A HIGHER GEAR: Minot's 'aemsco' finds new gear in corn boom

Minot, N.D. - To farm equipment executives, the moniker "aemsco Inc." is a new thing - an acronym for Agriculture Equipment Marketing & Supply Co.

To farm equipment dealers and farmer customers, "aemsco" is less visible. Instead farmers see a kaleidoscope of colors and names such as Geringhoff, Degelman and MacDon.

It's like two sides to the same coin.

"We market the 'aemsco' name to the manufacturers, and we market the product lines to the dealers," Says Bob Daws, marketing director for the Minot, N.D.-based company. "when I'm at a farm show, talking to a farmer or talking to a dealer, I'm representing the product line."

And this company is moving a lot of product.

The recent explosion of the corn market and the ethanol industry has catapulted aemsco into a kind of warp drive of economic activity - with net sales jumping from $5 million in 2000 to $45 million 2007 and now on tract to handle $75 million in 2008.

Evolving identity

Until recently, aemsco carried another famous name - Degelman.

The Degelman family owned the Minot-based firm, and it carried the family name until July, when it became aemsco Inc.

"Degelman is a great name, but anymore it doesn't represent what we do and what we are," Daws says.

Degelman Industries was founded in Regina, Saskatchewan, in 1964 - initially as a rock picker and dozer manufacturer. In 1975, Degelman set up a distribution center in Minot to get its own product into the United States.

"The company began to expand from 1979, taking on new products," Daws says. "We took on Ralph McKay tillage tools. They moved on to MacDon, Valmar and other manufacturers from Canada. Products went to dealers about 15 to 17 states.

"Since then, we've continued to grow and expand and we've begun to import products internationally - from Europe as well - and have grown into a distribution center for the whole U.S. market."

In the 1982, Ross Giles, an accountant and one of the original Degelman employees, bought out the Degelman family shares. The company became something of a so-called catalog company, handling up to 30 lines.

In late 2001, ownership shifted to Joseph Jandrisch, Gile's son-in-law. He'd been a marketing executive for a recreational vehicle company in western Canada.

Under Jandrisch's leadership, the company refocused itself and cut down its lines.

"We're now down to seven lines," Daws says. "Our focus is to do the best job for the equipment, instead of doing a marginal job for marginal equipment."

Aemsco prides itself on maintaining a close relationship with farmers that buy the products.

"We follow the products into the field," he says.

In 2003, the company added 50,000 square feet in an expansion, which included more office, assembly and warehouse space.

Daws credits the company's growth to the smaller number of companies it represents and the quality.

"The other factor is the corn industry," Daws says. "We have some equipment geared to the corn industry, and in the past three years, that's done very well."

He acknowledges that's something of an understatement. Corn equipment pieces have quadrupled their net sales - partly because of corn acreage increases and because of a shift toward no-till practices. For example, aemsco handles Dutch Industries seed boots, which are made for the purpose.

Daws says it's a weekly thing for aemsco to be contacted by equipment manufactures, wanting them to handle their wares.

"We're very picky on the lines and companies we represent," Daws says. "We're not a catalog distribution center anymore. We focus on the larger, high-ticket items - high quality."

The company does distribute after-market, smaller-ticket items - tillage accessories for seeding and fertilizer applications, but also high quality.

Diverse 'partnerships'

"We have different relationships with all of our suppliers," Daws says. "We have manufacturers we market for, where we represent them all across the U.S. We have those who we assemble for in the U.S., and transport to their entire dealer network. With another, we might market their product but do no assembly. For another manufacturer still, we might distribute their parts but they do their own marketing."

There are many competitors out there, but aemsco promotes itself as offering more services.

"There are not other hubs like ours, that offer all of these services that the manufacturer and dealer needs."

Aemsco's services fall generally in three major categories.

• Marketing and distribution: The company has 14 regional representatives and coverage in more than 40 states. Services include in-field demonstration campaigns, dealer sales and service training, Internet marketing, national media exposure and a presence at 35 trade shows.

• Assembly: The company has seven full-time and 15 total technicians in Minot. These technicians are factory trained by the companies for which they assemble machinery. CNH, for example, uses aemsco as an assembly depot for products that have been manufactured in Saskatoon. It ships parts for things such as sprayers, air seeders and chisel plows that then are sent to dealers in Montana, North Dakota, South Dakota, Kansas and Nebraska.

"We'll assemble it and haul it to a dealer. It allows them to know that their product is assembled correctly," Daws says.

• Warehousing: Aemsco warehouses parts for the majority of its manufacturer-partners - sometimes for the company's own assembly process, sometimes as replacement parts. Sometimes aemsco takes ownership of the parts and acts as a distributor, and in other cases, it is simply a warehouser.

"All of the product is brought into Minot, even if just for a short time. And then it's transported out of Minot on our transport trucks," he says.
Here is where aemsco tailors its services to the needs of a manufacturer.

Some of the equipment comes into Minot complete. Yes, they still handle Degelman products. Degelman's bale processors, for example, are completely assembled when they arrive.

Promising future

If they had it to do over again, aemsco Inc. officials probably still would choose Minot for a location, Daws says. It's well-poised for the future.

Most of the manufacturers the company initially worked with are based in western Canada. The city is near two major border crossings, in Portal and Pembina, N.D. Today, however, an increasing majority of the company's business is with off-shore manufacturers, but Minot still is a centralized hub even for them.

"Off-shore works well because we have the transportation means, and we're centrally located so we can market to the Canadian market as well," Daws says. "The city of Minot is also in the process of developing an intermodal facility to handle rail cars and containers that would come from overseas."

Aemsco always is looking for promising manufacturer-partners, and new alliances are likely.

The cellulosic ethanol market offers intriguing possibilities, Daws says.

"We're working with some international companies to develop equipment for the cellulosic (ethanol) industry," he says. "The challenge in that industry is not only harvesting the product but in transporting of the product to the plants after the harvest."

Daws sees this as the "next boom" in the corn industry, but the future has plenty of uncertainty. Next year, he says, crop analysts are either predicting a swing back to soybeans or a further expansion corn acres.

"I wish we had a crystal ball."

THE AEMSCO FOLD

In the main, the aemsco Inc. of Minot handles products priced at more than $10,000.

Here is a list of its current lines and when they came into the fold:

• 1975: Degelman Industries, Regina, Saskatchewan. Rock removal, bulldozers and blades.

• 1979: Ralph McKay Tillage Tools, Regina. Tillage tools, including sweeps and seed boots for air seeders.

• 1982: Valmar, Manitoba. Fertilizer application equipment.

• 1994: Dutch Industries. Seed boots and fertilizer accessories.

• 2001: Brandt Industries, Regina. A manufacturer of grain augers, conveyors, sprayers and harrows. Aemsco warehouses Brandt's parts. Dealers contact the manufacturer, who contacts aemsco to ship the parts.

"By having product in Minot, you're a minimum of three days closer to the market," says Bob Daws, aemsco's marketing director.

• 2004: Geringhoff North America. Corn headers. Geringhoff, established in Germany in 1880, has been a corn header manufacturer since the 1950s.

• 2007: DG Crop Sweeper, Minden, Neb. Made a pickup reel that goes on the front of a corn header, to make the header 0.8 to 1.2 miles per hour faster and more efficient, especially for "down corn," where it is blown flat and there is difficulty in pulling it up. Aemsco handles everything for the company except manufacturing.