will increase on U.S. roads are very low given anticipated Consumer Confidence ratings, unemployment for 2009 and the fact that the U.S. has experienced an unprecedented 14 straight months of mileage reduction, stretching from October 2007 through December 2008. Nothing in sight seems capable of reversing this downward driving trend. From Aftermarket Insight™ by Jim Lang, President of Lang Marketing Resources, Inc., www.langmarketing.com.

Using Soybeans to Extend the Life of Ohio Roadways

RePlay, a soy-based asphalt preservation agent created in part by the soybean checkoff, is helping to keep Ohio roadways in good condition. Ohio Pavement Systems, Inc. (OPS), a pavement maintenance contractor based in central Ohio, first started to market RePlay in Ohio 5 years ago, eventually moving all of their customers over to the product. RePlay reduces the need to repair or patch roads by reversing the oxidation and moisture penetration, which are the major sources of road deterioration and pothole formation. RePlay will extend the life of treated road surfaces twice their normal life span at a fraction of the cost of conventional road maintenance, saving money in the long-term. It cures quickly, maintains normal skid resistance and helps repair small cracks by resealing them. And it is an environmentally friendly product. “Similar petroleum-based products can take hours, or even days to cure. If it rains before it has cured, it can create environmental damage due to runoff into storm drains,” said Joe Kindler, owner of OPS. “In addition to RePlay being over 80% biobased with 30% of that being derived from soybean oil, it also has a curing window of about an hour, reducing the chance of a rain runoff and damaging the environment.”

Industry Updates Bobcat and Polaris announce long-term strategic alliance

CNH Launches New ‘Work EZ’ Implement Line

The alliance will include co-development of work vehicles, supply of highly differentiated work vehicles and technology sharing, with a planned launch by the second half of 2010.

In an exclusive interview with AEI, CNH says they’re introducing the new brand to fill a void for its dealers in segments outside of the production agricultural “core.” Both New Holland and Case IH will share the new, black equipment. The line includes loaders, box blades, disc harrows, landscape rakes and rear blades.

AEDNews reports that Bobcat Company and Polaris Industries Inc., announced a long-term strategic alliance that will leverage the complementary strengths of both companies to penetrate work-related market segments globally.

Initially, Polaris will produce and sell highly differentiated work vehicles to Bobcat for sale through the Bobcat dealer network. The breadth and depth of our cooperative efforts will expand thereafter to include co-developed vehicles for both Polaris and Bobcat, and further technology-sharing.”

Red Tractor, Green Technology

Tractors are normally slow and noisy, but not this new high tech piece of farm equipment. AGCO Corporation is on a tour, showing off a new tractor that’s both environmentally and farmer-friendly. Rene Boivin, AGCO Corp. product marketing specialist said that, “The EPA has been putting laws, controls into the automobile, also the tractor, farm industry to reduce the type of NOX (Nitrous Oxide) and also the smog. This tractor has new equipment that treats its own exhaust and reduce pollution. The more you can reduce the nox and the type of black smoke we might call it form the engine the better it is and and it’s trying to push down where it’s better quality of air for everyone. We’re the first company that is using such a technology in the agriculture industry.” Not only is this tractor environmentally friendly under the hood but the entire cab has been redesigned with the farmer in mind. Boivin pointed out that, “All of the control center has been redesigned, you’ve got all the touch to the fingers, you’ve got also, all the controls are all right with a screen next to the driver.” It even has a place for the farmers laptop, heated and cooled seats and cruises at 33 miles per hour.

It may have taken a while, but six years after John Deere launched its second brand of implements, Frontier, Case IH and New Holland have responded with its own new line of farm tools — Work EZ.

According to Case IH officials, the Work EZ loader and implement line supports the needs of Case IH dealers, especially those with customer segments outside of traditional production agriculture — like homeowners, landscapers and others who still purchase tractors and implements smaller than those offered in its current lineup. “These customer segments may be less familiar with the Case IH brand and heritage,” says Ron Morishita, marketing manager, loaders and compact equipment. “It offers dealers an opportunity to consolidate more of their total business with one primary supplier, while still participating in segments where Case IH had not previously offered a line.”

