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Thriving economy boosts small equipment sales

FARWESTEALER 10 Right-to-Repair 15 Drive Repeat BusinessD May | June 2019

EPA ramps up enforcement of Learn to manage, track and improve emissions standards customer retention IMPLEMENTS 15 Implements For the Care and Maintenance of Vineyards

VVineine TrimmersTrimmers LLeafeaf RRemoversemovers PPreprunersrepruners  Available in half row, one row,  Available in single or double  Cuts the long canes and two complete rows defoliation heads, in row or over small eough that they fall through the wire  Features the row mountings for easy clean-up stainless steel  Featuring 3-pt. air compressor  Featuring unique blades that with low pressure magnetic sensors for never need air that shatters opening and closing sharpening the leaves the cutting heads

VVenturienturi AirAir 3-Pt3-Pt HitchHitch ModelsModels TTrailerrailer MountedMounted VenturiVenturi AAirir TTrailerrailer Wrap-AroundWrap-Around BoomBoom  More uniform spray particles with Spray twice the acreage per day  Less fog sized droplets  Entire chemical  3-Point hitch - 75, plant run-off 100, and 150 gallon evenly means models covered better spray  Distribution heads with spray utilization and savings available to match a  Trailer - 300  Trailer - 300 and 500 gallon variety of foliage pro les gallon

33-Point-Point CCompostompost SSpreaderspreaders 33-Point-Point HHitchitch SSulfurulfur DDustersusters VVineyardineyard IncorporatorsIncorporators  Spreads wide range of The organic way to  Year round implement for vineyard materials such as: control mildew  oor maintenance  The Incorporator tills, compost, peat, lime,  Hopper capacities of gypsum, etc. buries weeds and 300 and 400 pounds other small material  For tractors up to  Mechanical for decomposition 150 H.P. agitation for even  Available in tilling  Capacity - 35.3 cubic feet  ow widths of 63" and 73"

FFlaillail MMowersowers / SShreddershredders RRotaryotary TTIllersIllers SSoiloil CConditionersonditioners  Fine shreds grasses, Tilling produces  One pass implement breaks up clods weeds, and brush loose textured and creates a  ne soil that holds  SFG Series, level surface (53" to 82") moisture and  Widths reduces erosion available with available  N Series available in widths of double Y blades or from 4' to 8' to 51", 61", 71", and 81" for tractors up  t all popular vineyard rows hammer knives to 70 H.P.

AAirir BBlastlast SSprayersprayers IIn-Rown-Row CCultivatorsultivators DDoubleouble SSpinnerpinner SSpreaderspreaders  Ideal for small Four different attachments - blade,  Accurate broadcast spreading to medium power disc, back  ll disc, attachment sized vineyards available for  Tank capacities and rotary hoe 2 row band of 50, 100, and  Sensor rod for 150 gallon automatic spreading  For tractors 20 to implement  Large 2200 lb. 50 horsepower retraction capacity hopper with Cat. 2 hitch

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6 2019 Shapes up well for small equipment Economic prosperity, new home buying boosts market for small tractor sales ontents across the West. C 5 Message from the Chair

6 Small Equipment Sales 8 Ask FWEDA's Board

10 Right-to-Repair 8 15 Boost Customer Retention Talent acquistion challenges dealerships 18 Member Mileposts NEW FEATURE: FWEDA board members weigh in on issues dealers grapple with in their businesses and how it shapes their decisionmaking. 20 Industry News 23 Workforce 24 Politics & Policy 26 After Market Sales Force 26 30 HR Update Incentives – Engendering Engagement Design incentive programs that engage and retain your best employees.

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4 May | June 2019 FARWEST Dealer Help us help you build greater success quipment dealers share The legislator who sponsored the Right- Ecommon ground on two critical to-Repair bill in Wyoming experienced that issues: recruiting and retaining message firsthand — our customers CHOOSE quality talent, and the threat of to have their equipment repaired in our Right-to-Repair legislation from service departments because they value the an underground movement that relationships we build and the expertise we undermines our industry. provide. Far West Equipment Dealers Professionalism matters. It’s why we’re ERIC MASON Association recognizes these members of this association. We recognize Board Chair issues weigh heavy on the minds the importance of aligning our objectives of our members. And that’s why with like-minded individuals who share our FWEDA works to support your business in values and want to advance the equipment overcoming the challenges they present. industry with competent, skilled and qualified employees that set us apart from the Advocacy is our top priority as we push competition. We invest considerable resources back against efforts that mislead the public, in our teams and their technical proficiency negatively impact the environment and risk because successful dealerships know referrals the safety of our communities. are gold. Chair Recently, we launched FW Coaches, a training I encourage you to be industry ambassadors. and education consortium of industry experts Embrace FWEDA’s mission of protecting and ready to coach your teams and complement promoting dealer interests. Help us help you the resources you already provide. and all dealers to raise the bar and be even FW Coaches differs not just in its approach to more successful. raising the bar for employee skills, but also by inspiring employees to advance a company culture that effectively conveys an important

From the From message to our customers.

FWEDA Past Chairman Directors Brian Potter FWEDA Staff 2020 Research Park Keith Greenwood Quality Machinery Officers Drive, Suite 160 Stotz Equipment Russell Ball Center President & CEO Davis, CA 95618 and Directors 21st Century Joani Woelfel Bluffdale, UT 84065 Tulare, CA 93274 Phone: 800.576.8850 (385) 351-3206 Equipment (559) 686-1579 Chairman Administrative Email: [email protected] Eric Mason Fort Morgan, CO 80701 President/CEO (970) 867-9434 Brent Scott Manager www.fweda.com Mason Machinery, Inc. Joani Woelfel M & S Equipment, Inc. Shunda Justin Aurora, UT 84620 Nathan Green FARWEST Dealer (707) 678-8859 Coolidge, AZ 85228 Marketing & (435) 529-7445 Belkorp Ag, LLC (520) 723-4181 Vol 29 | Issue 03 EDA Director Modesto, CA 95358 Publications Vice Chairman Tom Rosztoczy Jason Peacock Cover photo: Kubota Bill Garton (209) 538-3831 Stotz Equipment Tractor in Field Garton Tractor, Inc. Avondale, AZ 85392 Mike Meth Turlock, CA 95381 (623) 936-7131 4Rivers Equipment (209) 632-3931 Greeley, CO (970) 356-3666 May | June 2019 FARWEST Dealer 5 Thriving economy boosts small equipment sales TRACTORS SOLD

– AEM A rise in single-family home sales and disposable income translates into increased spending on non-auto durable • For John Deere, residential property owners purchase between goods and employment in landscaping services, driving small 50-55 percent of these tractors equipment sales. • Deere shows about 15 percent of sales going to commercial “The U.S. spring home buying season is shaping up as the best businesses in years … About 40 percent of the year’s sales take place from Regarding changes among customer segments, there is little March through June.” the Wall Street Journal reported April 1. variation year to year, with only a couple of point changes each Equipment dealerships are adapting to consumer demand: year, but no major trending up or down by any one segment, says Jason Tucker, Western Regional Sales Manager for John • Nationwide: the 2WD Tractors under 30 engine HP Industry Deere, who provided the statistics referenced here. sales have seen double digit percentage increases every year since 2011 He observed customers do a tremendous amount of research online for these products. “Online shopping and understanding • Of the customers who have FSA Acreage information, what is available and meets needs is key to serving this segment,” producers with 20 to 320 acres acquire about 50 percent of Tucker said. these tractors SMALL EQUIPMENT SALES Continued on page 7

"I love being a part of Far West. I love what they're doing for the dealers and I think that we need to keep up and get more of the younger generation to start grabbing ahold of the networking and why you do this kind of thing." – Chanse McGuire VP Basic Software Systems

EXPERIENCE THE BENEFITS OF MEMBERSHIP Russ Ball, Bill Garton and Chanse McGuire at the 2018 FWEDA Convention

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EDUCATION & NETWORKING OPPORTUNITIES ADVERTISING OPPORTUNITIES Connect with members in our publications and during our annual Grow your business by advertising on our website, in our convention with sponsorship and programming opportunities. bimonthly printed and digital Dealer publication and 2018 Convention Program. DEALER MARKETPLACE LISTING A listing on the Dealer Marketplace that places your business INDUSTRY PARTNERSHIPS at our dealers’ fingertips. FWEDA and EDA form strategic alliances to develop programs and partnerships that benefit the business needs of our members and their employees. Join FWEDA today at www.fweda.com/membership

