For Bernard Krone, fourth generation owner and CEO of Krone Company, keeping the company tidy and in the family has paid off in continued success for a company that has been filled with moving parts throughout the years — from agricultural machines to commercial vehicles. Focusing solely on hay and forage equipment today, its North American operations are based out of Memphis.
Below is the full conversation between Farm Equipment editor Mike Lessiter and Krone.
Bernard Krone: My name is Bernard Krone. I'm fourth generation owner of the Krone company. I'm 40 years old and I'm married, I have two kids, and I’ve now been with the Krone company for 11 years.
Mike Lessiter: I know that this will be difficult to encapsulate, but I would like our listeners, our readers to get an abbreviated history of the company going back you know, four generations.
Bernard Krone: Of course, to go to every detail would be a little bit too long, but our company now is more than 110 years old, and we started in 1906 in Spelle in a small village, near Osnabrück, west of Germany. My great grandfather started as a blacksmith, and the whole family worked as a company, so to say. My great grandmother ran the farm, and a little beer pub, which we had besides as a blacksmith's workshop. Then, when second generation took over, my grandfather already manufactured small farm machines, tillage equipment, these kind of things.
The company continuously grows after the second World War. And then in the '60s my father took over, so generation. And under his leadership of course, as a company, we had the fastest and biggest gross in history. And, we also went into the commercial vehicle business. We are now Europe's second largest manufacturers of commercial vehicles, trailers, re-fill trailers, semi-trailers, all these kind of things.
I took over 11 years ago and we’re still on the good way. You know, every generation change has certain danger and challenges but I was trained by my father — what are the upcoming things and what are the upcoming challenges. So far, I really enjoy that.
Mike Lessiter: As a young boy did you know that this was the dream that you wanted to pursue?
Bernard Krone: Yes, I think so. Sometimes I say I wanted to be a circus director. Sometimes I also feel I am one. Of course, there were times when maybe some teachers were complaining about my behavior, then I said, “No. I don't want to take over the company,” but deep in myself I always knew I that's the only thing I want to do.
After my apprenticeship, I worked In Dublin, with all our partner there, Farmhand, as a farm machinery mechanic. A couple of months in the workshop and then in the field as a service mechanic. I worked on our first Combi-Pack in Northern Ireland, close to the sea. It was really nice. Good time.
Mike Lessiter: That must leave an impression that you were a mechanic, with all the dealers that you travel around to that you know...
Bernard Krone: Yeah. You know when I showed up there and they of course, in the first weeks, I was with another guy, and in the last couple of weeks on my own. Of course, some of them already heard that Bernard Krone is driving around as a service mechanic and I'm pretty sure that some people got a phone call before I went there, but some were looking really surprised when they heard my name, from Germany, and, “Do you have any relations to the company Krone?” They were... Yes, um… But I think they knew already. I'm not sure, but that was a good time. I really had fun. I enjoyed it very much. And then I had my military service and then I came to North America. I think it was summer of 2000.
Mike Lessiter: In the history, if I have the story right, both your father and your grandfather were put into the role at a pretty young age due to death in the family.
Bernard Krone: Yes, that's correct. My father had to take over the whole responsibility at late 20s. His father died in 1970. I think he felt a lot of pressure, these days, but he managed it and it was the same attitude like his father — tried to convince everybody to follow him, the employees and the customers. My father always said that we have very loyal customers and partners in the world.
Mike Lessiter: Question about where you are today in the products segments that you serve. Tell our readers, our listeners what products segments you define yourself in today?
Bernard Krone: I would say we are the only hay and forage specialist in the world. We are really specialized on hay and forage equipment. So that, I think that really just describes quite good who we are and what we do.
Mike Lessiter: That has served you, you very well for quite some time, that those will be the boundaries in which you pursue growth will be in that area?
Bernard Krone: I think so, yes. You already know that we manufactured also tillage equipment and these kind of things in the early days, maybe until the mid ‘80s. But we figure out to specialize on one product category like the hay and forage equipment. It gives us a much better position to really focus on something and have good ideas, good innovations, and also how we can serve the customers. And I think focusing on something like that is — especially in the farm machinery business — very important and for us. It turned out to be very good.
Mike Lessiter: Tell us today the turnover, the employee size — the size and scope of the company in 2018.