Deere Announces Additional Layoffs in Construction & Forestry Division

Deere & Company said that 325 employees of the construction and forestry division will be placed on indefinite layoff in March at two factories due to depressed market conditions. The layoffs are in addition to previously announced reductions in those factories. The company said the layoffs are effective March 30th and include 220 employees at Dubuque Works and 105 employees at Davenport Works. Deere said layoffs are based on seniority and that employees were told of the plans in meetings today at both locations. In February, Deere reported that sales of construction and forestry equipment had deteriorated more than expected. 23

Five recycling mysteries solved

Wondering what to do with your stash of old batteries or the cans of unneeded paint taking up space in your garage? You know you shouldn’t throw them out, but it really is time to get rid of them. Resist the temptation to toss them in the trash anyway. The reason: They (and everything on the list below) contain toxic chemicals capable of contaminating the environment if not disposed of properly. Unlike items that are picked up at the curb, you’ll have to make a special effort to unload these ones responsibly. But, with a little advance planning and some good info, you’ll see that it’s really quite simple to dispose of these seemingly mysterious items. Here’s how: •

Batteries. Recycling rechargeable batteries is fairly easy. Home Depot, Staples, Radio Shack, Best Buy, and other retailers take them back free of charge. There are fewer options for single-use batteries, but look for bins at your local Whole Foods Market, Ikea, or library. Otherwise, your best bet is the local household hazardous waste drop-off site.

•

CFLs. These energy-efficient bulbs are becoming easier to get rid of. Just drop old bulbs off at any Home Depot or Ikea for free recycling. Or ask about CFL recycling at your local Ace Hardware or home improvement store.

•

Electronics. Every retailer that takes back rechargeable batteries also accepts mobile phones, as do most wireless providers. For computers, cameras, televisions, and others it’s worthwhile do a little homework because some stores charge fees depending on item and brand. Check out Best Buy, Staples, and Office Depot to see what’s the best fit. Some places, like Radio Shack, have trade-in programs where you can receive store credit for your old gadgets.

•

Motor Oil. In case you need some motivation, consider this factoid from Earth911: Every gallon of used motor oil that’s improperly disposed of can contaminate one million gallons of drinking water. Bring it to WalMart, Autozone, Jiffy Lube, or search online for more convenient choices.

•

Paint. It’s among the harder items in this group to dispose of, but it’s worth it and totally doable. If the paint is still in good shape, consider donating it. As of now, there aren’t any retailers that accept used paint so you’ll need to make a special trip. Search Earth911 for a comprehensive list of options.

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THE ECONOMIC STIMULUS PLAN-WHAT IMPACT DOES IT HAVE ON PAYROLL?

The American Recovery and Reinvestment Act (ARRA) of 2009, AKA the economic stimulus plan, was signed into law by President Obama on Feb. 17, 2009. It includes four provisions that have a direct impact on either payroll taxation or payroll reporting. Below is an overview of them; for more detailed information visit www.irs.gov. The Making Work Pay Tax Credit -- For 2009 and 2010, the Making Work Pay provision of the ARRA will provide a refundable tax credit of up to $400 for working individuals and $800 for married taxpayers filing joint returns. This tax credit will be calculated at a rate of 6.2% of earned income and will phase out for taxpayers with adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly. For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employer through automated withholding changes. The IRS has issued revised income tax withholding tables for wages paid through December 2009. The tables are effective ASAP but no later than April 1, 2009. These changes may result in an increase in take-home pay. The amount of the credit must be reported on the employee’s 2009 income tax return filed in 2010. Taxpayers who do not have taxes withheld by an employer during the year can also claim the credit on their 2009 tax return. It is not necessary to submit a Form W-4 to get the automatic withholding change. However, an employee with multiple jobs or married couples whose combined incomes place them in a higher tax bracket may elect to submit a revised W-4. IRS Publication 919 provides additional guidance for tax withholding. Temporary Increase in the Earned Income Credit -- The Act also provides for a temporary increase in the Earned Income Tax Credit (EITC). For taxable years beginning in 2009 and 2010, the credit percentage for eligible taxpayers with 3 or more qualifying children has been increased to 45% of the family’s first $12,750 of earned income. In addition, there is a reduction in the amount of the marriage penalty. This reduction for 2009 will be $5,000; this amount will be adjusted for inflation in 2010. These adjustments are reflected by the IRS in revised advance earned income credit tables for 2009. These tables are effective ASAP but no later than 4/01/2009. Transportation Fringe Benefit Parity -- ARRA also provides parity For transit benefits. Effective March 1, 2009 through December 31, 2010, the amount excluded from income for commuter transit benefits and transit passes will be the same as the amount excluded for qualified parking. As a result, effective March 1, 2009, the maximum monthly benefit for transit will be increased from $120 to $230 to equal the maximum monthly amount allowed for parking for 2009. This parity will continue for 2010, but is set to expire after that year.