6 May | June 2019 FARWEST Dealer SMALL EQUIPMENT SALES Continued from page 6 Dealer Forecast Deere outperformed Kubota earlier this year in overall small • About 88% of North American rural equipment dealers say 2019 will be tractor sales, which is Kubota’s specialty. (Kubota could not as good as or better than 2018. About 93% say aftermarket revenue will be reached for comment on this story.) Market watchers say be as good as or better than last year. Kubota has struggled with margins, and the company recently • Zero-turn mowers topped the list of products with the most unit sales announced its plans to enter the big tractor market in North potential this year. Tractors less than 40 horsepower, utility vehicles, America. rotary cutters and tractors 40-100 horsepower rounded out the top 5 for unit sales potential. The small equipment segment shows no signs of slowing. • Finding good employees, low sales margins and healthcare programs Associated Equipment Manufacturers report a 50-percent and costs are the top 3 issues dealers are most concerned about. increase in sales of < 100 Engine HP machinery in the five years • More than 53% of dealers say their market has grown 5-19% in the last from 2013 through 2018 across FWEDA territories. 5 years and nearly 17% say they’ve experienced growth of 20% or more. More than 70% have been serving rural lifestyle customers for more Responding to the most recent Ag Equipment Intelligence than 16 years. Dealer Sentiments & Business Conditions Update survey, one – Rural Lifestyle Dealer dealer summed up the state of the rural lifestyle market in 2018: ‘"Commercial sales are way up, specifically for less than 100 million of the total 2.04 farms reported. It should be noted that horsepower tractors." The numbers coming from the Assn. of California, one of the nation’s largest Ag economies, had less Equipment Manufacturers back up this dealer's commentary, than a 68-percent response rate to the Census. particularly in the sales of under 40 horsepower tractors. California had the highest value of Agricultural production at According to the latest AEM numbers, North American sales of $45 billion followed by Iowa at $29 billion. compact tractors were 169,788, up 8.8 percent in 2018 and up more than 80 percent when sales bottomed out in 2009.’ The Census found there continues to be more very small and very large farms with mid-sized farms diminishing, and that The U.S. Department of Agriculture released its 2017 Ag Census fewer farms produce the majority of all Ag products sold. in April, which shows farms of 179 acres or less represent 1.4

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May | June 2019 FARWEST Dealer 7 ask fweda's Q&A BOARD

What do you see as the greatest challenge facing the equipment industry in the next five years and how are you preparing for it? RUSSELL BALL interest rates, inflation. As triggers happen, act District Manager 21st Century Equipment with inventory reductions. Cheyenne Wells, CO NATHAN GREEN • Rising costs from President manufacturers. We are reaching Belkorp Ag, LLC Modesto, CA a point where the average grower can no longer afford I hate to say it but we have new iron. It creates concern that this will lead to a lot of challenges facing more corporate farms and fewer customers in the our industry in the coming marketplace. years. Some are not unique to us, such as an • Low prices and lack of a global market for aging workforce but we do have some unique commodities are a threat. ones I think about. In California, I worry how • Growing legislative pressures from R2R bills. the equipment buying cycle will change once government air board dollars are no longer • Tariffs, rising interest rates, aging growers, available. This still seems like it's years away aging upper management and a lack of interest so I don’t spend too much time on it. The from young leaders make recruitment difficult. commoditization of our Parts business: with Rising healthcare costs are a huge concern. internet retail plus other physical stores having more and more ability to sell parts that work for BILL GARTON President our tractors, pricing becomes more and more of Garton Tractor, Inc. a challenge. With limited pricing control it makes Turlock, CA it harder and harder to afford wage increase • Young people interested in for the parts department. We must find ways to work smarter within our parts department as the business — preparing by well as provide better service to our customers working with local colleges. so they want to do business with us. Not an easy • Online sales format such as Amazon — proposition and without an easy solution. quick and free delivery. Preparing by offering exceptional in store service; however, some KEITH GREENWOOD always buy online regardless of higher prices. COO Stotz Equipment • Manufacture direct sales of whole goods and Bluffdale, UT parts to large accounts. Preparing requires work There are so many challenges with FWEDA on manufacturer relations. facing the equipment industry • General global economy — increased tariffs, today. 8 May | June 2019 FARWEST Dealer BOARD TALK Continued on page 9 BOARD TALK BOARD TALK Continued from page 8 more attractive? How do we make it, let’s say Commodity prices, labor pool and labor talent, “sexy,” to attract talent today? That is the key competing interests for limited skilled talent to getting good talent onboard for the future. pool; regulations, cost of production — service Dealers have to change what we have done for trucks, labor, buildings, interest rates, health generations and step outside our comfort zones care, used inventory, inventory management; to create an environment that attracts younger market share — balance of growth, trade cycles talent. or inventory management, and gross margin. When looking at overcoming the limited BRIAN POTTER General Manager skilled talent pool, we need to work to have Quality Machinery Center Tulare, CA a reputation of being a great place to build a career. Our culture needs to build our Having skilled labor in all employees and then leverage their talents to departments of the dealership. build the business. Experienced skilled workers are in high demand so we have developed a strategy of filling a BRENT SCOTT pipeline of younger talented technicians and General Manager M & S Equipment, Inc. providing training to help them grow and Coolidge, AZ develop. Company growth combined ERIC MASON President with the distance between Mason Machinery Aurora, UT dealerships has brought a new challenge to our company that I see the biggest challenge is a focus now, as well as continuing forward. as dealership recruitment and retention of valuable We are recognizing the effort and dedication employees. Working on the involved in keeping the company culture culture of my business and making it a priority. consistent. Establishing a new dealership involves much MIKE METH more than just policy and procedures in a General Manager, Ag Division handbook. Teaching the company culture and 4Rivers Equipment Greeley, CO creating an environment centered on the core A majority of the younger beliefs that our company was founded on takes generations today do not want mentoring and modeling. to work like their parents or As our leadership positions expand, there is grandparents. They want a job an increased need for company training in the that is 40 hours or less a week fundamental best practices that represent what with no commitment on weekends or evenings our company is known for. when our customers are working. So how do we get our industry image and workload to look

May | June 2019 FARWEST Dealer 9 EPA RAMPS UP ENFORCEMENT OF EMISSIONS STANDARDS

This is the third in a series of articles related to Right-to-Repair, a movement that seeks unrestrained access to equipment tools and technology. These articles address the Right-to-Repair vs. Right-to-Modify machinery, the potential impacts that compromise safety and emissions standards set by state and federal governments and the ramifications consumers face by altering equipment.

iven the ease of acquiring the and emissions standards and stealing Gapplications necessary to modify intellectual property,” according to R2R RESOURCES power and emissions features across Natalie Higgins, vice president of the equipment and vehicle industry, government affairs and general counsel For detailed information many people seem surprised to find to the Equipment Dealers Association on Right-To-Repair visit: it’s a violation of the Clean Air Act to based in St. Louis, Mo. www.fweda.com/r2r manufacture, sell or install parts that Citing an increase in imports of non- bypass, defeat or render inoperative any compliant equipment and vehicles emissions controls. Caterpillar also emissions control device. This would starting in 2008, the Environmental include chipping or tuning machinery. allegedly failed to comply with emission Protection Agency pursues various control reporting and engine-labeling Suppliers market these items “to parties for CAA violations ranging achieve superior performance, more requirements.” Caterpillar was fined from failure to provide a certificate of $2.55 million that included a recall power, cleaner emissions or better fuel conformity (COC) or display compliant efficiency.” of non-compliant engines. In 2017, labeling, to importing compression- Husqvarna was fined $2.85 million for Tuning modifies a vehicle’s electronic ignited (CI) nonroad engines that either failing to provide EPA with “complete control unit (ECU), which is an do not meet emissions standards or are and accurate emissions testing erasable programmable read-only not exempt from the requirements. The information relating to engines used memory chip. When taking in trades Act and its implementing regulations in handheld lawn, garden and forestry or used equipment, dealers cannot provide for testing, reporting, equipment.” And late last year, EPA set always determine whether engines have recordkeeping, warranty, labeling, its sights on tuning when it penalized been tuned, which creates challenges tampering, defeat devices, and vehicle Derive Systems, maker of “Bully Dog” for customers who could unknowingly and engine maintenance and alterations. and “SCT” tuning software, asserting purchase a piece of equipment The EPA isn’t shy about targeting the company manufactures emissions that’s been modified well beyond its industry leaders for these violations: defeat devices. Derive was fined performance capabilities. Briggs & Stratton, Caterpillar, $300,000 and will spend another $6.25 As it relates to proposed Right-to-Repair Cummins, Toyota, Doosan, Nissan, million bringing its products up to laws, manufacturers say end users do Komatsu, Kubota, Krone, Claas, standards. not need to modify embedded code John Deere and Husqvarna are just a Thus, it’s no surprise the equipment to perform repairs. Rather, equipment few that have paid fines and incurred industry operates in a heightened is designed to comply with applicable expenses for non-compliance. In state of sensitivity when it comes to safety and emissions standards. “The 2011, EPA settled a claim of violations modifying embedded code, machinery ability to modify embedded code, with Caterpillar “for shipping more performance and emissions. EPA in fact, is sought for inappropriate than 590,000 highway and non-road regulations treat dealers selling new purposes such as circumventing safety diesel engines without the correct EPA RAMPS UP ENFORCEMENT Continued on page 12 10 May | June 2019 FARWEST Dealer Best In The Field, Call us at 1.800.726.5070 Just Got Better. [email protected]

