Read on to find what Mark Hennessey, CEO, shares as to why it is so important to have a Business Continuity Plan in place so you’re NOT that “other guy” when it comes to disaster recovery of any kind.
Explore with Phil Erdman as he discusses what he has been up to in Nebraska the past few months, including the Special Session, handing out PAC checks and Career Exploration Event and weighing in on ag tech curriculum development.
EXPO DIRECTOR
Join Tom Junge, Expo Director, as he shares why our Expos are so highly regarded amongst exhibitors and attendees and also explains why the shows must go on!
Read on as Jamie Mertz shares information on the summer storms in Iowa and the devastating affects they have had on some of our Iowa dealerships, including many of their employees. 3 7
FEATURE BUSINESS CONTINUITY PLANNING
Discover the best practices to help you develop and maintain an effective business continuity plan for your dealership and also how you can continue operations and recover quickly from major disruptions. 14 4
FEATURE HOW THE CDK HACK HIT EQUIPMENT
DEALER OPERATIONS
Find out more about the late-June attack and how it downed management systems at equipment and auto dealerships across North America.
FEATURE DOL ISSUES GUIDANCE ON AI IN THE WORKPLACE
Learn what the Department of Labor recently shared about the application of the Fair Labor Standards Act and other federal labor standards to employers’ use of artificial intelligence in the workplace.
MARKETING VIEW
Read along as Director of Marketing, Cindy Feldman, shares what opportunities exist beyond traditional marketing to help you reach your customer.
OFFICERS:
Jay Funke Chairman, Edgewood, IA
Kevin Clark Vice Chairman, Lincoln, NE
Tim Kayton Past Chairman, Alliance, NE
DIRECTORS:
Bruce Bowman Ankeny, IA
Kent Grosshans Central City, NE
Clay Haley Carroll, IA
Dave McCarthy Waterloo, NE
Mark Placek Alliance, NE
STAFF:
David Adelman IA Legislative Director
Phil Erdman Dir. of Dealer & Gov’t Rel.
Cindy Feldman Marketing Director
Laurie Haeder Ag Expo Coordinator
Mark Hennessey President/CEO
Tom Junge Expo Director
Tim Keigher NE Legislative Director
Jamie Mertz Dir. of Dealer & Gov’t Rel.
Donna Miller Operations Manager
Gwen Parks Controller
Jordan Reynolds Marketing Comm. Designer
DEALER INFORMATION UPDATE:
In addition to receiving this Retailer magazine in print, INEDA will begin sending you more information in print––yes, you heard that right!
Currently, you can stay informed about events through the RoundUp eNewsletter, Retailer magazine, social media, email invites and on INEDA.com. Starting January 1st, however, we’ll also be promoting all events through print mailings. We want to make sure you get information the way you prefer, and the choice is yours!
Individual subscriptions are available without charge to Association members. One-year subscriptions are available to all others for $30.00 (4 issues). Contact INEDA for additional information. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is furnished with the understanding that the Iowa-Nebraska Equipment Dealers Association, the publisher, is not engaged in rendering legal, accounting, or other professional services. Changes in the law may render the information contained in this publication invalid. Legal advice or other expert assistance should be obtained from a competent professional.
This issue of the Retailer focuses on business continuity planning. I remember a quote from one of my favorite TV shows MASH when Colonel Potter said to Captain Pierce about a patient’s casualty – “To the other guy, you’re the other guy.” That quote resonated with me as we tend to think that disasters, or major disruptions to our business will not happen to us. But when it does, it’s too late.
We have seen the impact of floods, tornadoes, cyber-crimes, theft, online and offline fraud, and other perils that dealt painful blows to our dealers in recent times. The Red Cross reported that 65% of small-mid sized businesses deploy no data backup or have a weak backup plan. 58% are not prepared for data loss. 36% don’t have any kind of disaster recovery plan.
According to a 2023 survey by Mercer, 49% of businesses globally have a business continuity plan (BCP), which is about 163 million companies. This is down from 2020, when more than half of companies worldwide didn’t have a BCP.
A BCP is a written document that outlines how an organization will continue to operate during a crisis, such as a natural disaster, cybersecurity incident, power failure, or IT failure. It helps organizations resume operations without significant downtime and can minimize business disruptions. For example, a BCP might explain who is responsible for essential business operations and highlight tasks that need to be completed quickly.
According to Gallagher, more than 70% of companies without a comprehensive BCP fail to recover from a significant business interruption.
The time to plan for a disaster is not when you are in the middle of having one. Throughout this issue, please take the time to identify at least 3-4 items that you will do within the next 90 days to avoid being a casualty. And then implement them, rather than letting them go unfulfilled. As your association, we don’t want you to be the “other guy” where disaster strikes you. Take the time, and make the effort to take action.
Chief Executive Officer
AROUND NEBRASKA
Nebraska Legislature
“It’s déjà vu all over again!” – Yogi Berra
As soon as the Nebraska Legislature adjourned in April, Governor Pillen began efforts to bring Senators back for a “special session” to work on the impact of rising property taxes. As property taxpayers in Nebraska of personal and business real estate taxes, we have seen these increases firsthand. We do not oppose the goal of tax reform, but the priority should be to see the tax burden go down – not just paid differently.
Governor Pillen proposed taxing all ag machinery (new and used) at 4%. The tax increase would have funded 25% of the cost of shifting the funding of schools and local government from primarily property
PHIL ERDMAN Director of Dealer and Government Affairs [phile@ineda.com]
We discussed the impact of this new taxation on your business and customers, the reality of border bleed and driving sales across the border, that half of the relief would not go to the farmers paying higher taxes, and the practical problems with the drafting of the bill including the reality that ag machinery would generate 25% of the tax increase hoped for by Governor Pillen to fund his tax shift.
14 dealers also submitted written testimony to the Revenue Committee and nearly every dealership group contacted their Senator. THANK YOU!