Bernard Krone: Yeah, we just finished our financial year by the end of July. So all facts and figures of are still pending, as you know. We will reach a turnover around $2.5 billion U.S. in total in the group. Uh, uh, Like always, profit is not good enough, but on a reasonable level. We invested a lot in the last couple of, of months, so in the last 12 months. We opened up our new spare parts department, our new spare parts storage for the trailer business. We also invested in our new paint works, which will be opened in August this year, so in the couple of weeks.
This paint works is the new investment around 40 million euros, which will help us to increase even more our quality in paint and everything, which is very important for us. We have around 6,000 employees, including rental and part-time workers, and apprentices and students. We mainly work out of six factories. Five of them are factories for the commercial vehicle business and one is a factory for farm machinery. But in the farm machinery factory we also work with partners. So we have machines coming from East of Europe and Canada, which are exclusively made for Krone.
Mike Lessiter: Okay. So those figures are just the farm equipment and the commercial truck, not including the dealers side, is that correct?
Bernard Krone: Right, just the commercial vehicle business and farm machinery business...
Mike Lessiter: You have been there 11 years. What did the company look like 11 years ago in terms of revenue and employee size and...?
Bernard Krone: When I started we had a turnover around… I think it was around 1.1 or 1.2 billion euros. But we were in a period where the growth was very fast. You know, we had this economy crisis in 2008, until then, as a company growth, quite good. I think we had a turnover in, in ’07, ’08 about 1.4 billion euros, which was also the highest record, since then. Then the turnover dropped due to the commercial especially the commercial vehicle business center and the problems during the economy crisis. But, you know, we have overcome that situation and I think today we are even stronger. So, I just talked to our CEO, Mr. Fir, he said he's now been with the company 15 years. And when he started, the turnover was around 400 million euros.
So you can see 15 years ago, it was 450 and 10 years ago it was 1.4 or something like that. We had a really good growth period between 10 and 15 years ago, especially in the commercial vehicle businesses, very fast.
Mike Lessiter: Mm-hmm. In terms of percentage, how much of it is equipment, versus commercial?
Bernard Krone: You can say, more or less, two-thirds our commercial vehicle business. And one sort is a farm machinery business.
Mike Lessiter: Mm-hmm. Okay. In what year did you get into the commercial vehicle business? When did that start?
Bernard Krone: 2007. Yeah. 1st of January of 2007 I started in Denmark in our factory for refill trailers.
Mike Lessiter: I wanted to talk about the decision to exit the tillage, which must have been a difficult decision for some at the time, for probably your dealers, customers, but it sure looks like it was an act of brilliance, of genius looking back at what happened. Could you talk about that?
Bernard Krone: I think the decision was very hard for my father and at that time, Heinz Krone, his cousin... Because the turnover was, I would say one-third of the company, who were most quite important. We had a lot of people working in that particular area, we had a long history — tillage equipment, more or less, was the first equipment we made. The costs were quite high. I think it was, as I said, one or one-third of the turnover, but maybe 50%, 55% of the cost.
I think the decision was out, but they made it, as I talk to all the customers, to the partners. They told them why they had to decide this and that they want to focus and that they have good ideas in balers, in machinery for the future, related to the hay and forage sector. So, I think every partner, every customer could understand quite well why they have taken this decision. They stick with the company and together they were quite successful.
Mike Lessiter: And that was shortly after the wall fell?
Bernard Krone: I think that was, yeah, late ‘80s or early ‘90s. Yes, that's correct.
Mike Lessiter: It's interesting to me because it was, uh, just recently here we're interviewing Michael Horsch for the program. And he had said, had the Berlin Wall not fallen, he would likely have not been around today.
Bernard Krone: Yes.
Mike Lessiter: Because, if I have the story correct, it's so that that brand of tillage, passive tillage, was something that you decided not to pursue.
Bernard Krone: That was long before I stepped into the company and I was really involved in decisions. But, I think Mr. Horace is much more specialized in what he's doing, and he has a lot of know-how. You know, we did seeding equipment, we did plows and I would say, easy tillage equipment, so to say. So, that was probably not the size, maybe the customers and later on, in the eastern part of Germany need it.
Mike Lessiter: Mm-hmm. Exiting those segments allowed you to deeply pursue what was coming in the mid '90s with the square baler, the BiG M, and the BiG X?
Bernard Krone: Yeah.
Mike Lessiter: Could you talk about the freeing up of the capacity to pursue those things?
Bernard Krone: I'm not sure if we would have produced something like the BiG M without getting rid of the tillage equipment. So as you said, and that really gave us free space in the development department to think out of the box. Yeah. What can drive the turnover and the development of the company in the next years with our tillage equipment? Where should we go? Which way? What is the right way? What is the development of our customers as they're getting bigger? We have more and more contractors and these kind of things. So we should focus on machines, which is also getting bigger and going in that direction, yeah.
