Steve KibbleBy Lisa Cownie • Jul 2016 • Category: Cover Story
Steve Kibble has cultivated success in the region with an eight-location John Deere dealer network.
As Steve Kibble looks back over the last 27 years, he’s still not sure just exactly what happened. When he graduated with a business marketing and management degree from MSU Mankato he had no intention of getting involved in the family business, Mankato Implement. His dad had owned the local John Deere dealership since 1973, so Steve grew up watching his father navigate the highs and lows of the business. Steve was a first-hand witness to the struggles his father went through as the farming industry ebbed and flowed. And Steve just didn’t think that would suit him.
He understood how it fit his father. His dad was in the United States Marine Corps and served during Vietnam. John Deere and Case International were two corporations hiring Vietnam veterans when they returned from duty. So Ron Kibble took a job with John Deere. He was familiar with the farming industry, he had grown up on a farm in South Dakota. After working for John Deere for several years, he became a partner in a dealership in Mankato.
By the time Steve graduated college in 1992, Mankato Implement had 40 employees. And his father wanted to add Steve to that count. He asked him to give it a chance, to just see if he liked it. So Steve did, and 27 years later he’s still there. Starting in finance and sales, Steve now fills the role his father used to play, although now it’s on a larger scale. Steve helps to run an eight-dealership group known as Kibble Equipment, Inc.
His dad sold out to Steve in 2009. He had either worked for or owned a John Deere store for 40 years. He keeps in touch with the industry though. In retirement, he helps Steve farm a few hundred acres south of Mankato. Happy to watch as his son continues his legacy and continues to cultivate a successful John Deere franchise.
The operation now has stores in Bird Island, Blue Earth, Mankato, Minnesota Lake, Montevideo, Redwood Falls, Sleepy Eye and Wabasso. And Kibble Equipment has quite the reputation both nationally and worldwide, earning many John Deere award honors.
Steve says an eight-dealership franchise is probably average for John Deere as far as number of locations, but Kibble does a higher volume sales because they concentrate on tractors and combines. So, the average dollar transaction is probably higher than other parts of the country.
The Kibble Equipment footprint goes from Montevideo to Blue Earth, with an area of responsibility of about 17 counties. It’s a responsibility Steve takes seriously. He is keenly aware that the ups and downs of the agriculture industry don’t just affect his business, but the entire southern Minnesota and northern Iowa region.
Steve says, “This region is just so agriculturally-focused. All sorts of businesses here rely on the strength of the ag economy. Everything from car dealers like Mankato Ford and Mankato Motors, to other retailers, manufacturers and professional services. All sectors can definitely tell when the farm economy is not so strong.”
And Steve has been around long enough to have weathered all sorts of industry conditions. He reflects now on just how he got to where he is and where he sees his business and the industry headed.
What was it like growing up in a “John Deere” family?
Growing up with a family owning a business was like most other businesses where both parents were involved. They worked 70-80 hours per week at the office or at the kitchen table doing paperwork, payroll, or paying bills. I learned quickly that you have to work hard in order to get anywhere and as a business owner you learn to do everything: cleaning toilets, answering phones, washing equipment and other duties that were not the most popular jobs to do. I learned that you have to be fair with the customers and treat them like they are your livelihood as they are who pay the bills, yet you need to make sure that you get paid for the goods and services you offer in order to keep employees happy and the doors open. Our employees at Kibble Equipment are our most valued assets and cannot be thanked enough for the dedication and loyalty they provide us. One of the most important lessons I took from my father was to take care of your employees and treat them like family. We have dozens of employees with 25 to 30-plus years experience in our organization which is very rare in today’s business world.
When you graduated from MSU Mankato you were hesitant to join in the family business.
Yes, it wasn’t really what I was thinking I wanted to do. But it’s been a good business. I’ll tell you though, it has changed dramatically since I started! Back then we had a one-store operation with 40 employees. Then I would say in the late 1980s and early 1990s John Deere started pushing consolidation and we saw the writing on the wall. We saw that we needed to continue to grow our business and be larger in order to survive.
I think at one time there were 30-plus John Deere dealerships in a 60-mile radius of Mankato. We could clearly see and understand John Deere’s consolidation vision so we got involved in the mergers and acquisition program that John Deere was promoting at that time. And over several years ended up acquiring stores in Minnesota Lake, New Ulm, Nicollet, Albert Lea and Kiester.
And a few years ago, you doubled your six-location operation.
In 2012 we merged with my cousin, Butch Kibble, out of Montevideo. He also had a six-store operation and the timing seemed right for us to join together and make the family business even stronger. So we merged the two operations together. We changed the organization to Kibble Equipment Inc. with 12 locations. But, we actually ended up consolidating even more and cut our 12 down to 8 which is where we are currently. We do have a third partner/investor from Fargo, North Dakota.
Why go from 12 to 8?
We just had too many dealerships too close together. We needed to spread it out a bit and get out of some of the older buildings. We feel after that merger, we are in a position now where we are just fine tuning what we have. Of course, we are always open to acquisitions, but more acquisitions are not on our radar right now.