Since 1992, Nebraska has exempted the sale of agricultural machinery and equipment used in commercial agriculture from sales and use tax. Every previous amendment to state law was needed to correct the work of an overzealous department of Revenue who repeatedly reinterpreted the plain meaning of ag equipment and parts. That is why net wrap, baling wire and twine, header trailers, head haulers, header transports, and seed tender trailers had to be amended into statute with specific language to restore their status as exempt agricultural machinery and equipment.
The bill that ultimately passed did not include any new taxes on machinery. It was nearly identical to an amendment that was offered during the regular session to replace the income tax credit you get for paying property taxes to schools to directly crediting you that amount in the form of a property tax credit on your property tax statement. NOTE: When you file your 2024 income taxes you can expect an increase in your liability as the previous property tax credit will no longer reduce your income tax liability.
“It’s déjà vu all over again!”
the special session
NED PAC Update
Dealers across Nebraska have been or will be hosting Legislative candidates before November to discuss issues that are of importance to the future of their business. Topics include adequate labor and what dealers are doing to recruit and retain a talented workforce, housing, broadband/connectivity, right to repair, and, of course, taxation.
There are 25 Legislative Districts that are up for election – over half – and only 10 incumbents are running in those races. INEDA members in Nebraska, through the Nebraska Legislative Committee, have chosen to support 28 candidates.
Federal
Congressman Smith (NE), Chair of the Rural America Tax Team for Ways and Means Committee Republicans, is leading the effort to review the tax code ahead of Tax Cuts and Jobs Act reauthorization next year. During their travels to eastern Nebraska and western Iowa, they invited members to Claas North America Headquarters. Dave McCarthy (Titan Machinery), Kevin Clark (AKRS Equipment), Don Partridge (Bobcat of Omaha) along with INEDA staff attended and were armed with their own experiences as well as key updates and policy information from our federal advocacy partners at Associated Equipment Dealers (AED). Among the topics discussed included Section 179 expensing.
(L to R) Mark Hennessey (INEDA), Congressman Smith, Don Partridge (Bobcat of Omaha), and Dave McCarthy (Titan Machinery).
Claas leadership hosted Members of Congress (Center): Mike Flood (NE), Nicole Malliotakis (NY), Adrian Smith (NE), Randy Feenstra (IA), and Don Bacon (NE).
Jamie Mertz (INEDA) and Congressman Randy Feenstra (IA).
Career Exploration –Agriculture Equipment Maintenance and Technology Curriculum
Four teachers from Nebraska and Iowa have recently completed curriculum training to teach and raise the interest and aptitude of students in high school for careers in Agricultural Equipment Maintenance & Technology (AEMT).
In Nebraska, Mr. Kubik at Norris High School and Mrs. Mowry at Syracuse/Dunbar/Avoca High School have both completed the AEMT training. Members in Nebraska visited their classrooms and delivered a starter electrical board for training in the ag equipment management and technology curriculum.
Representatives of AKRS Equipment and KanEquip joined INEDA staff in Nebraska to also discuss career opportunities for students in their dealership business.
Electrical training tool incorporates the starting system, safety system, PTO system and charging system and is designed help students understand series circuits.
Syracuse High School students and Mrs. Mowry with representatives of AKRS Equipment and KanEquip.
Norris High School students and Mr. Kubik with representatives from AKRS Equipment and KanEquip.
Career Exploration Event
Invitations have been sent to schools across Nebraska to attend the Nebraska Ag Expo in Lincoln at the Sandhills Global Event Center and participate in the Career Exploration Event, December 10-12.
The Career Exploration Event is a great way to introduce students to career opportunities in agriculture and the equipment industry. Last year we had over 300 students participate.
Students will have the opportunity to tour the Nebraska Ag Expo, network with equipment dealer employees, and participate in a career discussion. In addition to free admission, students and their sponsors who participate in the tour will be provided a lunch voucher.
This free event is open to middle school, high school, and college students in Nebraska – but space is limited! Schools can sign up online at: nebraskaagexpo.com/career-exploration-event
CAREER EXPLORATION EVENT
Would you consider serving as a tour guide for a group of approximately 10-20 students?
We work to match dealers with students near their area. If you are willing to help, contact me and I will get you the information for each employee who plans to volunteer. (You will receive a detailed schedule, school assignments, and instructions prior to the Expo.)
If you have any questions or would like more information regarding the event or other matters discussed here, just ask!
Phil Erdman, Field Director, Nebraska | INEDA phile@ineda.com
AROUND IOWA
HAPPENINGS IN IOWA – SUMMER OF 2024
JAMIE MERTZ Director of Dealer and Government Affairs [jamiem@ineda.com]
While we have dodged the legislative storms that have been occurring across the border in Nebraska, we have experienced our own storms – actual ones that wreaked havoc on many areas throughout the state, particularly the central/southeastern and northwest IA.
Greenfield IA had an EF-4 tornado go through town, destroying over 150 homes, damaging many trees and fields, we saw some wind turbines get toppled by the tornado, downed power lines, and unfortunately there were 4 people that lost their lives
during this event. Minden, IA was also hit on the same day by an EF-3 tornado and lost 40% of the homes in its town.
In the month of June, Rock Valley, IA and other communities in Northwest Iowa were impacted by severe flooding. Town and Country Implement in Rock Valley was impacted the most by the flooding between the store itself and its employees. We had other dealerships nearby that also had employees living in Rock Valley that were affected by the flood, Faber’s Farm Equipment in Inwood and AgriVision Equipment in Sioux Center, IA.
Greenfield, IA aftermath of EF-4 Tornado
A total of 11 employees at these dealerships were affected. 4 of them had a total loss of their home. The average amount of damage to homes was between $50-75,000. Many homes had water just in their basements, which the estimate of damage to repair was around $50k. If the water made it to the main level, the amount to repair the damage would be around $75k. The homes that were a total loss, the options for those were either a low interest loan (30 year at 2.6%) through SBA (associated with FEMA), or a buyout of 19% below market value of the property in which case FEMA will buy the property out and not allow any buildings to be built back on a place where there is a high chance of flooding again. That is a tough situation to be in if you are the homeowner. Do you rebuild or take the buyout and cut your losses and move to another location or town with higher ground.