I'm pretty sure that opened up everybody, because I said, “Okay, now we have to do something. Everybody is looking on us, everybody thinks when you stop a product line, you could lose turnover, you lose, customers, maybe the company is going down, whatever. Now we have to show everybody that we are still here, we have a lot of good ideas, and we go on and we are ready to grow.” And, I think everybody in the company had that feeling. Not only as the managing directors or my father or the leaders, everybody, I think, in the company. Especially the engineers also…
Mike Lessiter: It’s reminded me of a quote I really like from, Anna, your great grandmother, who talked about when your great grandfather had got rid of the debt.
Bernard Krone: Yes.
Mike Lessiter: And it did go, to toast to schnapps and she said…
Bernard Krone: Don't be a fool. Small people like us, they have to have a certain debt. Otherwise, they cannot grow, or we cannot become bigger. My father told me very early about that. I heard this story very often.
Mike Lessiter: It's a great story because it's, it's kind of like we're putting our chips on the table, we're going to grow, we're not gonna be satisfied.
Bernard Krone: All in. That's right. Yeah. We have to take a certain amount of money, to grow, to do something new, yeah. And, and that to have the possibility that we can get bigger and bigger. It was always important.
Mike Lessiter: Mm-hmm. We'll have some listeners, we'll have some old timers who've been around a long time. We'll also have some newer people listening to this who maybe don't understand how big the ‘90s were and how your company came in and did some things never done before. Trace some of the greatest product developments that had come during that time.
Bernard Krone: You have to understand where we came from. I just said we made tillage equipment and we made tedders and rakes and mowers for farmers. And then we had somebody in the company, at the late ‘70s already, I think, who developed the first round baler for us. And my father was not even sure if we should manufacture this round baler by ourselves, or should we sell it to somebody. So we talked to John Deere and they had already a baler, I think a belt baler at that time and they said, “No, we, we don't need another baler.”
And then my father said, “Okay. If nobody wants it, I really like the design and everything, we do it on our own.” After 25 years, they were number one in Europe with this round baler, and this is a really big success story. That showed everybody that also all employees in the company, that also was new products with totally new things we can achieve, also a great success.
In 1995 they introduced the first square baler. Also, at that time, we talked to John Deere about maybe doing a distribution or something like that. And that time, they said, “Yes, we want to do that.” So we worked together for a couple of years in the mid and late ‘90s. But that was not a big success. From today's perspective, I have a feeling that maybe it was not designed by John Deere or not developed by John Deere so they maybe were not really into that business or not interested in enough.
So that was not a success, but we were going on and we've developed new things, and then later on, we had the HDB technology, the high-density baler. That was very much needed by, especially by professional customers, contractors, or maybe mushroom farmers, all these kinds of things, in Germany and in Europe. And today also around the world, we have a market share in Australia of nearly 50%. At the moment we have a market share in Germany of 40%. So, the large square balers are really a very good product and, and one of our most important products.
And then, late ‘90s we introduced the BiG M, the first self-propelled mower conditioner. In the early 2000s we introduced our first forage harvester, the BiG X. And in the coming years, also the biggest forager in the world, with more than 1,000 horsepower. That is also quite an interesting story. Of course, we learned a lot especially in the first years, we had to learn a lot about how customers operate this machine, what do we have to care about and what is the most important thing and maintenance and all these kinds of things.
But we were always listening. And that is what, I still, until today, the customers appreciate about our company is that of course, there are always problems in business, everybody has that, every manufacturer, every dealer. But the Krone company always wants to listen and we take care about it and then we find a solution. That is a very important issue about our business.
Mike Lessiter: And during that time you also built your own corn header, right?
Bernard Krone: Yes. I had the feeling, you know, I just can't tell you how my impression was and when I heard later on. For my father it was very important that when he was introducing our own forage harvester that we do not have to rely on one of our competitors regarding the corn header. So he said when we have a good forage harvester we also need to have a good idea on the corn header.
Without our own corn header, there won't be any forage harvester. So it was clear from the very beginnings that we need both together, that we do not have to rely on any competitor. Because he always felt that that has a certain danger. So that was very important.
Mike Lessiter: That was a very busy time for the company it sounds like.
Bernard Krone: Yes. Always busy times. You can't, you can't stop running.
