Costs a constant for dealership

27 Nov, 2000 03:02 PM

INTERLINES Sales proprietor Greg Humphries has enjoyed some good years and weathered some tough ones during a career of nearly three decades as a machinery dealer. But one thing that has remained constant during all that time has been the ever-rising cost to run his Corrigin business. Along the way, he has withstood the tough times that have caused other Case International dealerships to succumb to a tide of rationalisation ‹ a harsh reality that allowed the business to grow. But the fact remains that rising costs have outperformed expansion and sales volume. In 1975 (his first year in business), total operating expenses were $29,000. In the latest financial year, 26 years later, the cost was $894,000. In that time, sales volume increased by 21 times and the expansion of the business premises has been undeniable but costs have gone up by nearly 32 times. The rise has been general. In fact, Greg cannot pinpoint a single item that has contributed excessively to the gradually creeping costs. The example of an annual electricity bill of $296 in 1975 that has turned into $6750 last year is typical of how costs have increased over time. It is an age-old problem that farmers also experience, but it makes a downturn today bite much harder than in the past. Greg first joined International Harvester in 1969 and remained with them as a zone manager in the Corrigin area until 1973. In 1974, he bought an existing IH machinery business in Corrigin, a timely move just when farming was starting to pick up after the 1969 drought and wheat quotas. The business remained as an IH dealership until the merger with Case when he lost the new franchise to an existing local Case dealership. But, within 12 months, the series of lean years from 1980 to 1987 finally took its toll and the other dealership went broke. The franchise has been in Greg's hands since. It has been a long innings in the game and it is brought home when he sees the same kids who rode tractors in the office when he was doing business with their fathers now visiting with their own children, who still want to ride on the tractors in the showrooms. When Greg started in business, his clientele was mainly local farmers in the Corrigin shire but the decline of surrounding Case or IH dealerships at Quairading, Bruce Rock, Narembeen, Kondinin, Kulin, Wickepin, Brookton and York, has expanded his service area and built Case IH sales to 80 per cent of Interline's total volume, despite holding franchises for at least a dozen other machinery and sundry lines. The staff has grown to 13 employees, including Greg, one of three sales people who have 45 years of combined experience with the business. There are six in the service department, including an apprentice mechanic, two in the parts department, two in the office and a constant flow of students from nearby schools and agricultural colleges who come to Interlines Sales on work experience. The sales staff attend accredited training courses and the last one, held mid-year at the Vines Resort, was aimed at distributors statewide and combined training with the release of Case IH's new Steiger tractor. The success of the week and the format of three days of breakout sessions with other industry speakers drew 300 farmers and is being considered as a regular promotional event. Interline Sales has 180 axial-flow headers (not to mention numerous tractors) out in the district, making it essential that each of the mechanics has a service vehicle to carry out maintenance on-farm. The office and workshop have undergone extensions and renovations over the years to accommodate under cover the bigger tractors and harvesters. While the trend of the monster 500-600 horsepower tractors of 15 years ago never really took off, Greg believes, in the future, no-till cropping methods will dictate a need for greater horsepower He says conventional seeding can be accomplished at seven to eight kilometres/hour using wide machinery and smaller tractors but the key to no-till is to work at slower speeds. The desire to achieve the same coverage per hour using no-till machinery is leading towards wider no-till implements and a need for greater horsepower to pull them. Greg feels he has been fortunate that Corrigin has been a relatively reliable area and generally farmers have had a progressive attitude to cropping. This positive farmer attitude has allowed some of Case IH's leading edge technology to be trialed virtually on Greg's doorstep. Local farmer Richard Barrett, who has been an Interline Sales' customer for more than a decade, is one such astute farmer, who has been at the forefront in adopting new technologies. Most recently, he has been using Precision Farming Australia guidance systems and is now trialing Case IH's self-steering system. Greg tips the next six months will be another watershed, not only for farmers who have experienced a disappointing season coupled with new wheat payment arrangements and GST but also for machinery dealers, who will feel the spin-off. He says the machinery industry has had 8-10 good years but businesses generally have the efficiency to survive, although with a curtailed staff and possibly some sort of assistance from manufacturers.


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