Rock Valley has had flooding in 2014, 2019, and then again, this year with this year being the worst in the history of the town. The flood stage was 10’ higher than the highest recorded. The flooding at the dealership saw standing water 30” deep inside the building. Anything that was in the water was damaged to the point it needed to be replaced.
Office furniture, all the items on the showroom floor, any parts in the parts room on shelves that sat in water were destroyed. Damage was extensive to 120HP & under tractors that were affected. The tractors above that sat high enough that the water did not get into the cabs of the tractors, but they still must change oil, filters and go through the machine to see if there is any other damage done.
When visiting the dealership, they were still under construction and trying to get all the offices and showroom floor finished up so they could move back in. You could see the sense of urgency with everyone to get everything back to normal, especially with harvest being right around the corner. It was amazing that the dealership was closed for only one week. When speaking with Ivan about what we could do for him, he was more concerned about helping his employees than he was about getting help for the business. Dan Faber was the same way when he learned of his employees that lost their homes, he did everything in his power to help them find temporary living.
Flooding at Town & Country Implement in Rock Valley, IA
Flooding at Rock Valley, IA 2024
Over the past 40 years, Iowa has had 82 weather related events that have caused over $1 billion dollars of damage for each event. The average number of events in the past 5 years is up to 4.8 events per year with the average since 1980 being only 1.8 events per year. Damage has been caused by a variety of weather events such as blizzards, hail damage, tornadoes, and heavy rainfall followed by massive flooding.
In 2018, 34 counties received presidential disaster declarations due to severe storms and flooding. Four of the counties hit the worst that summer were Lee, Marion, Marshall, and Van Buren. Vermeer in Pella was hosting its 70th anniversary event when the tornado hit. There were around 400 Vermeer dealers in attendance that day. The tornado caused
widespread damage, destroying over 400,000 square feet of manufacturing facilities, tossing many cars and trucks about in the parking lot. Fortunately, there were no fatalities, just minor injuries. The same day a tornado tore through the middle of Marshalltown.
In 2019, the Missouri river flooded and broke several levees that caused 48 miles of Interstate 29 to be closed due to the damage caused by the flooding. Many towns and fields along the river were under water. The AgriVision locations in Pacific Junction and Hamburg were destroyed by the flood waters resulting in a multi-million-dollar loss. It was estimated that the total damage caused by the flooding in western IA in 2019 was $1.6 billion.
In 2020, Iowa experienced a derecho which caused widespread damage throughout the central portion of the state leaving many businesses and families rebuilding from the devastation brought by the massive winds. The city of Marshalltown, after rebuilding only two years prior from the EF-3 tornado that hit it, was hit again and forced to clean up again and rebuild. The total damage caused in the state during this storm was estimated at $11.2 billion dollars. Crop damage was estimated at a total of $490.8 million.
INEDA has a disaster relief aid fund to help members who are involved in a declared natural disaster. This year alone, we have been able to help 4 individual members and 17 of their employees that were affected by natural disasters. Please reach out to Jamie Mertz (IA) or Phil Erdman (NE) to answer any questions you may have questions on state and federal aid and to get an INEDA disaster relief form. We are here to help our members and want to make sure you have all the available information for relief assistance. For more information on federal aid, go to https://www.fema.gov/. For state aide in IA, go to https://iid.iowa.gov/. For state aid in NE, go to https://nema.nebraska.gov/disasterassistance-resources.php.
Flooding at Pacific Junction AgriVision Location
Owned and managed by:
WHERE AGRICULTURE MEETS INNOVATION.
THE SHOWS MUST GO ON!
Even though the Iowa Ag Expo and Nebraska Ag Expo have had a long history of growth, positive feedback from exhibitors and increased revenue for the Iowa Nebraska Equipment Dealers Association (INEDA), there are always concerns as to their long term continued success. We hear how the younger generation of farmers don’t attend farm shows, farmers are utilizing the internet to research products, and manufacturers are reducing the number of farm shows that they attend. We also have the unknowns of uncontrollable occurrences such as weather or even a pandemic that could threaten the future of the Expos.
The adage of “The Show Must Go On!” couldn’t be truer. INEDA understands these trends and threats and has been proactive in various ways.
Nearly 20 years ago, it was determined that smaller local farm shows were more likely to die than larger regional shows. To avoid being one of these shows, proactive efforts were made to grow the Expos as facilities became available. The Iowa Ag Expo expanded when Hy-Vee Hall and Wells Fargo Arena were added to the Iowa Events Center. The Nebraska Ag Expo expanded when Pavilion 3 and 4 were added to Sandhills Global Event Center. The Nebraska and Iowa Ag Expos are now the 2nd and 3rd largest indoor farm shows in the U.S. Smaller shows in Dekalb, Il and Indianapolis, IN are gone. Three other Midwest farm shows and another in Canada are currently in their death spiral.
These shows were struggling but COVID-19 played a role in their further decline. INEDA determined that
TOM JUNGE, Expo Director [tomj@ineda.com]
the shows must go on during COVID-19. The risk of losing exhibitors for future years was too high to ignore. Fortunately, Iowa and Nebraska were held in pro-business states during that period. It took a lot of extra planning on the “what ifs”. It even took postponing the Nebraska Ag Expo from December to February, but the Expos stayed open for business.
Although Mother Nature can shorten the length of a shows, the Iowa and Nebraska Ag Expos remain a 3-day show. Although, the number of farmers in each state would suggest going to a 2-day show, the risk is too great. Historically, 22% of the attendees come on the last day of the show but in Iowa it has been as high as 40% and in 2016, 57%. The Nebraska Ag Expo started as a 2-day show but weather impacted attendance 2 of the first 3 years. It is now a 3-day show.
To keep the Expos fresh and to continue to attract young farmers, Innovation Hubs were introduced to both Expos to showcase the latest technology in agriculture. No other farm show has been as aggressive as INEDA in seeking out this technology. In addition to prospecting local farm shows, Expo staff are attending ag start-up events such as Midwest Invest, Gener8tor, Ag Venture Alliance annual meeting, World Agri-Tech Innovation Summit and Canada’s AgTech Accelerator pitch competition. These efforts resulted in the growth of the Innovation Hub in Nebraska from 37 companies to 63 in 2023. In its first year in Iowa, the Innovation Hub had 47 companies. This initiative is key to being relevant to the future generation of farmers.
