Ag parts fly off shelves, tractors at Worthington warehouse

Originally published in the October 30, 2009, print edition.

By Dick Hagen The Land Staff Writer

WORTHINGTON — Imagine getting 400 phone calls each day from farmers needing parts. That’s what you get when you’re the best-known agricultural parts warehouse in Minnesota.

Sitting on the southern edge of Worthington in Nobles County, Worthington Ag Parts buys, sells and rebuilds farm equipment of virtually every brand marketed in the United States. From its original Worthington birthplace, the business has expanded to 11 warehouse locations in nine states and Manitoba, plus four more in Australia doing business as Neil’s Parts.

Originally started as a family operation by a Worthington farmer-businessman in 1964, exceptional customer service is the catalyst behind this company. Churchill Industries of Minneapolis purchased WAP in December 1987, and has grown the business through acquisitions domestically and internationally. The firm now has more than 190,000 customers in its Midwest and Canadian database.

Fast delivery to farmers, wherever they live, is the linchpin of WAP. “Orders called in before 2 p.m. get shipped out that very day,” said Larry Frodermann, director of operations at the Worthington facility, in an Oct. 14 visit.

At least a half dozen freight companies makes stops there daily. UPS and Speedy try to make WAP their last stop for the day, “because we tend to fill their trucks when they stop, especially this time of the year,” Frodermann said. If a customer is really in a hurry, this outfit will run the part to the Sioux Falls, S.D., airport and ship it by air.

“Sometimes if a machine is down, that farmer doesn’t care what the freight costs are as long as he has that part the next day,” Frodermann said. Last year WAP exported parts to over 26 countries.

The phones start ringing at 7 a.m., sometimes even earlier; their answering machine takes calls 24/7. Whoever takes the call will let the farmer know if they have the part off and ready to go, or if it needs to be checked on a machine in the yard. Although it’s virtually impossible to maintain a computerized inventory of “what’s on hand” the caller is informed on immediate availability, or will be contacted just as soon as availability can be verified for that particular part.

The mid-October harvest delays were keeping phones ringing constantly at WAP; between 400 and 600 phone calls a day, Frodermann said.

“Right now farmers are fixing the little things that are wrong with their combines,” he said. “And they’re also buying big tires and rims, plus rear-assist drive units for their combines. We don’t handle new dual rim units but quite a few used systems come through. This fall better flotation is already a big item.”

Each of the 11 locations of WAP can’t maintain enough parts inventory as needed, but the firm carries more than 35,000 after-market new replacement parts that meet or exceed OEM specifications. The buying is handled at the corporate office in Maple Grove and product is warehoused through out all locations in North America and Australia.

How’s business?

Their market for Global Positioning System equipment is currently limited, but growing interest could soon add this technology to their market chain.

“Used salvage units already equipped with GPS are worth more so we pay extra for those tractors or combines fitted with GPS systems,” said Mike Winter, president of Worthington Ag Parts. “Our sister company, Dickey-John, provides an IntelliAg system that we’ll be carrying in 2010 that will help us diversify into this marketplace.”

Equipment fires result in quite a few “burned out” tractors and combines sold and salvaged by WAP.

“And the later models, with increased electronics, fiberglass and more wiring, especially with GPS hookups, burn hotter and faster,” he said.

After coming off two record farm income years — 2007 and 2008 — what’s happening this fall when it is now certain that 2009 farm income will be down significantly?

Winter said that the domestic market was “soft” in early 2009, but shaving expenses and increased volumes through the harvest, plus expanding export sales and growth in Australia, should keep 2009 volume comparable with 2007.

“Yes, 2008 was an extraordinarily good year assisted, too, by record scrap metal prices,” Winter said. “The beauty of our business model is that based on market conditions we can sell scrap metal, used parts, re-manufactured parts, after-market new parts and used goods as well.”

Frodermann said, “a farmer has to have equipment that works, regardless of the price of pork or dairy or corn and soybeans.”

As expected, farmers are bargaining harder this fall. “That’s the nature of our business,” Frodermann said. “With different weather patterns across the country this year, we’re seeing different impacts on our business. But when farmers have more money, they spend more money. And if corn bumps to $4 we’ll definitely sell more.”

Older, battered equipment brought in for salvage gets junked out the same week it comes in. An outfit dealing in the tonnage of scrap metal like WAP feels the bite of distressed iron prices. “Scrap iron was good money last year. It’s dramatically declined this year,” Frodermann said. “Most of our salvage gets sold to dealers within the location of each of our stores. There’s no money hauling scrap iron around the country.”

The “hottest-selling” parts lineup, perhaps reflecting its popularity with farmers, is the John Deere 9000 series combine. Frodermann said that overall “green” is the biggest seller in their parts business, with “red” right behind. Few foreign brands move through WAP simply because of limited demand.

Making no specific predictions on the economy, Frodermann said that staying positive each day you come to work is simply standard procedure. He thinks 2010 will be a stronger year than 2009. Driving, or hauling, your tractor or combine directly to a WAP location for shop work may eventually happen. “Right now your local implement dealer or independent repair shop is the place to go,” he said. “We supply parts to the repair shops and dealers to make the repairs more economical for our customers.”

Financing is not an issue with WAP because most of their customers pay upfront when they pick up their parts. “We do have a list of charge customers, but we also take various credit cards,” he said. “While we don’t get into construction equipment very much, we have been adding hay equipment, planters, plows, skid loaders and other ag implements.”

Becoming a machinery junkie when he left the farm in 1981, Frodermann continues to be impressed with the growing size and technology of today’s farm equipment. Because big equipment gets crops in and crops out faster than smaller equipment, the big selling season for parts is now a shorter event unless it becomes weather related, like the current 2009 fall.

How do Worthington Ag Parts employees handle the moods of farmers after two- and three-week delays in their harvests? Frodermann chuckled, “That’s why the coffee machine is always available.”

To contact Worthington Ag Parts, call (800) 845-8456 or log on to www.worthingtonagparts.com.