FarmTrac Troubles

[California]

This article is from FARM EQUIPMENT

The same Daily Southern article was also quoted back in post #206 in this thread. #206 had a couple more paragraphs about the employees.

Worst case, if Textron orders a liquidation auction to cash out the $12m in existing assets, it won't bring in the $15m they require, so there would be nothing left to pay other creditors, employees, warranty and rebate holders, etc.

I hope it's not that bad.

 

[MessickFarmEqu]

Yea, its pretty amazing that they only had 12mil in assets. I'm not sure how you could run a tractor distrubutorship with that amount of capital. I wonder if they knew this was comming and got all the cash out of the company that they could before going bankrupt.

 

[DavesTractor]

Yea, its pretty amazing that they only had 12mil in assets. I'm not sure how you could run a tractor distrubutorship with that amount of capital. I wonder if they knew this was comming and got all the cash out of the company that they could before going bankrupt.

That was just what I was thinking. There are dealerships, like your own I would guess, that have more assets.

 

[redlevel]

Yea, its pretty amazing that they only had 12mil in assets. I'm not sure how you could run a tractor distrubutorship with that amount of capital. I wonder if they knew this was comming and got all the cash out of the company that they could before going bankrupt.

That has happened before, hasn't it?

If my 535 will hold together for two more years without any major component failure, engine, transmission, or hydaulics, I will figure I have come out pretty good. It will probably go longer than that. As someone else said, I could have paid a lot more money for a used tractor, even one just about the same size as the 535, without any warranty, and with all the potential problems of a used machine.

I think I paid something like $10,800 for the tractor. I have 225 hours on it, and will be surprised if it doesn't run 1000 hours or more with minimal problems. I have bought many new tractors over the years, and I can't really remember having any warranty work done.

My main loss, I figure, will be the rebates from the "lower than zero" financing on the loader.

I was negotiating with my dealer for a trade up to a 545 just before Christmas. He was to call me right after Christmas to see if we could get a deal together before Jan. 1. I am glad he did not try to ram a deal through knowing something was amiss. I will continue to do business with him in the future. He has a yard full of Farmtracs now.

 

[SESS]

I hope the general public realizes that Farmtrac dealers were not part of this "problem" that Farmtrac announced in January. That last thing that we dealers wanted was for our tractor line to go belly up...or whatever it is doing right now! We dealers have been very patient awaiting a resolution to Farmtrac's problem...I hope news comes soon-good, bad or otherwise.

 

[Farmwithjunk]

That has happened before, hasn't it?

Google "Conrad Black" and look at his association with Massey Ferguson. MF was a strong company that had no need to sell out to AGCO when Black made his entry into the picture. Massey never went bankrupt, but Black and his "corporate raider" tactics sent Massey scurrying for help. AGCO bought Massey Ferguson for pennies on the dollar of their former worth.

The same sort of story plays out in modern business far too often. It's hard to say if FarmTrac was "raided" or simply grossly mismanaged. Either way, a fine product, a very fine dealer base, and a lot of loyal customers are taking a bath on this one.

 

[bluechip]

, a fine product, a very fine dealer base, and a lot of loyal customers are taking a bath on this one.

And we've been in it long enough now that our fingers and toes are all wrinkled... It may be time to pull the plug and let the water drain... Do you think if I bought some Ford decals and sold them as restored Ford's I could get more money?

 

[Highsmith]

Star-Telegram.com: | 03/05/2008 | Creditors going after motorcycle company
This link is about Textron going after another company. Seems like they have more than Farmtrac in their crosshairs.

 

[citytransplant]

Do you think if I bought some Ford decals and sold them as restored Ford's I could get more money?

I got some Ford decals that I collect. Will trade for Montana green paint and decals

(a little humor to take the sting out of all of this nonsense)

 

[MessickFarmEqu]

Star-Telegram.com: | 03/05/2008 | Creditors going after motorcycle company
This link is about Textron going after another company. Seems like they have more than Farmtrac in their crosshairs.

Textron is not some aggressive horrible company. They financialy back just about every small company in this business, and even some midsize ones. They also run the dealer floor planning system for many, many companies as well. They are a company we are all used to dealing with, in many ways they make this business work. I believe we sell 4-5 lines that textron floor plans for us. If they liquidate farmtrac, they are looking after their own financials and protecting the credit of much of our industry. Taking a 12-13 million dollar hit for their bankruptcy would cost all of us.

 

[Bob_Young]

Credit's getting very tight now thanks to the subprime mortgage disaster. It's spilling over into other areas and capital is in short supply. Foreclosures are at record levels and several banks are in trouble. Even municipal bonds are in turmoil; Jefferson Co. Ala. is in trouble with its banks over money it borrowed to upgrade the sewers of Birmingham....bankruptcy is a real possibility.

So, in the overall scheme of things, with BILLIONS of dollars in bad debts being written down daily, Farmtrac is pretty small potatoes. Textron may be fighting for its own life at this point; they probably have creditors as well. As Neil's post suggests, no one would be served by adding Textron to the casualty list.

Looks like there's a rough patch ahead. Hope everyone here can ride it out.
FWIW
Bob

 

[tommybr]

Try telling the Farmtrac dealers how wonderful the folks at Textron are.

 

[Robert_in_NY]

Try telling the Farmtrac dealers how wonderful the folks at Textron are.

If someone owed you millions of dollars wouldn't you try to collect it? I feel for the dealers and I do not know if there is any other way to go about it but Textron is protecting itself like any good company should. The problem isn't Textron, it is Farmtrac hanging their dealers out to dry.

 

[Tractech]

I do believe that Textron and Farmtrac both are to blame. I believe they worked together to move excessive inventory onto dealers lots. Yes companies like Textron are needed for this business but they are not needed if they worked to "dump inventory" on dealers. The real happenings will likely never come to light but neither company has conducted business in this situation with honesty. But that is just my opinion.

