One may look at the industrial-looking façade of the new Messick's dealership just outside Lancaster, Pa., and think that it’s a warehouse.
There is a dealership inside the 200,000-square-foot “hub store” the company opened in late December. But the warehouse look isn’t an accident. In fact, the owners of the business, which goes back to 1952, have incorporated the latest in warehousing and smart logistics to get parts shipped faster, a necessity in this high-tech world of e-commerce.
"We've taken and adopted a lot of what you would see in an e-commerce warehouse somewhere to us," says Neil Messick, one of several third-generation Messicks involved in the business — he is in charge of information technology and marketing. The move from Elizabethtown, where the company’s main store had been for 45 years, to 8 miles south on Route 283 near Lancaster will enable the company to do things it has never done before, he says.
“Our business continues to grow year after year,” Messick says. “Despite a declining number of farms locally, we just seem to be able to reach out further and further, so we’ve increased business across the mid-Atlantic and Northeast.”
Messick's is one of the region’s largest New Holland and Kubota dealers, but they also run dozens of products from numerous short-line equipment companies. The planned move was in the works since 2018, Messick says, as new requirements for water runoff, limited parking and a smaller-than-needed warehouse were starting to affect business.
“You had to hop in a pickup truck and drive off-site to find an unusual part stocked in a warehouse,” he says. “For the company to continue to grow, we were running into a wall, basically.”
The new store is double the size of the Elizabethtown location. The showroom is big enough to house numerous tractors, round balers and other implements, and still look spacious.
But the real action and changes have been behind the scenes, in the warehouse.
“Everybody is used to ordering from Amazon, getting it quick,” Messick says. “So we’ve adopted smart logistics, taking less people to get things done more quickly.”
Not only is there more space for storage, but parts are also now located closer to the front counter.
The warehouse has four times the pallet rack space as before. The aisles are narrower — 6 feet wide — and special forklifts must be used to go in and collect merchandise. “You don't have a 20-foot aisle, and this enables the fitting of a lot more inventory in the space. This is a supply chain best practice,” Messick says.
“With modern logistics, you build high to incorporate the technologies you have inside,” he adds. “Internally, we can do three floors of parts, and we can do pallet racking that goes clear to the ceiling, 30 feet high.”
But even with all the new space, the showroom still looks fairly bare. Much of this has to do with the supply chain issues affecting agricultural equipment suppliers.
Messick talked about the issues affecting farm equipment dealers and manufacturers, as well as the state of farm equipment dealerships in the Northeast and Mid-Atlantic:
From your perspective, describe the current landscape of the farm dealership network in the mid-Atlantic and Northeast? The whole trend of industry consolidation, it's hard. It's hard to make a dollar as a dealership. You need economies of scale in order to be profitable. Totally understand consolidation is probably going to continue. It's going to be financially harder and harder for small dealers to be able to make it.
We've had a great run the last two years; everybody has been pretty profitable up to this point due to just unprecedented demand.
The amount of stuff that's expected of us, from our manufacturers for one, just the baseline cost of doing business is very, very high. And if you don't have the volume, it's extremely difficult to be profitable.
How are you handling supply issues that are currently affecting the ag equipment supply chain, and what is your expectation for the next year? If you look at our inventory, we usually measure our inventory in terms of months of supply, so like how long until we run out. So, usually we're operating in the six- to eight-month supply; it is where we usually like to be. A lot of times manufacturers are trying to put you up a little bit beyond that.
Right now, we're sitting at about six weeks. And that's actually the best that it's been in the last six months, believe it or not.
Preselling of machinery has been commonplace now. It used to happen before with big tractors and combines. But at this point, it's everything. So if you want something, you have to get in line. And people have been very willing to do that. Close to half the inventory we're going to get in in the next year is already spoken for.
It's hard to paint the industry with one big brush because it really depends on the machine and the implement. Big ag stuff, 2022 is already booked out pretty much. A lot of the smaller stuff, there's cases where we can get tractors pretty readily, but we can't get any implements to put on them.
When you walk out and look at the lot, two-thirds of what's out there is sold. It's just waiting to get orders completed.
The parts side of the business hasn't had near the struggle. You think in terms of building a tractor, if you're missing one widget, you can't finish the machine. I've been pretty surprised of how well that's held up. We don't hear from our parts department huge problems getting everyday items. But equipment is a mess.
When are you hearing that these supply chain issues will get better? You hear, every once in a while, someone saying it will get better by the middle of 2022. That's baloney. We’ve got 18 months of this, at the very least. Even if you think in terms of just recovering our inventories, if everybody just stopped buying today, and every retail order was swept off the shelves, I’ve got six to nine months before my own inventory is back to normal again.
Manufacturers can only make so much. We're well into 2023 before dealer inventories start to recover. It's a combination of record demand and supply chain difficulties.
The supply chain stuff is half my day anymore. And every day, it's just meshing more orders and more orders into the computer. And you sit there and you think, what on earth are we doing.