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SEAFWEAFA May | June 2019 FARWEST Dealer A 11 EPA RAMPS UP ENFORCEMENT Continued from page 10 engines the same as manufacturers. The modified to violate EPA regulations another authorized person. Typically, potential cost for violating the CAA is from its original purchased state. these labels are permanently attached to $45,000 for each piece of equipment in • Require owners to indemnify dealers parts that normally don’t need replaced. breach of the standards. EDA’s Industry for any claims arising from the resale The equipment industry has a vested Relations Task Force advises equipment of the equipment (as allowed by state interest in ensuring the integrity and dealers to avoid these penalties by laws). life cycle of the machinery it sells and employing best practices. Engine maintenance: services. Dealers make significant New equipment: investments in technology and • Maintain the engine in factory training to support customers and • Verify that each engine is covered by a condition. Certificate of Conformity (COC). provide prompt, reliable products • Ensure that any change or parts and services to reduce downtime and • Confirm equipment has a label or tag substitution is supported by increase productivity. The industry has signifying the COC on the engine or documentation verifying it does not committed to providing the necessary part. affect emissions. tools to diagnose and repair equipment. • Do not alter or “improve” the new • Keep records to demonstrate Our final article addresses that motor in any way prior to sale. compliance. commitment and progress toward the Trade-ins: industry’s goal to meet the demands of • Emissions labels on any device or customers who rely on their equipment • Evaluate the engine to determine part should not be altered or removed; to sustain their businesses. whether defeat devices or other items instead keep them intact and up to date used to impair, disable or bypass with accurate information. Joani Woelfel is president and CEO of Far emissions controls have been installed. West Equipment Dealers Association. This • If a part must be replaced get a article appears in Wyoming Agriculture, • Verify the equipment complies with duplicate of the original label installed a publication of the Wyoming Farm CAA standards and has not been by the certifying manufacturer or Bureau.

12 May | June 2019 FARWEST Dealer Cyber risk assessment higher for larger businesses as criminals target wide surface

According to the Assessment of Business Cyber Risk (ABC) report up call to many businesses across the country,” said Christopher released in April by the U.S. Chamber of Commerce and FICO, D. Roberti, senior vice president for cyber, intelligence, and the level of cyber risk to the U.S. business community is holding security policy at the U.S. Chamber of Commerce. “Our focus steady for the first quarter of 2019, with a national risk score of this quarter is to help businesses understand how to improve their 687. cyber posture. It is important to emphasize that a lower score— The ABC measures the aggregate cybersecurity risk faced by the whether for a company or a sector—does not necessarily imply that U.S. business community. Based on data from the FICO® Cyber insufficient diligence is being applied by those entities. Such entities Risk Score, the ABC is intended to advance cybersecurity awareness may simply have a higher risk profile (i.e., they face greater risk of and improve the overall effectiveness of cyber defense programs. breach) due to the nature of their businesses.” Managing risk in the world of cybersecurity is about managing The report reveals that since the fourth quarter of 2018, small firms behavioral risk and skills gaps, as well as technical flaws. Based on showed a slight improvement—up to 740 from 737—while large the observations of thousands of businesses scored for the ABC, firms moved from 646 to 643. These changes indicated relatively the U.S. Chamber and FICO offer these six recommendations: stable risk performance from quarter to quarter. • Use the National Institute of Standards and Technology (NIST) “The disparity in risk scores between small and large organizations Cybersecurity Framework to develop an information security is due to the fact that large firms have a wider attack surface and are program. The framework enables organizations—regardless more frequently the target of cybercriminals,” said Doug Clare, vice of their size, risk profile, or cyber sophistication—to develop a president for cybersecurity solutions at FICO. cybersecurity plan or improve an existing one. The ABC is the revenue-weighted average of the FICO® Cyber • Develop a reliable understanding of one’s network. This includes Risk Score for nearly 2,400 small, medium, and large companies. identifying assets to apply security management based on risk. The score calculates the probability of an organization suffering a material data breach in the next 12 months. Just like a FICO • Identify functions and teams whose process and policy maturity credit score, the range is 300 to 850. For individual companies, the are not performing adequately. This will enable organizations to higher the score, the lower the likelihood that an organization will identify weak links in technology, personnel, policy, and leadership. experience a data breach in the next 12 months. Similarly, a lower • Oversee an organization’s network team to confirm alignment to score indicates greater risk of a successful data breach, based on five the details of network management policies. Avoid unnecessarily years of historic breach data. The score analyzes billions of cyber exposing network infrastructure assets and ensure correct risk indicators and uses machine learning to produce a forward- configuration for those that must be exposed. looking metric for measuring cyber risk. • Protect and monitor network endpoints. Organizations that “As businesses review the results for their organizations, it’s monitor endpoints are able to provide an early warning of potential important to note that industries carry different levels of risk, problems. which are outside the control of individual firms,” said Clare. • Develop a process to confirm that active certificate management “Banks are riskier than bakeries because they are richer targets, with programs are in place and are being implemented. more data to steal and that data is more valuable. The FICO® Cyber Risk Score looks at both security preparedness and sector-level risk More information on how to improve cybersecurity in your factors, and both are reflected in the ABC.” organization can be found in the report and on the FICO Blog at www.fico.com/blogs. Tips for Improving Cybersecurity – U.S. Chamber of Commerce “When we launched the ABC in October 2018, it was a wake-

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14 May | June 2019 FARWEST Dealer A HAPPY CUSTOMER IS YOUR BEST Boost customer retention ASSET. HERE'S A BREAKDOWN OF HOW TO MANAGE, TRACK AND to drive repeat business IMPROVE CUSTOMER RETENTION In the beginning stages of It’s no secret that acquiring a any business, most owners are new customer can cost a lot hoping they can simply find of money. But focusing on customers that are willing to customer retention can actually buy their product or service. lower your customer acquisition Customer retention isn’t a high costs. priority for most people during Loyal customers are more likely those early stages. to recommend your business As your customer acquisition to their friends and family and efforts begin gaining traction, bring in more word-of-mouth your business will start to make referrals. One study found that sporadic sales. Over time, these customers acquired by word- sales will continue to grow and of-mouth referrals spend 200% become more predictable. more than the average customer. If you make it to this stage, Another important thing to you’re faced with a new hurdle. keep in mind is that, once you It’s time to figure out how to have a customer, you don’t want get your previous customers to pay to acquire that customer to buy from you again and again as if they were brand new. spend more money the next Tracking customer retention time. This is called customer metrics retention. Before you can improve your Customer retention customer retention rate, you matters have to first understand where The future growth of your you are now. This involves company depends on customer looking at four key metrics. retention. Researchers like the Understanding how to figure Gartner Group found that 80 out these metrics and ultimately percent of a business’s future improve them is key to maintaining and increasing your customer profits will come from 20 percent of its current customers. retention. Here are four customer retention metrics your business In spite of this, businesses are twice as likely to focus on customer should be tracking: acquisition than they are on retention efforts. Let’s look at three Repeat customers sustain business reasons why customer retention is important: Your repeat customer rate is the percentage of customers who Affordability: According to the Harvard Business Review, It’s 5-25 have made more than one purchase from your company. Tracking times more expensive to acquire a new customer than it is to hang this rate is the best way to see how well your retention strategy is on to the ones you already have. Your current customers are 60-70 working. percent more likely to buy from you again whereas the likelihood of converting a new customer is only 5-20 percent. To track your repeat customer rate, you need to know two things: Increased revenue and profitability: Improving your customer 1. How many customers made more than one purchase within the retention rates will increase your revenue. This is because it’s easier past year to sell to an existing customer than it is to convince a brand-new 2. How many unique customers you’ve had within the past year customer to make a purchase. The formula for tracking your repeat customer rate is: By increasing your customer retention rate by just 5 percent, your The number of customers that bought from you more than once / company revenue could increase anywhere from 25-95 percent. The number of unique customers So, by focusing on customer retention strategies, your company will always generate more revenue than by focusing on customer This in not a metric that you should calculate once and forget acquisition alone. about. The best way to use this and any business metric is to monitor your performance over time and understand how the Lower customer acquisition costs: Customer acquisition costs methods you use affect this metric. are the amount of money a business spends on convincing a new customer to make a purchase. This includes things like marketing expenses, market research, sales outreach, and more. CUSTOMER RETENTION Continued on page 17 May | June 2019 FARWEST Dealer 15 Keys to the SUCCESS of any 3 DEALERSHIP The equipment industry’s everchanging landscape demands company leaders focus on THREE KEY areas of training that are crucial to THE SUCCESS OF ANY DEALERSHIP:

1 2 3

ABSORPTION CUSTOMER WORKFORCE FACTOR EXPERIENCE DEVELOPMENT As conditions tighten for Exceptional customer service A well-educated, efficient equipment sales, it’s is the key to building and workforce requires a imperative that parts and retaining client relationships. substantial commitment of service departments produce Do your employees know the time and financial resources. sufficient income to absorb difference between an Does your dealership have all dealership expenses. Do order-taker and a solutions the right culture to recruit your employees know what provider? Are they aware and retain key employees? defines 100 percent solutions providers create Are your employees key to absorption? Are they aware value for the dealership? the progress and success of of the best practices to your dealership? achieve it?

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16 May | June 2019 FARWEST Dealer CUSTOMER RETENTION Continued from page 15 Customer churn The customer churn rate is the rate at which your customers stop 4 ways to improve doing business with you. This could mean a customer cancels their subscription or stops buying your products. Either way, that’s a customer retention customer your business was unsuccessful in keeping. Now that you understand why customer retention matters and what A certain level of customer churn is normal in any business. metrics you should be tracking, let’s look at four ways you can begin to Depending on the type of business that you have, a churn rate of improve customer retention: between 5 and 7 percent could indicate a problem. Be accessible Regardless of your industry, being easily accessible is an important A high churn rate could indicate that your product or service is part of building trust with customers. This is especially true if a failing to help your customers reach their goals. The frequency with problem arises. which you track and calculate customer churn depends on your A 2016 survey looked at the top customer service frustrations faced business volume. by 1,200 consumers. The survey found that the top cause of frustration with customers is if the wait time to speak to a representative over the All of this depends on the product or service you are providing to phone is too long. your customers. For example, if you sell refrigerators directly to To ensure you are accessible to your customers, you should allow consumers and you have a lot of repeat business, that could mean customers a way to get in touch with your company 24/7, provide a that you are selling bad refrigerators, so keep in mind the nature of variety of ways for customers to contact you such as through email, live chat, a phone call, and social media, offer customers the option your business. to receive a quote or ask a question on your website, and when The formula for tracking customer churn is: customers call, make it easy for them to bypass the automated phone service and speak to a representative. (Number of customers at the beginning of the year - Number of Personalize the customer experience customers at the end of the year) / Number of customers at the You can personalize your interactions with your customers based beginning of the year on their location, purchase history, product variety, and more. One study found that when companies create a personalized customer Purchase frequency experience, they generate nearly four times more revenue than companies that don’t. Purchase frequency looks at how often the average customer makes a purchase from your business. A higher purchase frequency results in You can personalize your interactions with your customers in the following areas: Email marketing, social media, your website and higher revenue and overall profitability. webinars Calculating the purchase frequency is similar to figuring out your Ask for feedback business’s repeat purchase rate. Requesting and acting on customer feedback is the key to customer loyalty. After all, you can’t improve your customer retention rates if you The formula for tracking purchase frequency is: don’t know why your customers are leaving you in the first place. The number of orders placed / The number of unique customers • Send email surveys to all new customers and ask them for feedback on their experience. Average order value: • Always provide a customer feedback form on your website. The average order value calculates the average amount of money a • Provide live chat support on your website; 44% of customers feel like customer spends on each purchase. This metric allows you to see this is the most important feature e-commerce businesses can offer. how much each customer is worth. Create a loyalty program One of the best ways to increase customer retention is by creating a The more each customer spends with you, the less money you need loyalty program. Loyalty programs allow you to provide more value to to spend marketing to new customers. This results in higher revenue your customers and give them an incentive to continue doing business and less money out the door. with you. The formula for tracking the average order value is: However, your loyalty program is only as effective as the number of active participants you have. Most customers are members of 19-29 Total revenue earned / The number of orders placed different loyalty programs but only actively participate in about 5-12. The bottom line Keep the following points in mind when considering a loyalty program: Finding and obtaining new customers will always be a priority for • Make sure that it’s easy for your customers to understand how they businesses. But once that customer makes their first purchase, there can earn and redeem points. is more work to be done. • Make sure that you have a good onboarding strategy in place for new members. Smart businesses know that the real value lies in keeping that • As soon as a new member signs up, send them an email thanking customer, not just earning the first sale. Current customers already them and letting them know how they can earn more points. know your company and enjoy your products or services, so invest • Give members ways to earn points and rewards beyond just making most of your energy in improving the experience for them. If you do a purchase. For instance, your customers could earn additional points this, you’ll see more growth in revenue and profitability than you will for referring a friend, social sharing, and more. be just by focusing on customer acquisition alone. – Growth Studio, Good Company

May | June 2019 FARWEST Dealer 17 FW Member Mileposts RDO Equipment Co. Supports Wounded Warriors RDO Equipment Co.'s Forth Worth, and was a member of the Texas, store sponsored the seventh Army’s elite parachute annual Weekend to Remember, an event team, the Golden Knights. hosted by the Halo for Freedom Warrior In 1994, Bowman’s life Foundation, an organization dedicated changed forever when a to supporting military veterans who have parachuting accident cost been wounded in the line of duty. For him both of his legs. the Weekend to Remember, wounded Despite his setback, warriors – many of whom have lost arms Bowman went on to or legs as a result of their service – are re-enlist in the Army, invited from across the country to the something a double- “We’re lucky enough to work for a Fort Worth area to participate in a multi- amputee had never done before. He company that encourages us to give back day lineup of events, from aerial hog became a motivational speaker and to the community, to give something of hunts and target shooting, to parachuting, eventually went on to establish the Halo ourselves,” he said. “We thought it was a racecar driving, and bow fishing. for Freedom Warrior Foundation. good opportunity to pay those guys back who sacrificed so much for our country.” RDO Equipment Co. customer Dana General Manager Matt Daniell said it Bowman visited the Fort Worth store didn’t take much research after Bowman’s The Fort Worth store provided skid steers, to ask about a sponsorship. Bowman, visit to decide the event was a worthy a compact excavator, and even a $450K a retired Sergeant First Class with the cause to get involved with. dozer for the warriors to try out as part of U.S. Army, served in the Special Forces the Weekend to Remember events. T.G. Schmeiser celebrates 90 years of innovation Manufacturing Company was founded by to follow the contours of the furrowed Theodore Schmeiser in the early 1900’s soil. in Davis, California. In the late 1920’s Now in the 4th generation of family Schmeiser moved to Fresno, establishing members, Andrew Cummings (President), a plant and a new company on Stanislaus Cory Cummings (Sales Manager) Street, naming it the T.G. Schmeiser and the rest of the team are leading Com-pany. Founded in 1929, one of the organization to the next level of Schmeiser’s first inventions with the new achievement. company was the patented Schmeiser For 90 years, T.G. Schmeiser Company Grouser Lug; which gave better traction For more information about T.G. has been manufacturing and delivering for steel wheeled tractors. During World Schmeiser Company please visit versatile solutions for progressive War II, business was slow, but allowed www.tgschmeiser.com soil management. The Schmeiser him time to devise a floating rings roller

OPEI Board of Directors ahead for the outdoor power Nevada youth among the Farm Equipment appoints new leadership equipment industry. 2019 CASE Institute Manufacturers Association Scholarship Recipients (FEMA), support workforce The Board of Directors During the meeting, the CASE Institute Scholarship development and hopefully of the Outdoor Power Board appointed Rob Moll, scholarships, sponsored by spark student interest in the Equipment Institute (OPEI) CEO of MTD, as a director, Association of Equipment equipment manufacturing met with staff recently at the and named Tom Duncan, Manufacturers (AEM), industry. association’s headquarters President and CEO of Positec, in partnership with the Among the 34 recipients was building to discuss the to the executive committee as Equipment Dealers Chance Crain of Wells High challenges and opportunities secretary/treasurer. Association (EDA) and School, Nevada.