Mike Lessiter: And so, you initially came into the United States in the ‘70s through a partnership with two other manufacturers?
Bernard Krone: Oh, that was before I was born. So probably Rusty is the one who can explain much better, but just with a few words. I think it was very important for our company that we came to the United States. Especially my father says today, my great grandfather always wanted to be in the United States. Because he said, well, at that time, United States is the most important and biggest agricultural market in the world. If you want to be successful in the world we have to be successful in the United States.
We started with two other manufactures. I think they are all not existing anymore, more or less. I think we had a good team to start. Rusty Fowler stepped into the company at a very early stage. That was also very important, we had a good team, we had a good leadership. We had, I think, step-by-step, we also had the products for the United States. Of course, it took a while until everybody in our company had, you know, realized that we're not only selling machines maybe in our neighborhood in South of Germany, that we also sell maybe machines to California where the harvest is much earlier, you know. There's a story which we sometimes laugh about that somebody from the United States called and said, “Hey guys, we need the machines very bad harvest starts soon.” And the engineer stands on the phone, stands up and looked out of the window and said, “Hey, listen. The grass is not even growing. What is the problem?” Yeah. We still have snow or something like that.
Today you can smile about it, but of course, we had to learn a lot that the regions are different, and the climate is different, and the customers are different, and the needs are different. I think going through this process was very important for the whole development of our company. And today I think we, together with our team, we have a very good knowledge about the market, about the North American market, about the customer needs, and I think with our machines and service and also spare parts, we really can fulfill all our customer needs very good.
Mike Lessiter: Back then, it was set up in New Jersey and it was... I saw the logo last night and Joel Braddock's retirement gift. It was a Krone Mengele-Niemayer was that the original?
Bernard Krone: Yes.
Mike Lessiter: Okay. And so, in 2000 it became a wholly owned subsidiary of Krone… When did your family tap Rusty into this role here in North America?
Bernard Krone: Rusty, well, in 1986.
Mike Lessiter: Tell us about the North American operations, Memphis, what you have here and the support that you have for this market.
Bernard Krone: For me, the United States always was a very interesting market. As a young boy, I always loved to join my father when he went over to the United States. But he always said I'm too young, I'm too young and so, I had to, to go with my mother on ... You know, I'm a little bit younger than my two sisters. They are 8 and 10 years older and I was always the young boy and I had to go with my mother, on the island in the northern sea for vacation. And my sisters and my father, they went to the United States. At that time, I was a little bit angry. Today, when I look back, it was a great time. But I always wanted to come to the United States. It was always a big dream. And then age 16, I followed my father on one of his office trips. I think I met Rusty. We met I think in Birmingham, Ala. That was my first trip to the United States. And then we went by car to all other different places that we visited. Memphis, I think at that time, it was still West Memphis, Ark.
We visited Illinois, Chicago and, and it was really a great time. And I always had the feeling that the U.S. market is something special. And also today, we, the United States or the North American market in total is our biggest market besides Germany. It is still the most important agricultural region in the world. I think with our headquarters in Memphis, with our subsidiaries in Reno, Nevada, our West Coast center, and with our own locations in California and Idaho. And Wisconsin? In Wisconsin, we have really good locations and we have a good team. I think they have a very good knowledge about the service and training and spare parts and our machines, help supporting our customers. And, I think we now have run about a hundred employees here in the United States, which is the biggest workforce, as a sales and service organization, outside of Germany. So, that shows the importance of this market.
Mike Lessiter: How much growth exists here for you in the U.S.?
Bernard Krone: Of course, we know that, that we have some strong and good American and U.S. competitors. The growth potential is still very big. We have a good market position in mowers, tedders, and rakes. We have a really good position in square balers. I think we also have a good position in the forage harvesters. Of course, we have growth potential, we knew that there are strong competitors who have been also quite long in the U.S. market.
I think we also could have more potential in our round baler segment. I think the round baler is good but we have the European bale chamber measurements, which do not fit 100% to the U.S. market, we know that. We talk about it a lot. Maybe there will be some changes in the future. We have to wait, what our next generation will look like. Maybe that is a good potential for us for the future. Yeah.
And so, we have good market shares in many of our product categories, but also you always still have potential to grow, of course.
Mike Lessiter: Mm-hmm. And you have the mix, you mentioned your own company store locations and you have about how many dealerships you're covering?
Bernard Krone: Yes, six owned. I saw it how many dealers, independent dealers we have four hundred.