Exhibitor turnover is a normal occurrence even in the best of times. We know there will be companies deciding not to exhibit for one reason or another. To overcome this, INEDA has been proactive in recruiting new companies and is the most aggressive of any farm show. Prospecting trips now include three shows in Canada and two in California. New shows or start-up events are being added each year. Companies now recognize the faces of our staff as representatives of the Iowa and Nebraska Ag Expos. This effort has resulted in an extensive wait list at each Expo.
And INEDA isn’t stopping with these efforts! In the next year or so, focus groups and surveys with farmers will be conducted to determine what drives them to come to farm shows. This insight will assist the efforts in keeping the Expo’s relevant for future years.
“The Show Must Go On” is a timeless adage––however it is vital that our Expos are proactive in identifying threats and creating new opportunities. As we continue to attract attendees and exhibitors to sustain our future business operations, our members directly benefit from the Expos’ income by providing the funding necessary to operate, which in turn, allows us to provide services to our members!
Major Themes in the Farm Machinery Market
Rising costs slow equipment sales
Between high rates, increased input costs and lower commodity prices, the agricultural equipment and financing landscape is entering a distinctly different environment following years of unprecedented demand and high farm profitability.
As a nationwide equipment financing program, AgDirect is acutely aware of the challenges and opportunities equipment dealers and ag producers are navigating. With our knowledge and dedication to serving agriculture, customers can be confident in AgDirect as a trusted financial partner.
We recently sat down with a team of our experienced AgDirect territory managers from four different regions to get a pulse on the major themes and factors impacting machinery purchases, financing activity and overall buyer sentiment.
Shifts in Buyer Sentiment
From 2017 to the spring of 2022, buyer optimism and equipment purchases rose significantly year over year due to COVID-related supply chain issues, historically low interest rates and higher commodity prices.
Since then, this trend has reversed with high rates and lower grain prices. Across the country, many producers are carefully evaluating the cost-effectiveness of repairing existing equipment versus upgrading to newer models.
“Any time commodity prices are down, equipment sales follow,” says Richie Harris, an AgDirect territory manager in New Mexico and Texas. “Producers are slower to upgrade equipment and are buying only when necessary. Most buyers are now more patient to wait for the right deal to come along, even if that means using equipment longer than they would have in the past.”
Increased operating expenses and below-average pricing have also contributed to the deceleration of buying activity in the Pacific Northwest where cropping systems are more diverse. Chad Goldsmith, an AgDirect territory manager in Oregon and Washington says the first quarter of 2024 was the slowest he has seen since 2014.
“There’s usually some segment of the multitude of crops we grow that can be grown profitably – whether it be apples, cherries or asparagus – but in talking with our Farm Credit partners there’s a lot of break-even farming going on,” says Goldsmith.
“Input costs have increased dramatically across all of these cropping systems,” he explains. “Couple that with high interest rates, higher equipment costs and below-average pricing for 80-90% of the commodities we grow, and producers are operating in pretty tough conditions.”
Rates and Financing Considerations
Interest rates, of course, are an important consideration in any financing plan. Over the past year, rates have remained relatively flat, with expectations of a slight reprieve towards the end of 2024.
“Some producers have opted to delay trading to preserve the low rates on equipment they have financed over the last 3-5 years,” says Dan Takle, an AgDirect territory manager in Iowa. “With lower commodity prices, we haven’t seen as many cash buyers in the last year.”
In contrast, cash purchases are still prevalent in parts of the Southwest and the Great Lakes regions. According to Clinton House, an AgDirect territory manager in Ohio, there’s been a shift toward more cash purchases and a slight uptick in leasing activity with tightening margins putting pressure on profitability.
Leasing remains an important financing and tax management tool as farmers sharpen their pencils on payments and plan for equipment purchases. Creative financing will be key to lowering payments and providing a little bit of rate relief.
Supply and Demand Trends
While interest rates have a widespread impact on the machinery market, supply and demand trends of new and used iron are much more dependent on where equipment is purchased and sold. Auction, dealership and private party sales add distinct nuances to these trends.
Here’s a look at how supply and demand dynamics are trending across the country:
Great Lakes – Equipment purchases are occurring at auctions, dealerships and via private party sales with a notable increase in auction activity. Despite the availability of most products, there is low demand for both new and used equipment across several market segments. Many farmers are over-equipped and do not have any immediate needs.
Midwest – Lead times for new equipment have returned to normal but demand for big-ticket items is down due to projected lower net farm income. Dealerships remain the preferred point of purchase channel. However, producers are increasingly turning to auctions for high-dollar, late-model used equipment and monitoring auction prices to gauge the value of new purchases and trade-ins.
Southwest – Producers are looking for the best deals wherever they can find them, whether that’s at an auction, dealership or private party. In Texas, private party and auction sales have increased. Demand for both new and used equipment is down, and with ample supply and reduced demand, this trend is likely to continue for some time.
Northwest – Inventory levels have started to recover, increasing the equipment available at dealerships and leading to some surplus auctions and discount selling. While dealerships remain the primary sales channel, tighter economic conditions have boosted private party sales and auctions. The overall sentiment among farmers and dealers is pessimistic, with slow sales and cautious decision-making prevailing.
Overall, economic challenges are slowing down the machinery market and causing buyer hesitancy. Leasing products, longer financing terms and other financing strategies will play a critical role in equipment sales going forward. Dealers and equipment lenders will continue to be an important source in helping customers cover their replacement needs.
AgDirect offers customized loan and leasing options for both new and used equipment purchased at the dealership, at auction, online (auction platforms and marketplaces) and via private party.
Apply online, check rates, quote payments and compare options at agdirect.com or using the free AgDirect Mobile app available for download from the App Store and Google Play*. Or learn more about AgDirect equipment financing by locating your nearest AgDirect territory manager or contact the AgDirect financing team at 888-525-9805.
*Your mobile carrier’s messaging data rates apply. The App Store is a service mark of Apple, Inc. Google Play is a trademark of Google, Inc.
