The Bloomington maker of lawn care equipment adds a line of building products.
Toro Co., the king of lawn mowers and golf-course maintenance equipment, is moving full-bore into the construction segment with a new line of machines dipped in Toro’s classic red and bearing its household name.
The Bloomington-based company jumped into construction last year when it bought key assets from Astec Underground and Stone Construction. With Astec, Toro gained a line of trenchers and horizontal utility drills used to bury power, water and telecommunication lines. One of the larger machines has a 6-foot chainsaw with teeth the size of a hand on one end and a backhoe on the other.
Toro also acquired a line of concrete mixers, compactors, stump grinders and motorized wheelbarrows it calls the Mud Buggy. The products are trickling into the marketplace and have become popular with rental equipment firms eager to dust off the recession and offer contractors newer building products. The change is happening one year shy of Toro’s 100th anniversary and promises to launch it in a new direction.
“A lot of people might look at Toro and say, ‘This is a left turn. This is vastly off track from what they typically do and what the Toro brand is known for,’ ” said Rick Rodier, general manager of Toro’s sitework systems business. “But in truth, we have been in the dirt business for 15 years.”
In the late 1990s, Toro introduced its first lightweight construction product, a pushable compact utility loader with interchangeable drill, scooper and plow attachments. In 2008, it added a trencher attachment. Now it’s going for bigger beasts that can work 10 hours a day.
Instead of trying to sell new products — which range from $2,500 to $150,000 — directly to construction firms, Toro is marketing to equipment rental houses like United Rental, Ziegler Cat, RSC, Home Depot and Sun Belt. Before the recession, contractors owned their construction equipment and had them ready for big and small jobs. But after the downturn, Rodier said, “the cost to manage an equipment yard was no longer manageable. So contractors took to renting equipment” for periods ranging from four hours to four days.
Andy Way, co-owner of A-Z Rental in Eden Prairie and president of the 100-member Minnesota Rental Association, thinks Toro is on to something.
“I think they are headed in the right direction with these acquisitions ... and will become a big supplier in the rental game,” Way said. Toro should be able to win “those people who have always been faithful to Stone and Astec” and should also win sales from landscape contractors who trust the Toro name and are willing to give its construction equipment a chance.
But to reach some rental houses and compete with established U.S. manufacturers such as Vermeer in Wisconsin and DitchWitch in Oklahoma, Toro may have to shave prices, offer payment terms and douse customers with over-the top service in this new arena, Way said. If it does, “Toro would have a real good edge, because they are Minnesota boys,” he added.
Toro officials insist they are already off to a good start. House, apartment and condo construction starts are up more than 26 percent from May 2012, the U.S. Census Bureau reports. The surge helped boost demand for equipment that makes concrete sidewalks, paves parking lots and digs trenches for underground utilities. Toro said it is seeing strong demand for walk-behind trenching machines and rider trencher machines.
“The concrete mixers and the compaction products are doing pretty well, too. They are a pretty mainstream product for residential and multifamily construction. So we are seeing strong interest in that,” Rodier said.
Toro’s timing was perfect for Ziegler Cat in Bloomington. The rental house is known as the place to go when firms need large construction equipment, but it wanted to expand into smaller construction machines. Then Toro came knocking.
“We were working our way down [in size] just as they were working their way up into bigger equipment. So we kind of met in the middle,” said Jeff Schmidt, a Ziegler production manager who ordered 40 pieces of Toro construction equipment in February.
The $500,000 in equipment started arriving in March and April. The last batch is due soon. But educating construction customers about Toro’s new offerings is tricky, Schmidt said with a chuckle. “When we told these big builders we now have Toro stuff, they said, ‘Huh?’ They looked at you kind of funny and asked, ‘Why are you offering me a lawn mower?’ ” Schmidt said.
But they are catching on, Schmidt said. “Once you explain that [Toro] bought the Astec line and the Stone concrete products, then they say, ‘Oh, OK, great.’ But you do have to get over that hurdle first.”
Now, a little more than a year since Toro’s acquisitions, it’s getting harder for rental houses to quickly get Toro’s new equipment.
“It tells us that their business is taking off in other parts of the country,” Schmidt said. “A big thing that is helping them is the home building market coming back. I think their timing was really good. If they came out with this stuff two years ago, it would not have been a good time. There just was no demand.”
But now, Toro thinks it’s in a good place. In April, it started rolling out some of its Stone concrete mixers, rollers and compactors under the Toro label. Toro will also rebrand its large Astec utility trenchers, plows and horizontal drills. But that “reveal” won’t take place until October when it participates in the International Construction Utility Equipment Expo in Kentucky.