I heard yesterday about Toro's impending purchase of Venture Products just like most everyone did, via social media. Venture Products manufactures the increasingly popular and versatile Ventrac line of all-terrain prime movers and attachments.
My initial knee-jerk reaction was, "Perfect! Score one for Toro..." and of course for the Steiner family, owners of Venture Products. Toro will be a good steward of the brand, "Toro-ize" it to their standards, develop new attachments and take the line into new markets.
My next thought was more subdued, because many current Ventrac dealers are Jacobsen distributors. If history repeats itself, Toro will gradually — if not immediately — change that to Toro distribution. A big plus for Toro distributors. An already popular, profitable niche product line doesn't land in one's lap every day.
Many of the Jacobsen distributors who will lose Ventrac are hanging on by a thread financially due to the turmoil at Jacobsen over the past few years. I've been told by several that Ventrac had become their primary, most profitable line. It would not surprise me one bit if this loss (and concurrent uptick in their competitor's fortunes) pushes some over the edge and out of business. That bodes ill for the industry. Strong competition is good for everyone, and necessary for a healthy industry.
It would not surprise me one bit if this loss (and concurrent uptick in their competitor's fortunes) pushes some over the edge...
Nobody with any common sense is clamoring to get into the turf equipment business. Quite the contrary, on many fronts. It's a capital-intensive, high cost of entry business with diminishing profitability. Not a good combination. There are easier ways to make money.
The trend among distributors who want to get out of the business is to sell to a neighboring distributor, usually facilitated by Toro, Jake or Deere. Or they become a factory store, as some Jacobsen dealers have done. Or simply liquidate, close the doors and walk away.
In my old stomping grounds of the NY metro area, Toro recently assumed ownership of my alma mater, Storr Tractor Company (Branchburg, NJ and Ronkonkoma, NY), after the death of the owner. I'm sure Storr Tractor was doing well over $100 million in annual sales (they were doing $20 million 25 years ago when I was there). That scale of business requires serious capital just to operate, much less purchase. So no surprise that it's now owned by Toro.
The competing Jacobsen distributor, Wilfred MacDonald, Inc. of Pine Brook, NJ, went out of business last September after being a Jacobsen distributor since 1928. Jacobsen had revoked their franchise two years prior, after 90 years. At the time, the guys at Wilfred MacDonald told me Jacobsen had shrunk to only 15% of their business (I'd be surprised if at one point it wasn’t well over 50%), so they weren't that upset about it. They were also a Ventrac and Kubota dealer, and had taken on Baroness after Jacobsen pulled out.
Lawn and Golf Supply Co., the Jacobsen distributor in the Philadelphia area since 1937, was actually given by the Holman family to the employees back in 2015 in an ESOP transaction. Kudos to the Holmans for vesting their employees with ownership and giving each a stake in the game.
All told, the distribution game is changing. We will continue to see more large regional distribution and parts centers owned by the manufacturers, and fewer but larger privately-owned distributors as some acquire adjacent territories. We'll see more group equipment demonstrations as the luxury of salespeople roaming the territory with truck and trailer becomes increasingly inefficient with distance, and unaffordable for the distributor.
So what might be a great thing for Toro — a brilliant acquisition, in fact — might not be so good for the industry at large. Time will tell, of course, but my gut tells me that this will have a ripple effect much larger than the transaction itself.