Do You Have a Business
Business continuity planning (BCP) is essential for ensuring that an organization can continue operations and recover quickly from disruptions. Here are some best practices to help you develop and maintain an effective business continuity plan for your dealership:
1. Conduct a Business Impact Analysis (BIA): Identify and prioritize critical business functions and processes. Assess the potential impact of disruptions on these functions to determine the most critical areas for recovery and establish recovery priorities.
2. Perform a Risk Assessment: Evaluate potential threats and vulnerabilities that could impact your business, such as natural disasters, cyberattacks, supply chain disruptions, and human errors. Use this information to frame preparedness efforts for your BCP.
3. Develop a Comprehensive Plan: Create a detailed business continuity plan that includes:
o Recovery Strategies: Outline how to maintain or quickly resume critical functions and processes during and after a disruption.
o Roles and Responsibilities: Define clear roles and responsibilities for employees involved in the continuity efforts, including a crisis management team and point-of-contact personnel.
o Communication Plans: Develop procedures for internal and external communication, including notifying employees, customers, suppliers, and other stakeholders. Ensure contact information is accurate and accessible.
4. Establish Recovery Time Objectives (RTO) and Recovery Point Objectives (RPO): Set RTOs to determine the maximum acceptable downtime for critical functions and RPOs to define the acceptable amount of data loss. These metrics help prioritize recovery efforts and resource allocation.
5. Implement and Test Backup Systems: Regularly back up critical data and systems, ensuring that backups are stored securely off site or in the cloud. Test the backup and restoration processes to verify their effectiveness and reliability.
6. Create Detailed Response Procedures: Document step-by-step procedures for responding to various types of disruptions. This includes emergency procedures, evacuation plans, and steps for activating the business continuity plan.
Business Continuity Plan?
7. Ensure Redundancy and Failover Mechanisms: Use redundancy for key systems and infrastructure to reduce single points of failure. Implement failover solutions that can automatically switch to backup systems or locations in case of a disruption.
8. Train and Educate Employees: Provide regular training for employees on their roles and responsibilities within the business continuity plan. Conduct drills and simulations to practice responses to different scenarios and reinforce the plan’s procedures.
9. Establish Vendor and Supplier Relationships: Collaborate with key vendors and suppliers to understand their continuity plans and ensure they can support your business during disruptions. Include them in your continuity planning and test their responsiveness.
10. Maintain an Emergency Kit: Keep an emergency kit with essential supplies, such as first aid items, communication devices, and backup power sources, to support immediate response efforts during a disruption.
11. Review and Update the Plan Regularly: Periodically review and update the business continuity plan to reflect changes in business operations, new risks, and lessons learned from tests and actual disruptions. Ensure that the plan remains relevant and effective.
12. Document and Analyze Lessons Learned: After tests, exercises, or actual disruptions, document what went well and what could be improved. Use these insights to refine and enhance the business continuity plan.
13. Integrate with Disaster Recovery Planning: Ensure that the business continuity plan is aligned with disaster recovery efforts, addressing both IT and non-IT aspects of business continuity.
By implementing these best practices, you can develop a robust business continuity plan that helps ensure your organization’s resilience and ability to continue operations in the face of disruptions. Above all, set aside time to TEST your plan. This is where you expose your vulnerabilities and weaknesses in the event a disaster strikes your dealership.
How the CDK Hack Hit Equipment Dealer Operations
In late June, media reports of “cyber incidents” impacting dealer management system (DMS) provider CDK Global began to circulate. The cyberattacks downed management systems at equipment and auto dealerships across North America.
Initially, the company was able to restore its core dealer management system (DMS) and Digital Retailing solutions, only for an additional attack to occur later that day that “proactively shut down most of our systems,” according to a report from Equipment World’s sister publication, Truck, Parts and Service.
Kim Rominger, CEO of the North American Equipment Dealers Association, gave the following statement to Equipment World on July 12 regarding the hack:
“The breach took place at the CDK level, not at the dealership level,” he says. “We understand that the cybersecurity attack was to demand a ransom from CDK, not so to access our customer information. That is unconfirmed at this time, but we are closely monitoring it.
“We understand that most dealers on CDK are back up and running at some level, and this is improving every day. Our association has provided guidelines to dealers to help them get back up and running in a secure way. Also, not every dealer is using CDK in our industry. There are five other providers, and they haven’t been impacted, so it’s not as widespread as in the auto industry.
“It has been frustrating for our dealers, as they have had to do a manual process for invoicing, securing parts, managing inventory and repair, but they are doing a great job of it. We understand that this is also frustrating for our customers, and we ask for their patience as we work through it. Dealers report that we are close to being back up in full.”
CDK Global gave the following statement to Equipment World on July 12:
“All major applications are now available. We are thankful to our customers, partners and employees for their partnership.”
CDK allegedly paid a ransom to the hackers on June 21 via a traced bitcoin payment — then valued at $25 million — to a cryptocurrency account controlled by hackers affiliated with a type of ransom ware called BlackSuit, according to a CNN report.
CDK Global CEO Brian MacDonald has stated dealers can expect some form of financial compensation for the effects of the hack, according to CBT News.
Partial Shutdowns, Lost Business
The hack at CDK affected different equipment dealers in different ways, according to Marc Johnson, a principal at CPA firm Pinion, who works primarily with equipment dealers and distributors.
Many were unable to use IntelliDealer, a reporting feature within the VitalEdge Technology (formerly e-Emphasys) DMS. Heavy equipment and industrial machinery software provider e-Emphasys announced its merger with CDK Global Heavy Equipment in May 2023. e-Emphasys later changed its name to VitalEdge Technologies in January 2024.
Following the attacks, VitalEdge appointed Judith Tigner as Chief Operating Officer and Michael Geraghty as Vice President of Global Support on July 9, part of the company’s “significant investments and enhancements in its client support infrastructure, reinforcing its commitment to delivering exceptional service worldwide.”
Since the IntelliDealer system is spun off from CDK, says Johnson, many equipment dealers were able to continue operating with partial access to their management systems.