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18 May | June 2019 FARWEST Dealer May | June 2019 FARWEST Dealer 19 FW Industry News Did Ag Equipment Sales “Plunge” in the First Quarter?

An April 26 report from Bloomberg Unit sales of under 40 horsepower was headlined “Farm Equipment tractors in the first quarter of this Sales Plunge Most Since 2016 in year were up year-over-year less than Trade War Fallout.” The tractor and 1%. But compared to the average combine sales numbers published first quarter sales between 2015-19, by the Assn. of Equipment sales through the first 3 months of Manufacturers (AEM) throughout the year are up 17%. the first quarter of this year don’t For utility tractors, unit sales were seem to tell the same story. down 2.8% on a year-over-year The reference to “Trade War Fallout” basis. First quarter sales in 2019 vs. in the headline is the real tell of what average first quarter sales over the direction the story is heading. After past 5 years, for 40-100 horsepower all, it all depends on how one defines equipment are down about 1.5%. “plunge.” Year-over-year March 2019 row- According to the Bloomberg report, crop tractor sales were down 2.2%. “Purchases of farm equipment Through the first quarter of this year, plunged by an annualized $900 sales of tractors over 100 horsepower million in the first quarter, the are down 19% compared to average sharpest drop in 3 years, as U.S. first quarter sales during the past 5 producers struggle with falling years. commodity prices and collateral Unit sales of 4WD tractors were up damage from President Donald 1.3% in March vs. March 2018. The Trump’s trade wars. sales of this tractor category during “The Commerce Department cited the first 3 months of 2019 were the drop in agricultural machinery down by 4% compared to average purchases as a contributor to the sales during the first quarter over the paltry 0.2% quarterly rise in overall past 5 years. business spending on equipment, Finally, North America combine also the weakest performance since sales in March were up more than 2016. The softness in the category 41% year-over-year. During the first came despite promises by Trump quarter of this year, sales of combines and Republican leaders that tax are up 14% vs. the 5 year average breaks for equipment purchases in first quarter sales from 2015-19. the party’s signature tax law would boost investment by farmers and The Bloomberg report concluded manufacturers.” by citing comments made by Brent Norwood, manager of investor There is little doubt that sales of big relations for Deere & Co., during farm tractor sales in North America a conference call with analysts to aren’t where we would like them discuss the company’s earnings to be and commodity prices aren’t more than 2 months earlier. “U.S. where we’d like them to be. The fact farmer sentiment remains fluid of the matter is farm equipment sales and continues to erode the longer in North America have been pretty trade uncertainty persists” … [this] soft since 2015, at least a couple of “has resulted in some U.S. farmers years before the “trade war.” temporarily pausing equipment Here’s a look at the first quarter sales investment decisions.” figures from AEM. You can judge – Ag Equipment Intelligence how much ag equipment sales have plunged. INDUSTRY NEWS Continued on page 21 20 May | June 2019 FARWEST Dealer FW Industry News INDUSTRY NEWS Continued from page 20 drone technology spread like wild fire, and dependent on foreign sources for Did Ag Equipment Sales “Plunge” in the First Quarter? Revolutionary Ag Tech Gaining with local news agencies lining up to production. Interest From Farmers interview the team. "We had interviews Additionally, individual state initiatives Scientific Cal Ag has released results of from KBAK, FOX58, CBS47, KSEE24, that focus on battery recycling programs its first Farmer Research Study. The study 23ABC and FOX26, which were all aired are being kickstarted that address was conducted at World Ag Expo held during the Expo", states Jacob Lindberg, sourcing of minerals, as well as proper February 12-14, 2019 in Tulare, CA. Product Design Engineer. "Attendees were handling and management processes. "With over 100,000 attendees at the approaching us mentioning how they had Maine and California, in particular, Expo, this is the largest such event in the seen our drone on the news.” are creating regulations that not only world," states Anthony Hall, President The survey further assessed the likelihood impact manufacturers but the general and CEO of Scientific Cal Ag. of adopting this new drone technology, public as well. Other states, including While exhibiting at World Ag Expo, the indicating: Illinois, Maryland, Texas, Minnesota, and company offered a two-night stay with • 51% acknowledged that they use Vermont are preparing similar bills to help dinner and free wine, including wine precision agricultural technology to make address these growing concerns. OPEI tasting, at the exclusive Allegretto Resort decisions in the field. continues to engage with regulators and in beautiful Paso Robles, CA. Kaveh monitor these developments. • 97% stated they consider agricultural Nemati, the company's data scientist, – OPEI notes, "the incentive to participate in the technology/services worth the cost. study helped yield a statistically sound • Farmers responded positively to Don’t Forget to Submit Scholarship representation for sampling". Nearly 60% Scientific Cal Ag drone technology, with Applications identified themselves as growers or farm two-thirds stating they would definitely The Equipment Dealers Foundation owners, while agronomist/crop scientist, use their services, if available. (EDF), the charitable arm of the agriculture research and development, While adoption rates for farmers Equipment Dealers Association (EDA), consultants, operations and sales transitioning to agricultural technology has released the scholarship application comprised smaller portions. Among the remains below 10%, the general and guidelines for the 2019-2020 notable results: consensus is that innovators of agricultural academic year. The deadline to submit all • 50% of responders grew fruit (including technology do not fully understand application materials is 5:00pm (Central) wine grapes) and nuts, which affords the the requirements of farmers. "We tend on April 30, 2019. greatest opportunity for Scientific Cal to be bombarded with all of this new ED’s scholarship program supports the Ag’s drone driving technology. Smaller technology, but so far I just don't see training, retraining or advancement farmers (less than 440 acres) represented any savings", was a common theme from of current and potential employees of 63% of the survey, which is lower than visitors at the Scientific Cal Ag booth. equipment dealerships. Candidates must the 89% reported for all U.S. small farms, During the survey company officials asked be sponsored and recommended by a according to the 2017 USDA Census of farmers, "what are your main concerns dealership to be eligible to participate. Agriculture. within farming?" 31% responded water/ This program is part of EDF’s broader • The survey found that 16 out of 100 drought, 24% crop yields, 23% disease/ workforce development initiative and farmers refrain from hiring a specialist pests, 10% picking decisions, 5% aims to provide an incentive for qualified during the growing season, preferring to maturity and 7% other. employees to begin or continue their handle the ground truthing themselves. – WAE News professional growth within the agriculture Of those that hire a specialist, 31% are to industry. detect disease and pests, with 22% for soil States developing battery recycling initiatives Scholarships from EDF are $1,000 and inspection, 17% for irrigation advisement are matched by the sponsoring dealership and 14% for fertilization. The Department of Energy is leading for a total of $2,000. These funds can • Depending on the number of acres an effort to develop technologies to be used for any educational program; farmed, smaller producers spend up to recycle lithium-ion batteries from associate, bachelor’s and post-graduate $60,000 annually for the services of crop electric vehicles, cellphones, outdoor degrees in any field as well as technical scientist/PCA's and other specialists. power equipment, and other sources to training in the ag equipment industry. Nearly 41% of farmers spend between ensure a reliable and affordable supply EDF awarded 10 students a total of $60,000 and $120,000+ annually for of crucial metals to battery production $20,000 for 18-19 academic year. these services. in anticipation of soaring global demand and potential shortages. Metals such as Please direct questions to scholarships@ During World Ag Expo, news of the new Lithium and Cobalt are both expensive equipmentdealer.org. May | June 2019 FARWEST Dealer 21 ADAPT. GROW. SUCCEED.