For instance, since then we have moved into a new facility in Blue Earth. That happened last June. And just this last March we moved to a new facility we built in Sleepy Eye.
Would you say consolidation is the trend for many sectors of agriculture?
Yes. Each year it seems there are fewer and fewer farmers. So farmers are consolidating whether it’s cash crop operations, hog operations, or dairy, really in any sector of farming you see consolidation is happening. It’s an ongoing thing, whether it’s machinery or co-ops or seed companies. If you look at the news there are always mergers happening. For example, Dupont and Monsanto are obviously two large players in the seed business and they are continually purchasing smaller seed businesses.
So agriculture has really, really changed in the last 20 years. We are not dealing with many local mom and pop John Deere or Case International dealers. Even local cooperatives that the local farmers pay into are consolidating. These cooperatives are now huge, complex businesses with hundreds of employees and they have a pretty wide footprint in the areas that they cover. So it’s just the direction farming is going. In most sectors of farming you just see the economies of scale showing you need to continue to grow in order to survive.
How many employees do you currently have company wide?
We have more than 200 employees, but that number goes up when we hire seasonal help.
Is it hard to find employees?
Definitely. It’s kind of what I consider an “old trade.” It used to be easy to go to South Central College and walk in to their diesel mechanics class and find it full with 60 or 70 kids in it. But each year that number dwindles a bit. So we’ve had to reach out to other technical schools in the area, but even their programs aren’t full like they used to be.
We’ve implemented a new recruitment plan where basically we’ll recruit kids in high school. We try to convince them to go to a tech school like South Central or to a John Deere-sponsored school. John Deere has two of those, one in Calmar, Iowa and one in Wahpeton, North Dakota. We’ll sponsor these kids and guarantee them a job and tuition reimbursement. But we have to recruit them in high school so we can show them, convince them, and get them to understand, it’s a good lifestyle. Many aren’t aware that this is a great career path.
Why do you think that is? Especially since we live in an area with ag all around us?
Unfortunately, there is still that stereotype that tractor mechanics are in grease all day long. But these days the technicians are well-educated and, in fact, a majority of their time is spent on a lap top diagnosing equipment. Sure, they may still get their hands dirty a little tearing things apart and getting in some grease and oil. But the majority of the time is spent with the technology.
How has technology changed for equipment specifically?
Much of the equipment now probably has 15 onboard computers to diagnose every single thing it does and monitor every system that could go wrong. Truly, equipment today offers precision-farming capabilities. For instance, there are a lot of guidance-driven implements in the field. Tractors can even basically steer themselves!
Computers are always getting the system diagnostics back to the owner. If a farmer is out in the field, we are back here getting diagnostic information remotely. So we can remotely tie into a tractor or combine to see where it is located and it will give us an idea if something is going to go wrong with it! It will send us an email and say ‘hey Joe Farmer’s tractor’s water pump is going to give out in ten hours.’ We can call the farmer and say stop! We can be out in an hour and fix it before it breaks. That’s the technology that we have now.
From what I’ve seen, the equipment you sell is quite an investment.
Oh yes, the investment in the machinery these days is astronomical. Customers will look at spending up to $300,000–$400,000 on a piece of equipment. So we sit down with them and show them it’s not necessarily a matter of just being able to afford it, we break it down so they can see how much the machine will cost them per day, or per bushel. We need to show them how the investment will work for each client. We’ll analyze it for them to see if it’s a good purchase in the long term.
Sounds like more of a consultative approach. How have things changed in terms of what you sell and how you sell it?
Primarily we sell equipment to cash crop farmers, mostly tractors and combines. What’s changed over the years is the complexity and cost of the equipment. Because of that we are now looking to have a seat at the table with a farmer not just as a salesperson, but as a consultant and problem solver. We listen to them to get an understanding of what would be best to fit in with their operation. Every farmer’s needs are different.
There are great financing and warranty options now. So rather than just be a salesperson we strive to be true account managers and offer solutions for farmers and our customers.
What are your top sellers?
We primarily sell farm machinery to row crop farmers growing corn and soybeans, equipment like tractors, combines, and tillage equipment.
But with Mankato being a metropolitan area, we also sell a lot of consumer products such as lawn mowers, utility tractors and Gators. And in Southern Minnesota there are quite a few hobby farmers and large property owners that come in for a tractor with a blade or a front-end loader for doing chores around their property.
What’s the trade cycle on one of these big pieces of equipment?
I would say a normal trade cycle is five to seven years. The machines last longer but typically users like to keep up-to-date with technology or warranty. It’s kind of like a car, after so many miles it’s ready to trade in. Plus, in that time, a lot of farmers will grow or change in some way so their equipment needs change.
Is the face of your typical customer changing?
The U.S. Department of Agriculture puts the median age of farmers nationwide at 58 years old. So in the next five to ten years we will see a tremendous turnover of farmers. What is disturbing to me though, is that there are not a lot of younger ones coming up. There just is not a lot of interest. Maybe they don’t see the potential to staying on the farm so they get jobs elsewhere. And even if they wanted to go into the business, the capital requirement to get started is out of reach and securing land nearly impossible.
