5 Questions: Mike Horak on the current health of the equipment market

(Photo courtesy of Mike Horak)

Mike Horak, commercial leader, Wells Fargo Distribution Finance in Hoffmann Estates, Ill.

1. What is your job?

I’ve been part of distribution finance — which is a legacy company going back to TransAmerica, GE Capital and now the last five years with Wells Fargo — I’ve been involved with the business for about 30 years. My group lends money to the lawn-and-garden industry. We work with over 200 OEMs (original equipment manufacturers) and distributor relationships and over 10,000 active independent lawn and garden dealers. We’ve built up a nice portfolio over 40 years. It’s primarily about getting equipment to dealers to get it to the end users so that commercial landscapers can use these amazing products.

2. Have you ever seen end users make changes in the way that they purchase products?

Even though they’re online researching the product, end users still want to see the equipment, touch and feel. They want to be able to see the product and hear about the features from an independent dealer. They may only have to click five or six times before they are allowed in, but the dealer’s experience is crucial for the sale of the equipment.

3. What’s the current state of the equipment market?

There’s more equipment on the market right now. This industry is based on weather patterns. The weather has been favorable the last couple of years with precipitation … It’s not a technical term but there’s something of a COVID-19 bump going on. For the last 18 months, people have been working from home. People are improving their landscapes. This has led to increased demand from end-users. In aggregate, year over year we’re up about 30 percent in volume. This is quite an increase for manufacturers over the volume from the previous year. It hasn’t slowed down yet. It usually slows down, but it has held up really well.

4. It has been reported that some companies are having difficulty getting the equipment they require for different reasons. Which is your opinion?

There are some stumbling blocks, but the manufacturers seem to have kept up. These orders are pre-sold and they are almost all filled. We want those to be quickly processed through the finance pipeline. Dealers and end users are more transparent. Everything seems to be working well in the industry. There are additional costs associated with the supply chain. We are most concerned about the health of dealers. When you work with 10,000 independent dealers — these can be very sophisticated or mom and pops — we’re seeing overall the channel is extremely healthy. Our bad debts have fallen to historic lows. This will benefit the industry for many years.

5. What equipment segments are you seeing that are trending upwards in the market?

We make a lot compact tractors. This area is extremely hot. Battery-powered equipment is gaining traction in a smaller market. This is the consumer handheld side. Many homeowners are becoming more conscious of the need to reduce noise and emissions. It will only continue, I believe. There is a lot of research going into this. Some OEMs have formed partnerships with battery companies. It’s the right way to go, and the industry is adapting quickly.

Seth Jones

About the Author: Seth Jones

Seth Jones, a graduate of Kansas University’s William Allen White School of Journalism and Mass Communications, was voted best columnist in the industry in 2014 and 2018 by the Turf & Ornamental Communicators Association. Seth has more than 19 years of experience in the golf and turf industries and has traveled the world seeking great stories. He is editor-in-chief of Landscape Management, Golfdom and Athletic Turf magazines. Jones can be reached at sjones@northcoastmedia.net.

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