SAFETY BY DESIGN Safety Information you can use!

PREVENT SLIPS, TRIPS AND FALLS

Slips, trips, and falls do happen, usually only causing embarrassment or a simple bruise. However, at times these mishaps result in much more serious injuries or even death. Falls are among the leading causes of death in the workplace.

To ensure the safety and welfare of your employees, we recommend you take use the following tips to inspect your operation, make any adjustments as necessary, and share them with your employees.. ♦ Be aware of surroundings. Never assume a walkway is clear. Look for clutter on the floor or steps and watch for unexpected changes in floor levels, such as a step up or a step down. Also check for holes and grates in a pathway. ♦ Maintain adequate lighting in hallways, stairways, work aisles and any other traffic areas, and make sure it is bright enough to see. ♦ Do not leave tools, equipment or other materials on the floor and do not obstruct marked traffic aisles and walkways in the work place. ♦ When carrying materials or objects, make sure the view is not obstructed. Better to make two trips rather than a trip to the emergency room! ♦ Clean up spilled liquid on the floor immediately and watch for signs regarding wet floors. ♦ Do not leave anything on stairs, even for a minute. ♦ Watch for loose floor tiles, loose or torn carpeting, rugs turned up or slick floors. ♦ Do not run extension cords, cables or hoses across walkways. ♦ Close drawers in filing cabinets, desks and other furniture, as someone could trip over these obstacles. ♦ Wear the appropriate shoes for the surface where you work and keep shoelaces tied. ♦ Remember that baggy, flared or excessively long pants and dresses can cause tripping. ♦ Slow down and do not run. Many falls occur when people walk too fast or are in a hurry. ♦ Finally, stay alert! When tired or distracted, the likelihood for any type of accident is greater. In the workplace, when encountering a slip, trip or fall hazard, take corrective action immediately!

Tips that Help You Decide

The way individuals make decisions varies as widely as the people making them, but a few common tips can help anyone aid the process and speed the results. •

Prioritize the decisions you need to make. Delegate and enjoy the help of your decision-making team.

•

Trust your judgment in making the decision and focus on the next step. Even if the decision was wrong, move on. Make a decision, make it yours and die by it!

•

Timing is a big player in the decision game. Do it when the time is right. The right decision at the wrong time is no better than the wrong decision at the right time.

•

Small and consistent decision making prepares and disciplines you for the bigger ones that really matter.

•

Weigh out the pros and cons of any choice by writing them down. This removes the questions and directs a clear decision.

If you want to learn more about the power of PEOPLE SOLUTIONS THAT DRIVE BUSINESS PERFORMANCE, contact: JP Horizons Inc., PO Box 2039, Painesville, OH 44077, Phone: (440) 352-8211, Fax: (800) 715-8326, email: [email protected], website: www.jphorizons.com www.omeda.org

[email protected]

6124 Avery Rd. PO Box 68 Dublin, OH 43017 OHIO Phone: (614) 889-1309 Fax: (614) 889-0463 MICHIGAN Phone: (517) 651-5428 Fax: (517) 651-5435

OFFICERS & DIRECTORS George Fackler III, President......................................................Granville OH Tom Hill, Vice President............................................................ Circleville OH Dennis Lashley, NAEDA Director...........................................Quaker City OH Jim Bishop.......................................................................................Burton MI Ronald Diuble............................................................................ Ann Arbor MI Doug Finnerman....................................................................... Centreville MI Dana Harju................................................................................ Conneaut OH Dale Magie............................................................................ Liberty Twp. OH Brian Streacker........................................................................... Fremont OH Tim Wolfsen..................................................................................Fremont MI STAFF Kim Rominger................................................................ Executive Vice President/CEO Bill Garling.................................................................................Chief Operating Officer Dennis Alford.............................................................................Chief Marketing Officer Becky Anway.................................................................................. Marketing Assistant Jenny Archibald........................................................................Administrative Assistant Joan Dunham............................................................ Field Services Director, Michigan Donald Harsh................................................................Director of Accounting Services David L. Kahler................................................................................. Associate Director Dick Ryals......................................................................................Accounting Manager Dave Slagle...................................................................... Field Services Director, Ohio Dave Stangel.............................................Field Services Director, Indiana & Kentucky

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The After Market Sales Force by John Walker, President, After Market Services Consulting Co., Inc.