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22 May | June 2019 FARWEST Dealer FW Workforce THE STATE OF BLUE COLLAR AMERICA: SATISFIED WITH WORK, SATISFIED WITH LIFE

reviously a declining sector of the force because of disabilities. And more NEW WHITE PAPER EXPLORES TRENDS PUnited States workforce, blue collar Americans are obtaining four-year degrees, IN THE BLUE COLLAR WORKFORCE jobs are growing at the fastest rate in while those without continues to decline. HIGH PAYING JOBS WITH NO COLLEGE nearly three and a half decades, yet Industries that are feeling the squeeze workers are scarcer than ever, according in particular include transportation, DEGREE-OR MINIMAL DEBT to studies from The Washington Post and production/manufacturing and health care BLUE COLLAR WORK IS RED HOT The Conference Board, respectively. This support. unique combination of circumstances creates significant new opportunities for Gad Levanon, lead report author and Chief Economist of North America at • Blue collar workers recommend their Americans who may not have a college career paths. education. And, as they look to invest in a The Conference Board, says that while the career, they face a question: is taking a blue picture may look bleak for businesses, it • Well-paying jobs are possible without collar job a smart decision? looks very different for the workers. Blue a college degree and the debt that comes collar workers are now more likely to enjoy with it. According to America's blue collar workers, their jobs and be rewarded with rapid • While they acknowledge challenges, blue the answer appears to be a resounding yes. pay increases, which confirms the Express Today, Express Employment Professionals collar workers have a positive outlook on survey findings of this segment of the the future. released a new white paper, "The State workforce. of Blue Collar America." Drawing on • Blue collar workers have positive the expertise of Express franchise owners The vast majority of blue collar workers expectations for 2019, and very few are and on original polling commissioned by (86 percent) say they are satisfied with their concerned about automation disrupting Express and conducted by Harris Poll, the jobs, and 91 percent say their work makes their careers. white paper offers an in-depth look at blue them "proud." And as the paper reports, • Blue collar workers may face unique collar workers, how they find meaning in blue collar workers are more likely to have retirement challenges. their work and why filling open blue collar a positive outlook about the direction of jobs is so important. the country. • Blue collar workers lament that, despite their own satisfaction, society looks down "For the first time in modern history, blue Accurate perceptions of blue collar life, on their work. collar job openings outnumber white collar then, are important for those considering opportunities," said Express Employment career paths. But there are much larger "There's been a great deal of chatter about Professionals CEO Bill Stoller. "These are implications: if jobs go unfilled, the the future and frustrations of America's some of the most in-demand jobs in our strength of the American economy is blue collar workers," Stoller added. "But country. So as our paper argues, it's time at stake too. As Luke Sodergren, an our research shows that most blue collar to rethink negative stereotypes about blue Express franchise owner in Wisconsin and workers feel good about themselves and collar work. Job seekers really are in the Minnesota puts it, "We have many skilled their jobs. It is in all of our best interest, driver's seat, and that's part of the reason positions that go unfilled because there is a then, to check our preconceived notions- we're seeing rising wages in many of these shortage of talented individuals wanting to because our collective future will be fields." enter the trades." determined in part by whether these jobs are filled. One thing that will never The recent Conference Board study reveals The paper breaks down what more change is the importance and value of blue collar labor shortages are the result of Americans need to understand about blue skilled workers in the modern and future "converging demographic, educational and collar workers: economy." economic trends in the U.S. economy." • Blue collar work brings satisfaction. Baby boomers who once held these jobs – Express Employment Professionals • Blue collar work offers viable career paths are retiring, while others have left the labor and advancement. May | June 2019 FARWEST Dealer 23 FW Politics & Policy Upcoming California measure threatening tractor Events exemption advances through legislature Legislative Sessions California SB 468 sponsor Senator Hannah Beth- assesses the number of businesses/taxpayers who Jackson targeted the farm machinery exemption are affected; and reports many more criteria as Arizona 1/14 – 4/27 as part of legislation that would repeal all major required by law. The DOF study includes all tax California 1/7 – 11/30 business tax incentives by December 2023, if expenditures targeted by SB 468, many similar Colorado 1/4 – 5/4 certain conditions are not met, and result in one evaluation criteria/factors enumerated in SB 468 of the largest tax increases in recent years. and comparable notification and transmittal Hawaii 1/16 – 5/2 Jackson took amendments to SB 468 to remove requirements. Nevada 2/4 – 6/3 some provisions, and instead require the Both the LAO and the state auditor can initiate Utah 1/28 – 3/14 establishment of a state board to study the loss of studies under their own authority or at the specific Wyoming 1/8 – 3/1 revenue and other effects of tax incentives. Among direction of the legislature. In 2013, prompted by other things, the proposed language would: questions regarding the state’s Enterprise Zones US Regular Session • Require the legislative analyst’s office to complete (EZ), the LAO and DOF each independently 1/3 – 12/31 an assessment of all tax incentives and policies analyzed and made recommendations to the above a certain dollar threshold; Legislature. Upon finding the EZ program to be less effective than others, the Legislature June 2019 • Require the board to make recommendations to eliminated EZs and replaced them with three 18-19 the legislature regarding repeal or changes to tax other tax incentives. More recently, the State incentive policies; and FWEDA June Board Meeting & Auditor conducted an assessment of several of the Networking Event • Exclude from the review those incentives state’s primary tax expenditures and recommended 6:30 p.m., June 18 authorized under the personal income tax; improvements to some, while noting that others Morton's the Steakhouse 1745 Wazee St. sales tax exemptions on food, electricity and appear to be achieving their objects. Denver, CO 80202 prescription medications; and exemptions for Moreover, numerous state entities are tasked nonprofit organizations. with review, analysis and reporting for their September FWEDA joined a coalition of organizations specific tax expenditures, including the California 17-18 2019 opposing the measure in a letter to Senators: Department of Tax and Fee Administration’s annual report on the Manufacturing Exemption, FWEDA September Board “This measure would create a new body in state Meeting & Networking Event the California Film Commission’s evaluation of government that would direct the legislative 6:30p.m., September 17 the Film Tax Credit, the State Treasurer’s annual Wave @ Hyatt Regency John Wayne analyst’s office (LAO) to study “tax expenditures,” Airport, Newport Beach report on the California Alternative Energy and establish deadlines for completion of the studies, 4545 MacArthur Boulevard Advanced Transportation Exemption, etc. Newport Beach, CA 92660 and report findings and recommendations to the legislature. If different data on tax expenditures is desired, this can be achieved without adding another November While we appreciate the stated intent to promote bureaucracy and costs by the Legislature’s 5-8 2019 government accountability, we believe this goal changing of the parameters of existing reports, can be achieved without creating a new and giving different direction to the LAO or State potentially costly bureaucracy, through legislative FAR WEST Auditor, and soliciting stakeholder input as part guidance to the LAO and other state agencies, and 2019 Convention of legislative hearings. We respectfully request by expanding the scope of the study to provide a Phoenix Marriott Resort amendments that would delete creation of an more comprehensive assessment for the legislature. Tempe at The Buttes unnecessary state agency. 2000 W Westcourt Way Unnecessary and potentially costly new agency. Tempe, AZ 85282 Lacks Comprehensive Evaluation Metrics. This This measure would create a bureaucracy that bill enumerates evaluation factors intended to is duplicative of functions currently performed ascertain the revenue loss to the state, but lacks by a number of existing agencies, including the critical criteria for measuring the revenue gain Department of Finance (DOF), the LAO, the from tax incentives and their multiplier effects state auditor and others. through the economy. For example, SB 468 requires the LAO to The PEW Charitable Trusts report in 2017 annually review tax expenditures and report its entitled “How States are Improving Tax Incentives findings to the legislature. This function currently for Jobs and Growth” recommended that states is performed by the DOF. Every year, the DOF incorporate examination of “multipliers” to fully identifies all tax expenditures that cost $5 million evaluate tax expenditures. or more; estimates the fiscal impact over 5 years; POLITICS & POLICY Continued on page 25 24 May | June 2019 FARWEST Dealer FW Politics & Policy POLITICS & POLICY Continued from page 24 To provide a more accurate and of competitiveness with other areas of the skilled workforce, infrastructure, regulatory comprehensive assessment of state country: environment, and tax structure all play a revenue impacts, we suggest that any tax • What incentives are competitor states significant role, and businesses evaluate expenditure study incorporate “multipliers” offering? whether they can rely on these factors to and their effects on the economy, including remain relatively stable and consistent in but not limited to: • How do other states’ jobs climates stack the long term. Furthermore, for capital- up to ours? • Increases to state revenue from jobs, intensive industries like manufacturing employee wages and business income • What will be the loss to our state in terms and research-and-development, investment related to the tax incentive. of jobs and revenue if ta California tax decisions are made many years into the incentive is eliminated? future. The ability for corporate decision- • Increases to local property tax makers in these industries to anticipate costs Tax Uncertainty Discourages Investment. revenue from business investment and over a span of many years is an important While it is meritorious for the state to homeownership, and their funding support factor when determining locations for these consider the effectiveness of tax policies and to schools. investments. programmatic expenditures, this measure • Reductions in public assistance spending, would create significant uncertainty with The threat of repeal of tax incentives, in and other general fund savings due to respect to the future of the state's tax light of our state’s already high cost of greater employment. structure. doing business, poses a significant barrier to jobs, investment and the state’s long-term Additionally, we believe it is critical to When businesses choose to locate in a economy." examine California’s policies in the context state, factors such as the availability of a