So that’s a concern in the next 10 to 15 years, are we going to have enough farmers to continue? I think you are going to see more and more consolidation of farms because of that reason.
I imagine when the younger generation does get involved, it’s a different approach?
We primarily deal with that median age farmer, but we try to involve the next generation coming up, even though they are not the decision makers yet. They are the ones typically running the equipment and understanding the technology. They are the future of what we’ll be dealing with.
And, yes, their demands are a lot different than their fathers’ were. They don’t want to deal face to face, they prefer email or they’ll just send us a text to ask about service or what something might cost. So our way of doing business has changed and will have to change even more. It’s not the traditional sit down with a handshake anymore.
I noticed walking in you offer more than machinery, I saw quite a bit of apparel in the showroom as well!
It’s amazing how people are brand loyal. Whether it’s John Deere or Case International or Caterpillar or New Holland, they are all prominent in the machinery business. When you look at seed companies, it’s Pioneer, Dekalb or Channel. You can tell what brand a family likes because they all wear the hats! We sell a lot of John Deere apparel. I equate it to Harley Davidson. They’ve done a great job of marketing their apparel. John Deere will put a logo on anything!
You told me sales is really only part of your business, with parts and service making up the other 30%.
Yes, another big part of our business is our parts and service department.
That’s what we really hang our hat on. Our technicians are some of the best trained and most knowledgeable people in the business. We really feel like we are a step above our competition when it comes to our field technicians and their training. It’s a good balance because actually when planting and harvesting starts that’s when our sales department slows down a bit and our parts and service department gets very busy. And when the industry is having a down year, parts and service is our lifeline.
Are we in an up year or a down year?
I would say we are in a down year right now. Although we are coming off of a pretty good cycle. Farming is like everything else. It cycles. Currently, commodity prices are down considerably compared to where they were two or three years ago. It’s still not tough times like the 90s. That was bad. Commodity prices, at best, are break even right now. A difference between now and the 90s is that most farmers are healthier than they were back then. And interest rates are better. I think around here our savior last year was that we had one of the best crops we’ve ever had and that helped a lot of farmers out financially. Farmers have learned to use the good years to get through the bad.
There are elections coming up, anything on the political landscape that might impact the ag industry or your business?
The biggest thing that could affect our business will be what happens with ethanol. RFS, renewable fuel standards, is an issue we keep our eye on. It’s a law that was signed back in 2005 when George W. Bush was President. It basically dictated how much ethanol needed to be used in the next 15 years. Ethanol is an additive for gasoline, it replaced a toxic additive (MTEB) to help make gas cleaner. It’s a healthier additive and it comes from corn which helps lessen our dependence on foreign oil.
We have to keep our eye on it because ethanol has really affected our business and farming. If we didn’t have 20-some ethanol plants in southern Minnesota and northern Iowa that farmers can deliver corn to, corn prices would probably be half of what they are now. It is just one more source for them. If we didn’t have ethanol we would have a way over-abundance of corn in the United States.
Also, last year they passed the tax extension credits that help business owners, such as farmers. So that’s an issue we keep tabs on. Otherwise, I don’t see anything politically that will be a big game changer for agriculture.
Any regulatory issues you are concerned with?
There are some that need to be dealt with, such as water and air quality issues that need to be improved, but we need to be sensible about it. Some of the things they come up with to regulate are silly.
Not long ago, there was a dust bill that was meant to deal with dust pollution. Regulators were actually going to try to monitor dust coming from a field and if a farmer had too much dust stirring up, they would go after him or her and levy a fine! But bills like that are why we have good lobbyists to watch things on a state and federal level.
I do want to say that I believe farmers are better stewards of the land than anyone. Farmers get a bad reputation for polluting the land with chemicals and fertilizers, but farmers care about the land. They are very, very careful about how they apply chemicals, fertilizers and manure. Everything is monitored and documented.
The farmland in our region is one of our treasures, and the ag community works hard to keep it that way.
The Family Behind The Family Business
Wife, Pam: works as a Reading and Math Intervention Teacher at Kennedy Elementary School in Mankato.
Son, Zach: serves as a Captain in the United States Marine Corps, currently stationed in Hawaii.
Daughter, Abby: a Junior at South Dakota State University studying Agribusiness. Steve says he is not sure if she wants to be in equipment sales but knows she wants to do something with agriculture. Steve says for her, the timing is just right. “There is a huge opportunity for women to find careers in agriculture right now. The potential is truly unlimited. I’ve seen a lot more women get involved in agribusiness, whether it’s the seed business or co-ops. But there is tremendous potential right now.
Son, Jake: A 9th grader at Mankato East High School.
Kibble Equipment In Brief
Kibble Equipment has been serving southern Minnesota, in one form or another, for more than 40 years. The family-owned business has eight stores the region can draw upon for parts, service and sales. They pride themselves on top-notch service and support, combined knowledge of highly-trained people and a solutions-based approach. Their mission is to be the go-to John Deere dealership in the region.
THE ESSENTIALS: Kibble Equipment, Inc.
Phone: (507) 387-8201
Address: 1150 South Victory Drive, Mankato, Minnesota