Don’t You Wish . . . . . . . Don’t you wish that five or six years ago when the economy was in a slump and your equipment sales were positioned just about where they are today that you decided that enough was enough and done something about it? You were never going to allow this to happen to your business again! Many equipment dealers took the advice of those who had gone through market slumps in the past. They listened and made the necessary changes. They recognized that this was not the end of the world, and that if they changed the way they did business, the next time they faced a market slump, they would be prepared. Today they are the ones with the positive attitude toward what is happening in their market place. They are the survivors and will continue to be. Too many equipment dealers didn’t want to believe it would happen again and continued putting their emphasis upon satisfying their suppliers by achieving the required market share, no matter what the cost. Their focus continued to be upon the “big ticket items”, anything to make the numbers that kept them as a member of the manufacturers “elite sales clubs”. You made some really great deals in leasing equipment with maintenance. Now that equipment is being returned. You are faced with the same dilemma as the people who bought $600,000 homes. The value of homes is less than it was five/six years ago and they are stuck with making the payments. Some of the equipment that dealers sold on lease with maintenance are now worth less than what is on their books. Now what are they going to do? Six years ago you made a big sale and your market share exceeded what your manufacturer wanted. You got a trip to the ski slopes in Dubai. It was the trip of a life time. You sold that last piece of equipment at a rock bottom price to win the trip, all along not realizing that had you made a “normal profit” on that sale you could have paid for your own trip. You should also recognize that you paid some healthy taxes on that trip. As we have stated numerous times in our articles, business cycles occur on a predictable basis, varying many times by the industry. Successful equipment dealers recognize this fact and prepare for it. They prepare for it by making sure that their Absorption Rate Factor is near or even better than 100%! They worked hard at developing their Self-Feeding Profit Spiral, they concentrated on developing a Customer for Life culture throughout the dealership. Just recently I returned from Europe after having conducted a series of seminars for Parts and Service Managers for a “wellknown” brand of equipment sold all over Europe and the Middle East. All of those attending the class understood and spoke excellent English. That was not the problem.

I started off each meeting asking how many of them got out from behind their desks or from behind the counter on a regular basis to call on either customers or their competition. The look I got from those attending was akin to my stepping off a UFO from Mars! That was not their culture. After all, customers came to them for their parts and service requirements. They didn’t go after the customer’s business. It was guaranteed business. A whole lot of us can well remember when this was the prevailing attitude throughout the North American Continent. Those who changed from a reactive mode to a proactive mode are the positive thinking dealers, the survivors, the dealers who despite the economic downturn, are not only increasing their market share but increasing their sales and profits. Their glass is not half empty. For them it is half full. They have proven once again that it is certainly possible to achieve market share with a decent profit. Sure, things out there are tough! We would be fools to fail to recognize this fact. But for those of you with a “bit of gray” in your hair, you also recognize the slump will not only end, but will happen again in yet another four, five or even six years. If you are smart this time, you will see to it that next time around you will be more than prepared to weather the storm. Make up your mind NOW to do those things you promised to do five or six years ago. Make yourself a plan and then live by your plan. Plan to survive profitably. Start everything off by overcoming negativity! You might want to try this: Take a long weekend off from the business. You and your bride take off to some exciting place of your choice. Go some place where you both would like to go and for three or four days forget your business and all of your imagined problems. No phone calls back to the business, no messages on your Blackberry and leave your laptop at home. Purge your minds of all negative thoughts. You want to come back refreshed and ready to go to work. To carve out a plan and a commitment to all those things you are going to do to change the working model of your business. Set goals for yourself, your personnel and the departments within your dealership. When you set these goals make sure they are challenging and achievable. Allow us to start you off with our time worn suggestions: Absorption Rate: Most dealers today understand Absorption Rate. Unfortunately too many dealers are not challenging themselves or their employees to achieve a 100%+ Absorption Rate. Too many believe it to be an impossible goal, a goal they can never reach, so they fail to try. Continued . . .

©2009, AFTERMARKET SERVICES CONSULTING CO., INC. • 817 STOCKBRIDGE DR., #399 • FT. MILL, SC 29715 • 803-548-6707 • Fax:803-802-3112 • [email protected]