2019 audit risk high in light of Wayfair sales in the state from the new system died in poor,” Smith said, citing a cotton farmer in committee in February. the boot heel of Missouri who doesn’t need With last year's Wayfair ruling on sales tax – Denver Post to farm very many acres to go over the estate collection, dealers can expect heightened tax exemption, especially with a cotton picker enforcement actions in the coming year. The Death tax requires education costing around $600,000. ruling tied sales tax collection to the amount of Helping lawmakers, especially new members sales volume and number of transactions. of Congress, get a good handle on the overall The 50-plus members of the Family Business Estate Tax Coalition in February sent a letter to HBK CPAs & Consultants released an updated importance of farming and ranching is the first Smith, Bishop and Sen. John Thune (R-S.D.), Wayfair Sales Tax Chart. This reference tool can step to securing support for repealing the estate who introduced the Death Tax Repeal Act of be used by dealers to comply with the Wayfair tax, Rep. Jason Smith (R-Mo.) recently told 2019 (S. 215) in the Senate, thanking them for statutes in effect in the various states. several members of the Family Business Estate Tax Coalition. The American Farm Bureau their efforts to eliminate the estate tax. Members can download the Wayfair Sales Tax Federation is a member of the coalition. – American Farm Bureau Federation Chart at www.fweda.com. Smith, a seventh-generation Missouri family Three bills seek to ease ELD mandate Colorado lawmakers to codify big farm owner who serves on the House Ways and change to online sales tax system Means Committee and the Budget Committee, US Rep. Collin Peterson, R-MN., introduced along with Rep. Sandford Bishop (D-Ga.), two bills to provide relief from the ELD The Colorado House Finance Committee has earlier this year introduced the Death Tax Repeal mandate. HR1697, the Small Carrier Electronic unanimously approved legislation (HB 1240) Act (H.R. 218). Logging Device Exemption Act, would exempt that would codify a controversial rule change businesses which operate 10 or fewer commercial announced last year by the state’s Department “There’s a lot of opportunity to provide basic trucks. HR1698, the Agricultural Business of Revenue establishing a destination-based sales education about agriculture” to members Electronic Logging Device Exemption Act, tax system. of Congress who may not know a lot about farming, Smith said, noting that getting would exempt certain agricultural haulers from Under the state’s current system online retailers additional support for estate tax repeal the requirement. It contends that transporting assess, collect and remit sales tax based on the legislation, especially from Democratic members, live animals and perishable products requires tax jurisdictions they share with their customers. would take time. flexibility that the mandate does not allow. Both But under the new system, the retailers pay sales bills were co-sponsored by Rep. Greg Gianforte, “A lot of great things don’t happen immediately. taxes based on their customers’ addresses. R-MT. Rep. Austin Scott, R-GA., unveiled We can get there, slow and steady,” he said HR1673, would amend the Motor Carrier With more than 700 unique sales tax optimistically. combinations in the state, due to its multitude Safety Improvement Act of 1999 with respect to of special taxing districts and home-rule cities, Lawmakers who haven’t been exposed much to the definition of agricultural commodities, and the new system could be a significant burden on agriculture have a hard time understanding that more clearly define ‘agricultural commodities’ small-businesses. the estate tax can really hurt family farmers, who as applied to transportation laws, extending are far from wealthy. regulatory relief for all farm commodities. Another bill (SB 131) that would have exempted businesses with less than $100,000 in annual “Many farmers are truly land-rich, but cash – LandLine Daily eNews

May | June 2019 FARWEST Dealer 25 After Market Sales Force Incentives – Engendering Engagement By Dave Baiocchi, President, Resonant Dealer Services LLC

s a dealer working life as a Aprincipal I liked CALLING. Much to think that the of their identity wages we paid our was tied up in people provided their occupation, enough motivation and they validated for them to be themselves through personally invested achievement in delivering a in the working Dave Baiocchi quality experience to world. Employees our customers. Over time I found that currently in the while wages are necessary, the best and workforce however most productive employees are hard- may not see wired to innovate. For that additional work as a calling. administrative paper trail, writing better innovation they want a chance to get Instead they view their employment as and more customer focused SOP’s, and a little extra. My goal in designing a CONTRACT. Their validation and making computer enhancements for incentive programs was always to try identity are many times completely the benefit of all departments. These and foster a team environment and an separated from how they earn their achievements should be celebrated as atmosphere that called people up to the money. It’s not that they aren’t serious much if not more, than selling some next level, both in our dealership, and in about what they do, but they truly implements, and signing up winter their personal lives. VALUE their time as much (if not service specials. more) than their money. Employee engagement is a funny thing. If we find a way to weave rewards Over the years I have learned a thing 2.) Meaningful Contribution into our programs that address these or two about what motivates people to Connected to this obsession with time, areas, it is likely that you will find find that inner magic. The big surprise is the burning desire they have to be that elusive magic formula that draws was that many times it was not really a part of something important, and employees to be personally involved connected to wages, or even bonuses worthwhile. They want their work to and engaged. All that said, what should and over-rides. Instead there were a be meaningful. They want to solve an incentive plan look like? How do myriad of other motivating factors that problems and overcome challenges in we meet the motivational needs of a are seldom considered in even the most new and different ways. They value diverse intergenerational workforce? Not robust incentive programs. efficiency, and find it exciting and everyone is a millennial, and we want We have all talked ad-nauseam about motivating to find new answers to old a broad enough program to engender the generational differences that exist problems. This is why they constantly participation from everyone. in our workforce, but despite all the ask WHY. Management wrongly sees I don’t know if there is an easy answer, talk, I am not sure that we have made this question as an affront to their but I do think that whatever incentive the organizational shifts to keep our authority, but most of the time the format or system you put in place there millennials and Gen-X’rs engaged. We WHY is simply an attempt at finding are some compulsory components that still hang money in front of them and an alternative (and perhaps a better, and need to be included. expect them to jump for it. When they more profitable) process. We think we don’t, we still seemed surprised. know what works. But maybe we are • Incentive program products need to be customized, focused, and planned. By 2025, the millennial generation will missing an opportunity. represent over 50% of our workforce. 3.) Recognition Don’t broad brush the program. Customize both the products and the The more we do the same old things, Yes, everyone still likes to be recognized the harder it will be to get them rewards based on the department you publicly. What we recognize employees are trying to motivate. As an example, excited about our business. We have to for however has changed little over the address what compels them to engage. road techs should be rewarded for tire years. We made our numbers!!! We had sales, but tires are not necessarily a hot Studies have shown that overall, our no accidents!!! We met our sales goals!!! newer employees value many things item for parts countermen. Scale the All of this is great, but it does nothing products in the program toward items as much as OR MORE than adequate to really motivate today’s crew. Younger compensation: that fit naturally within the department’s employees like being recognized for capabilities and customer opportunities. 1.) Time and work/life balance achievement, but even more than that • Rewards should include CHOICES Baby boomers always saw their they value being appreciated for their IDEAS. Things like reducing the current INCENTIVES Continued on page 28 26 May | June 2019 FARWEST Dealer PEED JUST DRIVE. TTENTION DRIVE Your poor driving decisions could keep you and your ATIGUE employees from making it home S.A.F.E. today. MOTION