“If equipment dealers had been on full CDK, like the auto deal they would have been completely shut down,” he says. “For the most part, what I saw was they were having trouble generating reports and having to go back to old versions of generating reports. But some of the dealers, for whatever reason, it also really impacted their parts department. They were having to do a lot of hand-written tickets just to get it into the system.”
Chris Wackman, president of 13-store Texas Kubota and New Holland dealership WCTractor, says, “We had to come up with a bunch of workarounds to keep the doors open. It was a mess, but our guys survived. Customers were pissed, but we did what we could to keep them happy. Mostly they were just annoyed by the inconvenience.”
Since Wackman says the dealership was already taking cybersecurity seriously, he’s not sure there’s a lesson to learn from the hack.
“We certainly lost business because of their mess,” he says. “We also racked up some serious IT bills while trying to get us so that we could operate. We are just treating it as a sunk cost, and we are moving forward.”
Financial Impact
Equipment dealers impacted by the hack will most likely see the financial results down the line in their net income and margins rather than immediately lost revenue, says Johnson.
“The sales guys are saying, ‘Hey, we’re going to keep selling no matter what happens, and then we’ll just figure out the reporting part later,’” Johnson says. “We probably sold stuff at the wrong price. And we probably missed some tickets, and guys from the shop probably came and got parts, put them on machines, and it didn’t get recorded.
“I’m guessing it’ll be more of a margin issue, and, unfortunately, this is a bad margin year anyway, between labor being up and inflation hitting us on parts and whole goods. Margins are already tight.”
A Lesson in Cybersecurity
Johnson predicts equipment dealers will be more diligent in the future about preparing themselves to continue operating if anot shuts them down and that many will add alternative reporting op their DMS. What he doesn’t want is for dealers to revert to old “hacking-proof” methods of operating as a knee-jerk reaction.
“There will probably be add-on products joining the market now saying, ‘Here’s another place to generate reports!’” Johnson says. “The last thing I want to see is people having an adverse reaction to technology and everything goes back to Excel. CFOs, that might be their gut reaction, but ultimately, you’ve got to have these more robust reporting systems.”
The hack is a lesson in the importance of educating staff on cybersecurity best practices, says Johnson, since the entire situation began with a small mistake at an auto dealership.
“One part of why the whole CDK hack went down was some auto shop employee somewhere clicked the wrong button, and the hacker got in through a dealership,” he says. “We definitely want to make sure we’ve trained people. That’s the biggest thing right now.”
Source: Bon Thorpe, Equipment World
“One part of why the whole CDK hack went down was some auto shop employee somewhere clicked the wrong button, and the hacker got in through a dealership,” he says. “We definitely want to make sure we’ve trained people.
“I’m guessing it’ll be more of a margin issue, and, unfortunately, this is a bad margin year anyway, between labor being up and inflation hitting us on parts and whole goods. Margins are already tight.”
7 Reasons You Need a Business Continuity Plan
1. Emergency Recovery
While disaster recovery focuses on restoring company activities after an event, it does not prevent disasters. Business continuity plans help mitigate the impact of disasters, whether they are natural like earthquakes and floods, or caused by human errors, security lapses, or accidents.
2. Backups Are Not Enough
Data backups are crucial, but they are not always accessible during power outages or other disruptions. Business continuity and disaster recovery solutions ensure you can run critical applications from backup instances on cloud-based servers, reducing downtime effectively.
3. Insurance Doesn’t Cover Everything
Insurance might not cover all types of data loss or damages. It typically only addresses repair costs and not the lost income or future business opportunities. As cyber-attacks become more sophisticated, insurance alone is insufficient to protect against all risks.
4. Competitive Advantage
Having a robust business continuity plan allows you to quickly resume operations while competitors may struggle. This positions your company as a reliable leader, capable of maintaining customer service and operational efficiency during disruptions.
5. Mitigating Losses During Downturns
During economic downturns, revenues often decline, making it challenging for businesses, especially startups. A solid business continuity plan helps minimize additional losses and supports your company in breaking even as it navigates through tough periods.
6. Employee Commitment
Employees are more engaged and motivated when they see that management has a plan to ensure their safety and the company’s continuity. This increased commitment leads to higher productivity and consistent delivery of products and services.
7. Operational Continuity
For a business to thrive, it must continue operating regardless of disruptions. A well-defined business continuity plan ensures that your operations remain functional, keeping your firm viable even in the face of unforeseen events.
MICHELLE THORNBURG, CPA [mthornburg@koskicpa.com]
Business Continuity from a CPA Firm’s Perspective
The Federal Emergency Management Agency (FEMA) describes “continuity” as the ability to provide uninterrupted services, essential functions, and support, while maintaining organizational visibility, before, during and after an event disrupts normal operations.
Most businesses are successful in operating in the “before” side of things, but how the business is prepared to deal with the “during” and “after” of a disruption is critical in their ability to continue the business after an event. Your business can’t simply stop just because something happened. It is important for the business to maintain cash flow and customer relationships.
In today’s interconnected business environment, natural disasters and cyber attacks can severely disrupt operations, damage reputation, and lead to significant financial losses. Climate disasters have become more frequent and more severe, as we have seen here in the Midwest with tornados, flooding, blizzards, hurricane force winds that knocked out power for days, etc. The frequency and sophistication of cyber attacks have also increased dramatically, with ransomware attacks alone causing substantial financial damage globally.
The first step in developing a comprehensive business continuity plan is to conduct a thorough assessment of the potential threats and vulnerabilities. The key word in this is comprehensive. Think about things such as:
Natural – flood, tornado, epidemic, storms, etc.
Technological – IT system failures, hazardous materials release, industrial accident, transportation accident, utility disruptions, etc.
Human Caused – active shooter, cyber attack, explosives, etc.
Process Oriented – supply chain failure, etc.
Keep in mind that where your suppliers are located is also important to your business as their impact from disasters also impacts you if they don’t have a continuity plan in place.
You need to consider what an acceptable downtime is for each essential function and if you will need assistance from other organizations to get you back up and running.
