Pictured Above: John Ewald is the third generation owner of Ewald Kubota, an 8 store Kubota dealership based out of Seguin, Texas.
Next year, Ewald Kubota will celebrate 70 years in business. And while the dealership has experienced a number of changes and challenges in that time — manufacturer changes, the recession of the 1980s and now growth and expansion — owner John Ewald still manages and approaches the dealership like the family business it is. The dealership began as a single location Ford dealership in Seguin, Texas, and today is a 7-store Kubota dealership with locations throughout south-central Texas and one rental location. (See “Timeline of Ewald Kubota Growth.”)
“Really, even being 8 stores and over 100 employees, we’re still a family atmosphere, a family dealership and not corporate USA,” says Connie Owen, Ewald Kubota controller.
Seguin is located about 35 miles northeast of San Antonio and about 50 miles south of Austin, and as the city has grown over the last several years, Ewald Kubota has adapted to a changing customer base. “We’re in a fast growing area of Texas. San Antonio and Austin are both growing rapidly and we’re getting a lot of people from out of state who are moving to Texas and moving to our area, particularly from California,” Ewald says.
“Our customer base began to change a long time ago and so we have adapted. Now we’re taking advantage of that as best we can.”
So even though the dealership has been part of the community for nearly seven decades, there are always new people who aren’t familiar with Ewald Kubota. As a result, advertising is a big part of the dealership’s business and something they have fun with. (Visit www.EwaldKubota.com/Our-Television-Commercials to see some of their quirky commercials.)
“Even though we’ve been here for 60-plus years, people don’t know who we are because they just moved here. We have to remember that we’re starting fresh with new people every year who have never heard of us,” Ewald says.
Locations: 8 (Seguin, Floresville, Austin, Corpus Christi, Boerne, Marble Falls, Taylor and New Braunfels (rental only))
Shortlines: Land Pride, Rhino, Scag, Vermeer, Belltec and Terrain King
2016 Revenue: $64 million
2016 Absorption Rate: 66.1%
Owner: John Ewald
Dealership Management System: DIS
Finding the ‘Holes in Your Boat’
Ewald says two of the main metrics they regularly use to measure the business are paid-new inventory and used equipment inventory. He also watches the parts department closely, too, looking for what he describes as “holes in your boat.” The way Ewald describes it is to imagine a large ship making good speed with all cylinders pumping. The boat is working hard and all hands are on deck, but the boat is sinking because of the holes.
“Even though you’re making good speed and everything’s working, you’re sinking because of the holes in your boat like inventory, no turns in 24 months and aged work-in-process. Or, the books show you should have $500,000 in parts on the shelves, but you really have $450,000. What happened? Those are the holes in your boat.
“So all your focus is on making sure the ship is working properly and going, but in reality you have these holes you can’t see and they’re sinking you. So you have to monitor and measure these things and stay on top of it,” he says.
The key to keeping the holes filled? Ewald says it comes down to being diligent about running reports, looking at them and asking questions if anything seems off. For example, he recently noticed one store was getting close to the 10% limit on parts that are older than 24 months.
Ewald Kubota has gone through a number of changes over the years, starting off as a Ford Tractor dealership in 1948 and transitioned to New Holland when Ford sold the tractor division to Fiat Group in the late 1980s. The dealership changed its name to Ewald Kubota from Ewald Tractor in 2014 after merging with Lanford Equipment Co., adding the stores in Austin and Marble Falls, Texas.
“I called the store manager and said, ‘Work your returns and stay on top of it because at the end of the year, once the ‘no turn’ parts hit 36 months we’re going to obsolete them and it’s going to hit your bottom line,” he says.
“Everybody in the company is paid on some sort of a commission. If we end up writing off dollars because of inventory loss, that’s going to affect a lot of people’s pay. That’s just something you have to manage,” Ewald says.
In terms of paid inventory, the dealership measures it both on a per unit item basis and a dollar basis. Management will pull a report that shows which models have dates beyond what they feel comfortable. “When we have units we need to move, we’ll put up an internet special by serial number, do an inventory closeout or put a bounty on a particular unit and tell the sales team, ‘On top of any other commissions, I’ll pay you an extra $200 to get rid of this,’” Ewald explains.
To help keep aged inventory to a minimum, Ewald Kubota always has an internal program paying any salesperson who sells any diesel powered piece of equipment older than 12 months an extra $200. For gas powered units, it’s an additional $100 and for implements, it’s $50. (For additional strategies, read “Sales Incentives Keep Used Inventory Manageable for Ewald Kubota”.)
