Farmtrac workers, customers feel cheated

Bob Benedetti

Second of three stories.

Just as a chugging diesel tractor and its trailing agricultural implement churn through an open field of soil, so have corporate raiders of Eastern North Carolina tractor manufacturer Farmtrac North America plowed its loyal customers and employees under.

The Jan. 18 closing of Tarboro-based Farmtrac's assembly and headquarters buildings at 111 Fairview Drive, and an Edgecombe County Superior Court ruling late February to place the troubled firm into receivership are a few chronological benchmarks of the tractor firm's demise.

Receivership is a measure taken only when a company cannot afford filing bankruptcy. According to court documents, Farmtrac has generated more than $55 million in total liabilities.

Just as more than 285 Farmtrac retailers across America and Canada have been jolted by the recent turn of events, so have customers and employees; each is meeting the corporate plow.

In Edgecombe County, the Farmtrac closing has displaced nearly 180 loyal workers who are facing challenges regarding their work status, age and potential re-careering demands. So what are workers to do? The choice between riding it out or pursuing other employment has been a complex one.

According to Tarboro branch Employment Security Commission manager Althea Hopkins, many of the workers maintain a temporary layoff status that allows Farmtrac workers to collect unemployment without being required to seek new work. It has also allowed them to remain available to quickly rejoin the workforce on the outside chance the company is resuscitated.

A skeleton crew ranging from about 5-30 workers has volunteered about five or six hours daily to perform phone support and small parts warehousing functions in January and February.

They hope that somehow when the assembly facility reopens, everything will return to normal and everything they've earned through years of sweat and dedication – their jobs, their health care, their paid vacation – will be reinstated.

Court documents state Farmtrac workers have $308,802 owed in unpaid accrued vacation.

Farmtrac employees continue to be a quiet, solitary lot who refuse to say much about the closure – and nothing about a life after Farmtrac. More than 20 Farmtrac employees have declined interviews by The Daily Southerner staff.

Even if their utopic outlooks and stoic dispositions are commendable, the possibility of applicant struggles due to age, past earnings and a depressed economy are looming.

Many are middle-aged or older and have worked at the Fairview Drive building for decades: since Bill Long Sr. ran the business through the 1990s, or earlier.

Former Equal Employment Opportunity Commission Vice Chairman Paul Igasaki believes that makes things increasingly difficult to land new work. Igasaki stated on IMDiversity.com that "older applicants are finding the doors [of opportunity] harder to crack open" during the hiring process due to previous earnings and age discrimination. Worse yet, the former is legal and the latter seldom results in legal action. Igasaki called the practice "hard to prove" since employers "know better than to indicate this explicitly."

In addition, Edgecombe County hosts an unemployment rate of 9.0 percent – nearly twice the state average.

Hopkins, a 20-year ESC veteran, said once displaced workers take on a "permanent layoff" status, they become eligible for federal re-training and back-to-school programs. She also said the temporary layoff period in effect is a wait that can be extended for months.

The outlook becomes more clouded when replacement jobs are entry-level positions in the service industry ñ at humble wages ñ often times more than a $3 per hour pay cut. Of the Farmtrac employees Hopkins has seen, they varied from 20-38 years of service with the tractor manufacturer, which likely boosted their past wages to maximum levels in their industry.

Either way, laid off workers encounter a tough situation.

Customers have been short changed by Farmtrac's downward spiral due to scarcity of parts, slower turnaround on service and unpaid rebates.

Paul Preston of Paris, Texas, said that a mechanical problem he had with his new tractor in December is still unresolved.

"My tractor has a bad motor," Preston wrote. "It is months later, and I just received a new one."

Preston struggled to get a replacement motor, then has been waylaid by a limited availability of parts.

"I finally got a motor," the 80-year-old organic farmer said. "Still waiting for the accompanying parts" has extended the process.

Running out of time and unsure of the outcome, Preston chose a costly decision. He bought another tractor.

"It was a $40,000 solution," said Preston. "I'll just have to write it off (as a loss). Life goes on."

Despite the fluctuating level of service, Preston's installments remain constant.

"My payments have not stopped at the bank. I keep paying them," said Preston.

Since 1999, Farmtrac has sold more than 12,000 tractors across North America. Parts, repair and maintenance play a major role in keeping tractors operational.

Many retailers cover warranty parts and repair costs as an out-of-pocket expense in an effort to better serve buyers.

While some customers were short changed on parts or maintenance-related items, others fell prey to an aggressive clearance program by Marketing Head Shenu Agarwal called "Not-Even-Zero" (NEZ). A rabid last-ditch effort in late 2007 to clear units from Tarboro and rev up incoming cash flow, Farmtrac claimed to "pay your interest and more" through semi-annual customer reimbursements that exceeded each tractor's monthly interest rate.

Many retailers were uncomfortable with the NEZ program. Oxford dealer Billy Yeargin did not recommend it to anyone.

"It amounted to a scam," Yeargin said.

Dealers offered customers a less-risky alternate plan.

Court documents state that $2.9 million in Not-Even-Zero rebates are owed to customers.

Buyers are considered low-priority unsecured creditors by receivership laws and have little chance for reimbursement. Still required to make payments, many feel theyíve been scammed.

"It doesn't seem very fair," said Darrell Parker of Shreveport, La. "They still want me to do my part every month."

Parker runs a small construction site cleanup business. Without the refund, the tractor cost increased from $17,000 to $21,500; an expense that gets passed onto that gets passed onto business owners and consumers.

"Our bottom line is going to be smaller. These things ultimately get passed down to the customers," Parker said.

Those on limited budgets like Nancy Krone of San Augustine, Texas, are placed in a financial predicament. According to Krone, many buyers in her area "are now caught between returning the tractor and having their credit rating jeopardized or keeping it and paying an extra $4,000."

So why did debts to customers like Krone and a myriad of external creditors go unpaid from a company with plenty of inbound funds?

"It stinks," Krone said, and it has "the odor of a mini-Enron."

Customers like Krone and dealers haven't taken the matter lightly, initiating a drive to contact local, state and federal legislators. Since Farmtrac does business in 25 states across the U.S., the nonpayment of Not-Even-Zero victims falls under federal jurisdiction.

Last week, Missouri Sen. Christopher S. "Kit" Bond of the congressional Small Business Committee has taken steps to initiate an inquiry by the Federal Trade Commission.

The move may set a different set of tilling blades in motion.

Meanwhile, former midwest Territory Manager David Petri said how Farmtrac administration closed shop showed a lack of common decency to workers and customers alike.

"To shut things down and not even tell anyone," Petri said. "Tells me they could have cared less. That's really low."

Perhaps it was the final lap of another group being plowed under.

Notifications of Farmtrac's status were not sent to customers. Some retailers reported that a fax was sent after Edgecombe County Superior Court Judge Frank R. Brown appointed Tarboro attorney James C. Marrow receiver in late February. Many retailers and customers learned of the Farmtrac through The Daily Southerner's Web site.

Thursday: The business debacle.

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