In identifying risk mitigation strategies, you may need to have multiple solutions. For example, telework or an alternate facility may not be an option in every situation if there is widespread disruption to power, communications, etc. so you need to have an alternative secondary plan.
Having a disaster recovery plan in place is the first step. Most plans, however, get filed away and never get tested, updated, and reviewed. As your business and the world changes, so must your business continuity plan be changed to stay relevant. For example, have you added new systems, added new locations, changed personnel?
Actually test your plan. Most organizations back up their important electronic data, but not a lot of companies have tested the retrieval or restoration of that data. Where is your electronic data stored and how long will it take to get your information restored in an emergency? Do you have access to replacement
equipment to restore the data to and if not, how long will it take to procure that equipment?
Is your entire team aware of the business continuity plan and do they know specifically what to do if something happens? Generally, in times of disaster, you will not have the luxury of time to figure out what needs to happen.Your team must be ready to execute.
If the employees don’t know what to do, they may make quick judgments that could cause more harm than good. You want to eliminate the panic and make sure employees have clear steps to follow. As an example, in a cyber-attack, certain information will need to be recoverable in order to provide evidence of a hack for the insurance company to cover damages.
In a time of increasing climate disasters and cyber security attacks, business continuity planning is no longer optional. Businesses must implement comprehensive continuity strategies, leverage technology, and foster a company culture of preparedness to protect the future of the business.
Disclaimer: The above information is intended to be current as of the date noted, but may or may not reflect the most current tax laws. This information is intended to be general tax information and is not intended to be tax advice. If you would like to discuss how it may relate specifically to you and your situation, please contact your trusted KPG advisor.
Providing tax, accounting and consulting services to equipment dealers for over 30 years.
of Dealerships
Randy Koski
Michelle Thornburg
FTC Non-Compete Ban and Upcoming Practical Considerations for Employers
ISSUE
AUGUST 19, 2024 – Earlier in the year, Federal Trade Commission (FTC) issued a new rule which essentially bans non-compete limitations for workers in the United States. The rule banning non-competes is scheduled to take effect on September 4, 2024.
Although the business community has been anticipating a nationwide preliminary injunction to derail the ban, federal courts to date have only temporarily enjoined the FTC from enforcing the rule against Ryan LLC, a global tax services and software provider. The judge in Ryan LLC v Federal Trade Commission has refused to extend the scope of the preliminary injunction beyond applicability to Ryan. The judge in Ryan LLC has indicated she will release her final ruling by August 30th, which is mere days from the rule’s scheduled effective date.
POSSIBLE RELIEF
Notwithstanding the practical considerations for developing a plan of action for compliance, employers can still reasonably anticipate a protracted legal battle for the FTC to successfully implement this rule in its entirety. There are a number of other challenges in other jurisdictions and a court could still issue a broader nationwide injunction or vacate the rule in its entirety prior to the scheduled effective date.
ACTION
INEDA and Associated Equipment Distributors (AED) have a formal agreement to collaborate on federal advocacy efforts. Together we are advancing dealer interests in Washington, D.C.
AED joined comments on the proposed rule and urged the FTC to delay implementation to allow for judicial review in an industry letter. While AED is hopeful the courts will strike down the non-compete ban, employers should plan to comply with the mandate. If you have specific questions about the rule and its application to your company, please contact your attorney for further guidance.
UPDATE
AUGUST 21, 2024 – Yesterday, Judge Ada Brown of the U.S. District Court for the Northern District of Texas ruled that the Federal Trade Commission (FTC) lacks legal authority to implement its “non-compete” rule. As we alerted you in the below update, on April 23, 2024, the FTC ban on nearly all non-compete agreements was set to take effect on September 4. However, Judge Brown concluded that the FTC exceeded its statutory authority in promulgating the rule and that the rule itself was arbitrary and capricious. Therefore, the rule is considered unlawful and, for the moment, is now set aside (i.e., not enforceable).
The FTC will likely appeal the decision, opening the door to further review by higher courts. Nonetheless, at this time, the non-compete ban is not enforceable.
DEALER INFORMATION UPDATE:
This is the most recent “Regulatory ALERT,” however, others can be found under the Dealer Resources tab on the INEDA website at https://ineda.com/regulatory-compliance-2/.
Other ALERTS that can be found include:
• OSHA Proposed Standard on Heat Injury, Illness Prevention – Aug. 20, 2024
• DOL Issues New Rules Defining Overtime Exemptions – July 1, 2024 / UPDATE: August 9, 2024
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DOL ISSUES GUIDANCE ON RISK IN USING AI IN THE WORKPLACE
BY JERRY L. PIGSLEY | WOODS AITKEN LLP
The U.S. Department of Labor (DOL) recently issued guidance to Wage and Hour Division field staff regarding the application of the Fair Labor Standards Act (FLSA) and other federal labor standards to employers’ use of artificial intelligence (AI) in the workplace.
EXECUTIVE ORDER
In October 2023, President Biden issued Executive Order 14110 requiring the Secretary of Labor to issue guidance to make clear that employers that deploy AI to monitor or augment employees’ work must continue to comply with protections that workers are compensated for their hours worked, as defined under the FLSA and other legal requirements.
FLSA
DOL recognized some AI and employee monitoring tools have the ability to measure and analyze metrics of worker productivity or activity. However, DOL in its guidance found reliance on automated timekeeping and monitoring systems without proper human oversight may create potential compliance challenges with respect to determining hours worked for purposes of federal wage and hour laws.
TRACKING WORK AND BREAK TIME
DOL noted employers may use timekeeping systems which incorporate AI to make predictions and to auto-populate time entries based on a combination of prior time entries, regularly scheduled shift times and break times, business rules, and other data. However, DOL warned use of these “smart” entries does not relieve an employer of the obligation to ensure that records are accurate and that an employee is paid for all hours worked. DOL gave the example of an employee usually taking a 30-minute unpaid meal break but skips the break on a particular day due to their workload. If the system automatically deducts the break from the employee’s work hours based on the employee’s past time entries, it would result in the employer failing to properly record and pay the employee’s hours worked.