What the judges say …“Ewald Kubota is a 3rd generation dealership with an average employee tenure of 14 years. With the large number of employees, that says something about the company … One of the most impressive numbers was on ROA of over 15%, that was by far the highest of all nominees this year.”
Diversifying the Business
To help level the unpredictable nature of the rural lifestyle equipment market, Ewald Kubota added a rental only location in 2017. Unlike the rest of Ewald’s stores selling homeowner and small ag equipment, the rental store only offers construction equipment, such as Kubota skid loaders and mini excavators, plus other equipment such as scissor lifts, forklifts and light towers.
“Although we’ve been offering rental equipment out of our existing stores, we never really put a big focus on it,” Ewald says. “The standalone rental store helps us give it more focus and diversify so we’re not quite as dependent on the weather.”
Rainfall in southern Texas can be unreliable. In 2017, from March through August, the San Antonio area received less than an inch of rain per month for the entire summer selling season, which isn’t unusual, Ewald says.
Ewald Kubota doesn't have the same level of used equipment inventory as dealers primarily serving row-crop farmers, but it’s still an area owner John Ewald likes to keep under control. Ewald wants to turn the used inventory 3 times a year. After a used unit has sat in inventory for 4 months, Ewald depreciates the unit by 5%. So, if a salesperson gives a customer $10,000 on a trade, after 4 months the dealership will write off $500 into a loss. “But then the salesman gets hit for the $500 that was lost. So on his commission report he shows a loss of $500. Essentially, the salesperson owns that trade unit until it’s sold.
“That depreciation is what we use to keep our used inventory turning. And we’re pretty hard on ourselves. We’ll depreciate a unit 5% every month and then we’ll reduce the sale price. The salesperson takes a hit, too, so it helps keep him honest when he makes the trade because he’s not going to overinflate because he knows he’s tied to that unit until it leaves the dealership.”
“And that, regardless of selling construction equipment and utility vehicles, still puts a big strain on your business,” he says. “From September 2007 to September 2009, we had a total of 24 inches of rain in 24 months. It was just terribly dry. We have to be able to adapt quickly because we never know when the turn with the weather is going to happen.”
He goes on to say, “We have to adapt and adjust hours and days — and sometimes we send people home. But then we had Hurricane Harvey come up and dump a lot of rain on us. Now we’re busy again and we’re all hands on deck and working long hours again. It’s just unpredictable.”
Connecting with Employees
As Ewald Kubota has grown over the years, it’s been important to the organization to keep the family business atmosphere. While the number of stores and employees has grown, Ewald still makes an effort to get to know each employee on a personal level to help keep the dealership from having a corporate atmosphere.
“I hate the corporate atmosphere and I hate titles. A good company culture starts from the top and permeates through the whole business,” he says.
Ewald spends a lot of his time on the road visiting the other store locations. While he used to travel to each store every week, with 8 stores to visit now that is no longer possible. But, he does get out to each store at least once a month. He uses those visits to get to know his employees.
- Look for ways to diversify the dealership, such as renting construction equipment, so business isn’t totally dependent on the weather.
- Taking the time to walk around the dealership to casually talk with employees can help you learn about issues they might not bring to your attention on their own.
- Be diligent about running reports and watching for issues, so you can address small problems before they get too large.
“I try to know something about every employee. I want to know about their wife and their family, how many kids they have and what they have going on. If someone’s moving or having a baby or if grandma is sick or dad is in the hospital — anything like that,” he says. “Then, I try to keep that in my head so the next time I come around I’ll say, ‘Hey, how’s your dad doing. Or John Boyd’s grandson at the parts counter in Boerne — he always has videos on his phone of his grandkids. Let’s see how he’s doing and how they have grown.”
The visits and casual conversations don’t just help Ewald get to know his employees better. It also helps him get a better idea of how things are going at each store.
For example, he’ll take a seat at the parts counter to shoot the breeze and, during the conversation, will ask how things are at the store and how things are going in the back.
“If anything is happening at that particular store, if there’s any drama happening, by the time I talk to everybody in the store, I know exactly what’s going on. I know who’s not getting along with whom and what manager did something to make somebody mad, or if somebody’s thinking of leaving. I get a feel for what’s really happening at that store,” Ewald says.
Connie Owen is the controller for Ewald Kubota and has worked at the dealership for 28 years. As the dealership grew, it was difficult for Owens to let go of control and let individual stores handle settlements. She says, “I know I can’t do it all anymore. I have checks in place to make sure work is being done, but I let other people do it.”
