RM: How does the acquisition of Stone Construction Equipment fit into Toro’s strategy?
Rick Rodier: We started on the path almost three years ago of developing a more comprehensive strategy around the rental market. Part of our vision is to bring our brand deeper into rental with a class, category or portfolio of products that fit around those who have been customers in our Sitework business. When you look at the type of contractors or construction companies that are familiar with our brand, they handle jobs like irrigation, fencing, construction and landscape creation. They have used our Dingo brand products, they use turf aeration, they do tree care and they do things like hardscaping, which is where Stone products fit in. All the acquisitions we have made are part of our vision to increase our brand presence.
RM: During the economic downturn, those types of customers also developed new skills sets, handling different applications and offering other services that they didn’t offer before.
Rodier: Research shows contractors who were traditionally doing one or two types of contracting now do four or five. They go to their same customer base and now they say they can take out a stump, aerate turf, help with patios and extend their reach. Whether it is a contractor or rental stores that rent our products to these customers and the do-it-yourselfers who are comfortable with taking on these types of projects, they want an easy product to use because they don’t run a stump grinder or compact loader that often. They already may have a Toro lawn mower, so when they go to the rental store and they see our brand on other products, they are comfortable.
RM: Why did Toro develop a strategy around the rental market?
Rodier: Even though we strategized about rental three years ago, rental always has been a good customer for our Sitework business. A good percentage of our products are sold into the rental channel, including wheeled and tracked compact loaders and trenchers. We looked at customer needs and where the market was going to go. The recession was difficult and we felt that the rental market would come out healthier and faster. We wanted to be in a position to react to that with our brand. We were already there with some products, but we also wanted to expand our presence, which resulted in the acquisitions of companies like US Praxis, Lawn Solutions and now Stone Construction Equipment. In the product categories that we have expanded — like tree care and turf renovation — we felt there was room for bigger brands to be there.
RM: Are you acquiring all of Stone or just selected product lines?
Rodier: This is an asset purchase that includes all of the assets of Stone as it relates to all of their product categories and anything related to manufacturing all these lines such as inventory, finished equipment, parts, tooling fixtures and anything needed to build the products, but not the building or machines in the facility.
RM: What does this mean for Stone employees?
Rodier: We’re working to bring Stone folks back to work to help produce the products. That’s our focus right now. However, when a transition in manufacturing takes place, it is unlikely that there will be opportunities for manufacturing or assembly long-term. We will look at other opportunities for those who can help in our business and there will be a transition to Toro opportunities. We are working through the sales force to see how this fits together. When we have made other acquisitions, we have provided Toro employment opportunities.
RM: What does this mean for Stone customers?
Rodier: Stone customers are very loyal customers. They buy Stone equipment for a reason — they like it. Stone makes quality equipment and like our Toro brand, Stone took care of its customers. We will do the same. Once the acquisition was made, we spent a good chunk of the next two days to get the plant reopened. We had to contact vendors to get parts into the plant and go back into production to take care of backlog orders. We have learned that Stone had done a great job of moving its operations to “build to order.” They can react quickly to demand. We contacted customers to deal with backorders or to place new orders. One customer had been waiting on product since January. We apologized and he said he would continue to wait because a Stone mixer is what he wanted.
RM: How will Stone be represented to the rental industry?
Rodier: We are working through that. We have Stone folks coming on board to represent Toro with a short-term focus on Stone because they know the products and customers. We want to get people on board who helped drive business in the field.
RM: Will you keep Stone in Honeoye, N.Y.?
Rodier: We have laid a foundation with what we’ve done with similar acquisitions. We’ve worked with facilities and people with transition. We will have the plant running through the summer and into the fall, but it is unlikely that we will be there long-term. The products fit our core competency in manufacturing. We have a number of plants in the Midwest and these types of products fit well with our current assembly, vendors and components.