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The After Market Sales Force by John Walker, President, After Market Services Consulting Co., Inc. Absorption Rate is the “keystone” to developing a recessionproof equipment dealership. Achieving a 100% Absorption Rate means that the dealership’s parts and service and short term rental departments are covering the dealership’s Fixed Overhead Expenses, except for the dealership’s variable sales expenses. In effect the gross profit margins achieved by the sale of new and used equipment become the net profit of the dealership when your Absorption Rate is running 100% or higher. For those of you who are not aware, the financial formula for measuring an equipment dealer’s Absorption Rate is: Parts, Service and Short Term Rental department’s gross profit dollars divided by the Fixed Overhead or Operating Expenses of the dealership; less Variable Sales Expenses equals the dealership’s percentage of Absorption Rate. 100% or better Absorption Rate assures the dealership in a recessed market that overhead will be covered, survival will be achieved and the dealership will have a developed and steady cash flow. Successful equipment dealerships today have focused upon the achievement of a minimal goal of 100% and in order to do this they fully understand that a commitment to their aftermarket is imperative. They recognize that they must professionally market their parts, service and short term rental with the same enthusiasm, dedication of time, money and personnel as they do in marketing product to their customers. They selfishly want every dollar that their customers spend on the equipment they purchase from the dealership in the areas of parts, service and short term rental. No one outside of the selling dealer is going to take away the dealer’s hard earned and “fought-for” aftermarket! Developing a high Absorption Rate will begin the creation of the dealership’s Self-Feeding-Profit-Spiral. Customers want to do business with the dealer who takes care of them after the sale. Once the dealership begins to provide great parts availability, and rapid service response time the customer responds with more and more business. The dealership will experience repeat sales at increased profit to the dealer, because the customer is willing to pay “a bit more” for good service. Increased equipment sales will provide increased after market sales and increased customer satisfaction indexes. All of this develops an overall improvement of the dealer’s ROI, which makes the overall operation of the dealership more profitable and leads to survival when times are tough. Successful and surviving dealers develop their plan for success. “You would never build a house without a set of blueprints, so how can you attempt to grow your business without a solid plan to guide you?” A plan can force you to be successful by setting goals. A plan will tell you constantly: 1] Where you are, 2] where you want to go and most importantly, 3] how you are going to

get there. A plan will take you from simply being a supplier to becoming a marketer. You will want to build a whole new culture within your dealership. We refer to this new culture as the Customer for Life culture. Once you and your personnel embrace this culture you will have a strong base of lifetime customers. You will have a customer base that continues to buy from your dealership because they realize that your dealership and your personnel will take care of them before, during and after the sale of the equipment. Constantly sell your dealership! Let your customer base and your prospective customer base know how great your dealership really is. Sell the value-added services of doing business with your dealership. Email us at [email protected] and we will send you an eight page document on how to sell your dealership to your customers. It is all about the value added services you can provide the customer. One thing too many equipment dealers do is to wait for a downturn in business to take a hard look at their personnel to decide who is contributing and who is not contributing. No dealership can afford to have negative thinking personnel on the payroll. We have all the negative thinking we need with the media who blasts us hourly with nothing but negative news. We don’t need people working for us who constantly believe that “the sky is falling”. Dealers, you need people working for you who are upbeat, who want to satisfy the customer, who want to grow and who want to help the dealership grow. Customers do not like to do business with negative thinkers! Begin now to work at developing a truly positive attitude within your dealership. These are just five or six thoughts we have expressed over the past thirty years. We have seen numerous business slumps during the 30+ years we have been dealing with equipment dealers. We have seen survivors and we have seen failures. We do know this: The survivors have been those dealers who have incorporated many of the points we have mentioned within this article. The failures have somehow determined they don’t have time to change and therefore continue going about business the same way, day after day. Many take the attitude that change is too difficult to handle. Many equipment dealers do not believe it will work and that many of the points we have mentioned are fantasy and don’t help one bit, so why try? This has been a long article, but I can assure you of one thing. I could add one or two pages more by adding a list of dealers I know personally who have made the necessary commitment and changes and today are successful and surviving equipment dealers. Even though they are faced with a slump in the economy, they are positive and will survive! Henry Ford said: “If you believe you can, then you will but if you believe you can’t then you quite probably won’t!”

©2009, AFTERMARKET SERVICES CONSULTING CO., INC. • 817 STOCKBRIDGE DR., #399 • FT. MILL, SC 29715 • 803-548-6707 • Fax:803-802-3112 • [email protected]

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Is Your Marketing Plan Missing Something?

The Fastline Media Program. With our broad nationwide coverage and 876,000 readers, we will be an effective part of your overall marketing plan. Not only do we distribute 22 nationwide editions every four weeks, but fastline.com is the world’s largest online inventory of equipment. So you can rest assured that we can get the right message directly to your audience – producers that are focused on the needs of their farming operation. Contact Fastline today and find out how our comprehensive media program can work for you and your audience.

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