Plenty of managers and owners have an open door policy and say, “Come talk to me anytime, my door’s always open.” But Ewald says that’s not the same and doesn’t have as big of an impact. While a lot of times what he hears from the employees isn’t any cause for concern, every so often he’ll pick up something that could turn into a bigger problem. “You won’t know that without going and talking to the people,” he says.
“As one of the largest Kubota Dealers in the nation, Ewald Kubota continues to diversify into new markets and expand their footprint in the state of Texas. They have the leadership and infrastructure in place to handle this steady growth and continue to represent Kubota in a professional and positive manner. They understand the importance of brand exposure and customer satisfaction in their local markets, which is a great recipe for continued success. Customers know their name and recognize Ewald Kubota as a professional and reliable organization that takes care of their customers.”
— Don Lowe, central division manager, Kubota Tractor Corp.
The visits also have helped Ewald identify individuals who might be right for management roles. “Like most dealerships, we always try to promote from within, and when you’re out talking to people and getting to know their personality, you might see their work station or get a feel for how their appearance is, and you can say ‘that guy’s going somewhere’,” he says.
“The next time I need a service manager, the next time I need to move somebody up in parts, I need to talk to this fellow. And that’s because you get to know him and you get to see who, within the company, is a mover and a shaker, and where the talent is that I need to promote.”
Over the last 2 years, Ewald Kubota has grown its winter service programs. Encouraging customers to do preventative maintenance in the winter helps keep the service department busy in the slower months and means they aren’t bogged down with oil changes in the spring when the shop is busy. Dallas Brewer is pictured here.
With the exception of the store manager in Boerne, all of Ewald Kubota’s store managers started in the service department and were service managers. Justin Gay, the Taylor store manager got his start with the dealership assembling rotary cutters.
“He was a young kid putting together shredders and he’s talking to me about English literature and playing the violin,” Ewald says. “And I think, ‘what in the world are you doing back here putting shredders together? Well, it turns out he’s a brilliant guy and once we learned more about him, we moved him right up. That’s the benefit of getting out and talking to people and going to them as opposed to just hoping if there’s a problem I find out about it.”
Dealership of the
Year Video Series
Rural Lifestyle Dealer conducted a number of video interviews with John Ewald, owner of Ewald Kubota. Go to http://bit.ly/DOYvideos to view videos about how Ewald visits each of the dealership’s locations on a regular basis to keep the culture strong and learn about the employees; how being a part of a 20 Group has helped him improve the dealership; and the topic metrics the dealership uses to measure the business.
Taking the time to get to know the employees also seems to help with turnover. The average tenure for an Ewald Kubota employee is 14 years.
In addition to training facilitated by the manufacturer, Ewald Kubota puts an emphasis on in-house training as well. Ewald will arrange with Kubota to have a transaxle from a zero-turn mower sent to the Seguin store, where one of the more experienced technicians teaches a class for the newer technicians.
“We’ll spend a day talking about common failures and things to look for,” Ewald says. “We do the training based on our own experiences with the equipment.”
Shellee Gregory, who works in human resources for the dealership, also organizes training for every single employee, whether they work in accounting, parts, sales, etc. She’ll assign classes from Kubota University and set a curriculum for every position to follow. Those classes are available online through Kubota.
Learning from Your Peers
Ewald has been part of a 20 Group for a number of years. Initially the dealership was in a group that was made up large ag equipment dealers with a few other similar Kubota dealers mixed in. Ewald and 2 other Kubota dealers from Dallas and Houston ultimately left that group and formed their own 20 Group.
Ewald Kubota added locations in Marble Falls (left top and bottom) and Austin (above) in 2014 when the dealership merged with Lanford Equipment Co.
The new group is led by Bill Bohmer with the Spader Business Management. All the dealers are Kubota dealers in metro areas. Today, it’s a group of 10. Ewald says the group serves as a great resource for him.
“If I don’t know something, I just find somebody who knows the answer and I ask them,” Ewald says. “It’s a lot easier than me having to do it the hard way. When I had a question before we opened this rental store, one of the 20 Group members is a big time rental guy and I asked him to come down to the store, tell me what I need to do, show me how I need to do this. It’s nice being able to have those resources to do that, rather than me just going and trying it on my own and losing a bunch of money. It’s nice to go ask somebody and say, ‘What do I do?”
Looking ahead, Ewald and Owen both agree that with so much rapid growth in the last few years, they need to let the dust settle a little. There are already some signs of that, though. Owen says she’s noticed the office staff is starting to get used to the new workload and things have started to calm down.
As they move forward, Ewald Kubota will continue to operate under the motto that’s gotten them where they are today: “Your God is first, your family is second; your job is third. Never put one in front of the other.”