 

[tommybr]

AMEN, BROTHER!!!!!! Textron had to be looking at Farmtrac's balance sheet at least monthly....perhaps daily!!!! They sat there and watched it go broke and kept right on floorplanning tractors .....none of the dealers could see this coming....but Textron did, they had to....

 

[SESS]

I completely agree with posts #255 and #256. This is a bad situation for Farmtrac, Textron, Dealers and the consumers. But what Farmtrac and Textron have failed to realize, or did not think it warranted enough consideration, that the dealers AND the consumers make both those companies money and without us, there is no Farmtrac and not as much money for Textron. Based on my research, Textron will feel the $12million loss from Farmtrac, but will bounce back after they show their "write off". How are the dealers going to bounce back? Not only the financial hit we are taking, but the hit to our reputations and our good name. WE dealers sell to friends, familys, churches, county governments, etc and put our name on the Farmtrac product. This is the thanks we get-no returned calls, no information, just faxes reminding us of our financial responsibility to Textron? Emotions are running high and I just let me flow. Sorry for the rant. I wish us all the best of luck and hopefully a quick resolution. As I have said before, some news-good, bad or otherwise would be nice!

 

[Robert_in_NY]

I completely agree with posts #255 and #256. This is a bad situation for Farmtrac, Textron, Dealers and the consumers. But what Farmtrac and Textron have failed to realize, or did not think it warranted enough consideration, that the dealers AND the consumers make both those companies money and without us, there is no Farmtrac and not as much money for Textron. Based on my research, Textron will feel the $12million loss from Farmtrac, but will bounce back after they show their "write off". How are the dealers going to bounce back? Not only the financial hit we are taking, but the hit to our reputations and our good name. WE dealers sell to friends, familys, churches, county governments, etc and put our name on the Farmtrac product. This is the thanks we get-no returned calls, no information, just faxes reminding us of our financial responsibility to Textron? Emotions are running high and I just let me flow. Sorry for the rant. I wish us all the best of luck and hopefully a quick resolution. As I have said before, some news-good, bad or otherwise would be nice!

I do feel bad for the dealers and I would love to know exactly what happened and who knew what when. But I still do not blame Textron for wanting their money. Farmtrac is the main ones responsible for this mess and this is similar to what happened her in Buffalo with the Rigas family who owned Adelphia. Everything apperared to be great and they bought the Buffalo Sabres NHL team. Were going to build a new tower and move Adelphia Communications headquarters to Buffalo then all of the sudden people looked at their books and the Sabres were not in bankrupcy, Time Warner bought Adelphia and the Rigas family was sitting behind bars. The Buffalo Sabres paid the price as the NHL had to take over to keep the team from disappearing completely. Adelphia subscribers were left in the dark as the company was being sold off and no one knew much about what was going on. Management destroyed the company and I blame the management of Farmtrac for this current mess. If they were struggling they should have informed their dealers and kept them informed instead of locking the doors one day and disappearing leaving the mess behind.

I do feel bad for you Farmtrac dealers as well as the Farmtrac customers. I still hope something good comes out of this but I can not see Farmtrac recovering now. The damage is done, the name is basically ruined because of this and hopefully all of the dealers are being honest about this.

I will say this, my local NH dealer has a couple Farmtrac tractors on the lot and they are charging full price for the used tractors and I doubt they will tell anyone about the current situation.

I will also say I am not afraid to own a Farmtrac new or used right now. They have good tractors and it is a shame the company fell like they did. I wish all the dealers the best and hopefully you guys can pick up another brand and recover from this mess.

 

[Tractech]

You are correct in the fact if someone owed me millions I would be trying to get it. Yes that is just good business sense. We are all going to feel this and who knows the recovery process. I just think that Textron had its hand in the till for a long time and they; if a good business, had a responsibility to tell FT to get on track. I believe that Textron had the responsiblity to protect the dealers from the "Excessive floating crdit lines". I am over being angry and pisssed off. I now just want closure so we can move on and hopefully prosper. Something like this has a way to ruin our entire business no matter what product you sell or how honest we are. I refuse to lie to make a sale. I will go down and out before I twist a customers arm for the sale. I do believe that most of the dealers I know would do the same. I am looking forward to offering another tractor line but entering the ring with a little extra caution. Hopefully the courts, Textron, FT, and what ever other parties involved realize the longer this wound is left to fester the more damage they do to this entire industry.

Ok gotta go get some rest and ready myself for the poss. of 18" of snow in the morning. Blizzard warning and hopefully the winter final. Were is Al Gore and the mighty furnace!!

 

[NassauEquipment]

When a tractor moves from the Vendor's inventory to the dealer, the invoice is dicounted 1%. The Vendor in this case (Farmtrac) received 99% of the value of the invoice and used the money to cover operations,including their interest payments to Textron for what was on the dealer's floors. The tractors belong to Textron at that point with someone (either vendor or dealer depending on program) paying the interest tab.
Farmtrac was pumping inventory into the dealers by telling them they would never pay any interest and the tractors would never come due. Farmtrac was effectively borrowing money against the dealers' credit lines with Textron instead of Farmtrac's own. this is fine as long as tractors sold at retail.

In simple terms....they saw the end coming last summer, "cashed out" their inventory against dealers' credit lines (since it would be worthless in a bankruptcy) and hauled butt.

This is one of the oldest tricks in the Outdoor Power Equipment Industry. I feel for the dealers that fell for it. And yes..shame on Textron for continuing to buy invoices when they knew Farmtrac was in no position if Textron exercised their buyback agreement.

One big Ponzi scheme.