GPS TECHNOLOGY
DOL cited to employers using GPS technology to determine a worker’s location relative to a job site. Then based on location, the automated system recorded what it determines to be the employee’s “work hours” as they enter and leave the job site. If the system records only the time the worker spent at the work site as compensable hours of work it may fail to account for travel time between work sites or hours worked at other locations and may result in minimum wage or overtime pay violations.
WAGE RATES
DOL recognized some AI systems use automated algorithms to independently calculate and determine workers’ rates of pay based on a variety of data and metrics collected by systems. Employers using such systems must exercise proper human oversight to ensure employees are paid the applicable minimum wage and accurately calculate and pay an employee’s regular rate and overtime premium.
FMLA
DOL noted AI is sometimes used to process FMLA leave requests, track time off, and integrate absence calendars. However, without responsible human oversight, employers relying on AI to process leave requests, including determining eligibility, calculating available leave entitlements, or evaluating when a leave is for a qualifying reason, can create potential compliance challenges. DOL warned that employers should not use AI to take adverse action against employees based on the use of FMLA leave.
TAKEAWAYS
AI has potential to help INEDA members improve compliance with the laws. The key is proper human supervision to ensure the use of AI complies with the labor standards that the DOL enforces.
Editor’s Note: This article is not intended to provide legal advice to our readers. Rather, this article is intended to alert our readers to new and developing issues and to provide some common sense answers to complex legal questions. Readers are urged to consult their own legal counsel or the author of this article if the reader wishes to obtain a specific legal opinion regarding how these legal standards may apply to their particular circumstances. The author of this article, Jerry L. Pigsley, can be contacted at (402) 4378500, jpigsley@woodsaitken.com, or at Woods Aitken LLP, 301 S. 13th Street, Suite 500, Lincoln, NE 68508-2578.
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MARKETING
6 Brand Marketing Opportunities That Don’t Involve Advertising
Talk to anyone about your work as a marketing professional and the conversation will likely steer toward traditional and digital advertising: TV, radio, print, direct mail, banner ads, streaming audio and video, native content, paid search and social media.
No surprises here. These are, after all, the marketing assets with which they interact on a daily basis. These assets are also what we as marketers pour our time, energy and resources into producing.
But marketing goes far beyond the ads served while streaming a show, flipping through a magazine or scrolling social media feeds. And chances are you’re missing opportunities to introduce and reinforce your brand.
What Opportunities Exist Beyond Advertising?
Here are six unique ways to reach prospects and customers with your brand narrative outside of the more obvious advertising channels:
1. Website
Sure, your website is one of the most valuable pieces of real estate you own. But when was the last time you audited your website or overhauled it? A website’s design and content should reinforce your brand identity and provide a consistent, outstanding
experience for first-time visitors and repeat customers alike. Drive traffic to relevant landing pages and maintain a high degree of cohesiveness throughout their journey.
Most visitors will spend time on your website using their smartphone, so be sure to use a mobile-first design. It’s also important to pay attention to load times to help keep bounce rates low. Review website analytics regularly to ensure mobile and desktop users are engaged, and learn how they utilize your website. And, of course, fix any broken links or other errors that might detract from the user experience.
2. Meta Descriptions
We’ve all been there before: You’re ready to publish a new page on your website or an article for your blog and you quickly hammer out a meta description. Make sure it’s coherent and has a keyword or two, and you’re good to go. But while creating meta descriptions with the right keywords matters to search algorithms, you want to be mindful of the actual consumers scanning search results for content. They matter, too. Compelling meta descriptions that reflect your brand voice and tone can help you build connections with prospective customers before they even click on a link.
3. Trade Show Presence
Think about the last trade show floor you walked. How many pens, stickers and pieces of candy did you end up stuffing into your conference tote bag? Your brand has a real opportunity to stand out at a trade show. Transform your booth into an experience that goes beyond popup banners and gimmicky giveaways.
Design a comfortable, on-brand environment that invites prospective customers to stick around for a while. Set up monitors to display brand videos, product demos, testimonials and more while they’re waiting to talk with a sales rep. Equip your sales team with tablets and slick customer-facing content to use during their introductory pitch. Invite industry influencers to stop by to record a podcast and interact with visitors to your booth. These extra efforts demonstrate your brand’s commitment to being extraordinary.
4. Curb Appeal and In-Person Experience
When a customer or first-time visitor sets foot in your business location, what do they see and
hear? How are they treated? Where do they wait for an appointment? These collective experiences significantly impact how they will ultimately view your brand. Design your signage, entryway and lobby to reflect your brand. Tend to every detail of their on-site interaction—from initial welcome to wait time to how they depart. This should include training and equipping your office staff to support the overall customer experience you’re trying to create.
5. Statements, Invoices and Stationery
Let’s be honest, nobody likes paying bills. But that doesn’t mean it’s okay to just stamp your logo onto your statements and invoices and send them off. Instead, use these touch points as an opportunity to reinforce your brand and remind customers why they like doing business with you. Keep your communication clear and concise, and make it easy to pay invoices. This adds to a smooth, streamlined customer experience.
Also, don’t forget the power of a nice handwritten note to thank your customers for their business. Design stationery or note cards that reflect your brand—or better yet, put together a brand box with a branded coffee mug and some locally roasted coffee to show your appreciation. Such attentiveness to your customers does not go unnoticed.
6. Products and Services
Ultimately, your products and services are the most important way to assert your brand narrative. Get earnest feedback from your customers and sales team and look for ways to constantly improve and add value to whatever it is you’re selling. This also applies to the sales process, packaging and delivery. You should seek to create a truly memorable experience for each person who purchases your product or service.
Increase The Effectiveness Of Your Advertising
Advertising is essential to your brand’s marketing strategy, but it’s only one piece of the puzzle. There are many other ways to create a positive customer experience that can help build customer loyalty and drive word-of-mouth marketing—all while increasing the effectiveness of your ads. Taking advantage of these opportunities can move your business forward when done well.
Source: Sara Steever, Paulsen Agency (Article was originally published in Forbes.)
Iowa-Nebraska Equipment Dealers Association
8330 NW 54th Ave.
Johnston, IA 50131-2841
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