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May | June 2019 FARWEST Dealer 27 After Market Sales Force INCENTIVES Continued from page 26 Nothing kills an incentive program like to making the program popular. Just NOT HAVING THE ITEM. Your as an aside…. I know that employees Yes, it’s easier to just throw money at employees will actually ridicule the always prefer CASH. Their preference them, but in light of what we discussed management for their lack of planning notwithstanding, if the program is earlier, perhaps we could add some and any traction you established early on successful, this may complicate tax PTO hours, sporting event tickets, will disappear. consequences for both the employee and Snap on tool credits, or even dining • Programs must be internally advertised the dealership. We did not pay cash, but or travel awards. The wider the range instead created and presented our own of choices, the more participation you If you don’t talk about it, why internal payroll voucher. The employee will get, regardless of the generational should you expect them to? Banners, got a copy of the voucher knowing what proclivities. leaderboards, paycheck stuffers, blast they earned, and were able to anticipate • Programs should include emails, just keep the communication getting their reward on their next EDUCATION going. Your employees are watching you paycheck. and they will only be as excited as YOU If you give someone a story to tell, they are about the program. There are dozens of ways you can may just tell it! If your dealership is engender participation. The key is to highlighting a product, and hanging • Rewards must be distributed no less be creative. Perhaps you can reward a reward on it, you will have much than monthly, and only during staff the world of “ideas and improvements” more success if you educate the people meetings. (discussed earlier) by having managers selling it on the compelling reasons Nothing says “we’re really serious submit candidates that made intellectual why a customer may want to buy it. about this” more than actually paying contributions every quarter. Reserve This addresses the “WHY” we discussed the rewards. Doing so publicly even some rewards just for the idea generators earlier. It they want to know WHY, let’s heightens the effect. Once again on the among you. We even offered shop techs tell them! subject of choices…. you may allow rewards based on completing jobs under • Programs must have adequate your employees to accumulate points the quoted hour allowance. Whatever INVENTORY toward upper level rewards, or cash you do make it fun, talk it up, and pay them out as you go. Flexibility is the key it often.

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28 May | June 2019 FARWEST Dealer May | June 2019 FARWEST Dealer 29 FW HR Update California Employer Update Notices and Disability Insurance Provisions, C & R Committee will be referred to The updated notices have been released by both have a revision date of March 2019. the WCIRB’s Governing Committee the Department of Fair Employment and These pamphlets are to be provided to for approval. Approved changes will be Housing (DFEH) and the Employment new employees and to employees either submitted in a Regulatory Filing to the Development Department (EDD). taking a covered leave of absence or a Insurance Commissioner for adoption non-work-related disability leave. January 1, 2020. Effective April 1, 2019 the DFEH requires all California employers to post –Western Agricultural Processors Association Please be advised that the proposed the NEW Family Care and Medical Leave changes will be reviewed by the WCIRB’s and Pregnancy Disability Leave poster. CA Insurance Bureau Proposes Governing Committee, at its meeting This notice was previously named Family Workers' Compensation Changes on June 12, 2019. (Please confirm this date on the WCIRB’s website prior to the Care and Medical Leave (CFRA) and The Workers' Compensation Insurance meeting.) Pregnancy Notice and only employers Rating Bureau of California (WCIRB) with 50 or more employees had to post. is proposing changes to classifications If approved, the changes will be included This new updated notice has a revision contained in the California Workers’ in a Regulatory Filing that will be date of March 2019 and all employers Compensation Uniform Statistical submitted to the Insurance Commissioner with 20 – 49 employees must post and Reporting Plan–1995 (USRP) that may for consideration in June 2019. Changes employers with 50 or more employees apply to employers in your industry. approved by the Insurance Commissioner will be effective January 1, 2020. must update their exiting notice. The draft report will be considered by the Please be sure to update your bulletin WCIRB’s Classification and Rating (C & If you have any questions regarding board(s). R) Committee at its meeting scheduled this matter, please contact Brian Gray for May 7, 2019. at [email protected] or by telephone at In addition, the EDD has updated two 415.778.7177. pamphlets: California Paid Family Leave Any recommendations approved by the Planning Tool: Disaster preparation and recovery strategies he skies are Institute for Business and Home Safety • Earthquakes • Floods clear. The (IBHS) Open for Business-EZ program. • Freezing weather • Hail Triver is at its The program, available online or in print, normal level. guides business owners through the • High winds • Hurricanes Authorities are process of developing a plan to help keep a • Tornadoes • Wildfire reporting a low business profitable after a disaster. The site www.disastersafety.org, is also risk of wildfire. The toolkit contains documents to Fault lines have great for employees of the business to record information about the major learn how to prepare for disasters. been quiet. It’s areas of your business, including basic tempting to operations, equipment, employees, A business cannot recover unless they have operate your customers, suppliers, vendors, finances, employees that can help and employees Erick Johnson, Regional Marketing business as and information technology. can’t help the business until they have Manager, Federated Insurance if these will their own personal situation under always be the It also helps you record and assess your control. risk for a variety of natural and man-made case. But what will you do when disaster For more information on OFB-EZ and strikes? Ask any business owner who has disasters, and test your plan for reaction and recovery. the library of other risk management been through a disaster — thorough resources Federated Insurance offers, preparation makes all the difference. To access the toolkit, visit the IBHS contact your local Federated marketing When you experience a catastrophe, the website, or log on to Federated’s Shield representative. trauma and stress make it difficult, if Network and click on “IBHS – Disaster not impossible, to think clearly enough Planning.” — Federated Mutual Insurance Company to begin setting things right. And unless The IBHS website also offers a tool that This article is for general information and you’ve collected all the documents and helps users identify threats specific to information you need for operational risk prevention only and should not be their geographic region, helping to focus considered legal or other expert advice. The continuity, you’ll have a hard time getting preparedness efforts. things moving again. recommendations herein may help reduce, It also provides information on best but are not guaranteed to eliminate any Federated Mutual Insurance Company practices, including assessments, guides, or all risk of loss. Qualified counsel should offers the resources you need to prepare and checklists to help prepare for these be sought with questions specific to your your business for a disaster with the perils: circumstances.

30 May | June 2019 FARWEST Dealer Compact Estate Sprayer BNL-50 An excellent choice for use with compact tractors that will enable municipal and industrial turf care professionals easy maneuverability. Simple to mount and control.

• 50 gallon polyethylene tank, with bottom drain, filter basket, and sump • 14’ manual fold boom, and hose wrap Spray gun with 25’ of 1/2” hose (40’ optional) • Diaphragm pump and M-70 Control

Three-Point Sprayer • Available 105, 155 & 210 gal, high-impact polyethylene N Series tank has a deep sump to ensure complete emptying. • Low center of gravity chassis is powder coated, ensur- ing outstanding weather and chemical resistance. • Rigid mount MB booms from 20 to 33 ft and self stabi- lizing MB booms in 40 ft. All booms have aadjustable spring loaded break-away. • Hardi pumps are designed for the application of chemi- cals and liquid fertilizer. Vineyard Sprayer Zenit Vine • Available 105 to 320 gallon tanks are made of high- impact UV and chemical resistant polyethylene. Tank includes site gauge, Hand wash tank, jet agitation, and sump drain valve for complete emptying. • Selection of blowers, booms and spout sets makes it easy to choose the machine which fits your needs. • Electrical remote control of all functions and is available with 2 distribution valves. The pressure valve is made of stainless steel for maximum corrosion resistance. • UPN steel chassis provides excellent durability. Chas- sis is powder coated for long life. • Diaphragm pumps provide excellent output and protect mechanical components from harsh chemicals.

220 S. Jefferson • Dixon, CA 95620 220(707) S. 678-5533Jefferson • Fax: • Dixon, (707) 678-9788CA 95620 (707) 678-5533www.solexcorp.com • [email protected] • sales@solex- www.solexcorp.comcorp.com

May | June 2019 FARWEST Dealer 31 Far West Equipment Dealers Association 2020 Research Park Drive, Suite 160 Davis, CA 95618

Phone: 800.576.8850 [email protected] | www.fweda.com

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