Mike Lessiter: One of the things I wanted to ask about you personally. You were born in ’77. What are some of your earliest memories and some pivotal moments that your father taught you, that you are using to run the company today?
Bernard Krone: “Be good at school,” he always said. You know, when I was in the first years in school, I was not so much in learning. You know, I enjoyed school, meeting friends, and playing on the schoolyard or maybe play after school or something like that. But he said, I remember that, “Please, Bernard. You also have to learn. Because otherwise, I don't need you in the future for running the business.” And, you know, that, sooner or later that reminds me also, okay, I have to learn something. And then at some, at some stage, I got to the turn and then I was… Later in school it was quite okay. So, I was never the best but I knew how to go through with some good values.
I remember that very early that I really enjoyed going into the factory. You know, I've grown up in Spelle next door to the company.
Mike Lessiter: Well, literally next door, right?
Bernard Krone: Yes. Literally next door. Um, I really enjoyed the, to go there, uh, talk to the employees, talk to the workers, go through the factory, play there at the weekend, driving a, a forklift truck or something like that. So that from a very early stage that was, I would say my favorite place to be, beside home.
Mike Lessiter: And your grandfather died before you were born.
Bernard Krone: Yes.
Mike Lessiter: I know it's different when your name is on a building like this, that it's very personal and, and I'm sure your dad and his dad before him were making sure that you live by certain values and core tenets, were there certain other things that he may have made sure that, uh, through repetition got into your head about what it means to be leading this company with the name on the back?
Bernard Krone: There were more or less four words he always said to me about leading a company like that. I'll first say it German, it was “Fleiss, ehrlichkeit, gesunder, menschénverstanod.” So, hard work, to be honest to everybody — to employees, suppliers, customers, of course. And just normal human thinking. Yeah, that was three things he told me, which are very important for leading such a company. Of course, you need a good school exam and then later on university diploma and everything, of course. That is, you know, entrance fee or something like that, how would you call it. But what really helps you to lead the company guided so to say was these three words, which were very important for him always.
Mike Lessiter: Now I'll ask you to... You prepared to enter the workforce. And you did, you went and did some things outside before you came back to the company?
Bernard Krone: Yes. After university, I was thinking what I should do and I decided to go to a consultant company for two years. And I worked as a consultant, we did all different types of project management. We did garbage trucks and one of our customers was a manufacturer of guns, for example. And, we did axles and we did many different machines and projects and I enjoyed that really much.
And then one day my father came and said, “Bernard, I need you, we need your help in Denmark today. I can say it, we had a quality issue there.” And he said, “Now it's a good time for you to step into the company and go there and you're not in the daily business of the whole group. You are in a small factory, you can make your own mistakes, do that.” And I said, “Hey, dad. I'm not sure if you can afford my daily wages. You know, my daily salary as a, as a consultant.” And he was not smiling, I can tell you, but, oh, it was funny. And, uh, yeah. I did that. Yeah.
Mike Lessiter: That was mentioned in the book, that you led the quality campaign...
Bernard Krone: Yes.
Mike Lessiter: Which then became a very big job in reorganized R&D and other things?
Bernard Krone: Quality was always in my... before I studied I was, I made the apprenticeship as a mechanic. So I worked three years as a mechanic. And, already there, quality was a big issue. I also worked in the quality department. When I started in our company, quality was from the very first day, one of the biggest issue I always had when I talked to our employees, to our engineers, to our suppliers, and to our own manufacturing people.
I said, when we have bad quality, there is not only one department or one worker or, I don't know, one people, I don't know how to say it, but there's not only one individual responsible for bad quality. And nobody can blame this guy or this department or whoever. When we have bad quality it's always the team. It's always engineering, assembling, purchasing, so the suppliers, everybody is involved. Yeah. And everybody has to take care about that, about it. And I had a feeling with that, nobody was afraid anymore to, to say, “Hey, here we have a problem. Here we have a challenge. Here is something we can, we have to talk about.” Yeah? Because everybody knew we don't blame anybody. We just want to make it better.
And that is something which was very important for me from the very first day. And, yeah, we still believe that we still want to have the highest technology for the best quality and for an affordable price. That is what we — every day — we work on that.
Mike Lessiter: So that time, that was on the back of some tremendous growth for the company, quality can often happen in that, you know, little sloppiness here and there… that's a fairly typical thing?
Bernard Krone: And there was, we figured out that, our suppliers delivered everything, they could deliver to all of the companies. Most of them deliver into different areas of agricultural equipment. We were very much, ourselves were very much concentrating on growth and assembling, we had not enough time to test the machines on the field. All these little things lead to another. Nobody of us, also, not our partners, our daughter companies, were really happy about it.
You know, we had good growth, we had good turnover. But, customers were complaining and that is something, you know… Of course, we are happy when we can grow, and we have a good turnover, and when profit is good and customers say that they are happy. But if not, that really drives us crazy and then makes us sad. So, we said, we have to do something, we were very honest to all our partners and to our customers. We said, “Okay, we have grown too fast, we had some problems, we had with some issues. Let's talk about it. Please tell us, what are the things you are not happy about. And, we assure you we’ll listen and we’ll solve it.”
And even when I came to some of our partners, they said, “Oh, Krone it's good that you are here, and we are so happy with your company and with your brand, and everything is all right.” I said, “Stop. You don't have to be too nice to me and I want you to be honest and very open and tell me..." Of course, I like to hear what is good about our company, but no lies. I want to hear what is not good about our company. Because then I have learned something. I can take it back to Spelle and tell our staff, “Hey, look at this or that little thing and maybe we can do something about it.” Yeah?
We do a lot of, so to say, investigation. We are not just, you know, listening and, and hear something and then do everything to solve it. Also, we do some investigation. Why do we have this problem? Why or what is it coming from? Yeah? And then when we find a way how to, how to solve it.
And I think that went very well in the last couple of years and I'm sure that that is also something customers like about Krone. We are not perfect, nobody is. We knew that. But when you have a problem you can be assured that you got help.
Mike Lessiter: Mm-hmm. So, that was your initial job, is to fix the quality situation. Tell us what happened after that and your path going back to Spelle.
Bernard Krone: Yeah. After that, I also went into the commercial vehicle business more and more. I was not so much focused anymore on one business. I took care about the whole group. Strategy was a very important issue. And, also, mergers and acquisition. We acquired Gigant Axle, which is quite famous in Europe for heavy axles for commercial vehicle and also for some areas in agriculture, maybe for tippers or something like that, agriculture tippers.
And, yeah, we also acquired a production partner of ours a couple of years ago, the Bloom Company. They made swap bodies and the refill trailer for us. So that business also belongs to us today, as a... We call it the Krone Commercial Vehicle Group. Yeah. They all have their own name. Gigant Axle is a broken company in Krone. They all belong to the Krone Commercial Vehicle group. They are owned by the Krone family and they all produce under the brand name Krone. So that is the only brand name. But outside of the factory the former family or brand names are still existing. So I believe that is very important, especially for the employees and for their identification with the company. So, that is something we won't rush in, in something new, so to say. That was strategy and in some ways was very important for me in the last years.
Mike Lessiter: When you were presented with the, that was the watch, the blacksmith watch?
Bernard Krone: Yes.
Mike Lessiter: Then that was a turning point for when you were running the company and your dad withdrew to a more of a consulting, tell us when that was and what that meant for you.
Bernard Krone: That was in 2010, I think, inn a big tent from Circus Krone, which is very famous in Europe. A very old and famous circus. We saw that it would be nice to, when we present our new forage harvester models, also, to add some personnel. And then, the year before I was officially more or less a 100% owner of the company, not 100% but, it was I think at that time it was 95% or something like that. So I was a majority owner of the company.
Everybody said, also my father said, it would be nice also to show that to the public. And we were thinking what would be a nice way to do that. And then we thought, the watch of Bernard, so to say, is a blacksmith. At that time, only wealthy people could afford a gold pocket watch. Our family was not wealthy so he bought a... Or his parents bought him a silver pocket watch. It was used. It was a used silver pocket watch. And then, somebody wrote in, “B. Krone Blacksmiths 1896.” Because that was a year when he got his master blacksmith’s diploma, so to say. Yeah, and when he opened his first blacksmith workshop it was a rented one in a town nearby. And, then he got this watch. Everybody thought it would be a nice way to show everybody that now, Bernard IV is in the role of leading the company. Also, to our partners and to our customers and to of course, to the employees. And that's the reason why I got that watch.
Mike Lessiter: So it's a very much a public anointing of your leadership. This is a new day for the company.
Bernard Krone: Yes. Actually, to be honest and just for your readers and viewers, I got the watch a couple of years earlier already. My father already thought to give me the watch when I came into the company. But it was broken, it was not working. So he had to repair and then that took a while. So he decided to give me the watch then later. But, you know, that was in the very private.
Mike Lessiter: It must have been a proud moment for both of you.
Bernard Krone: Yes.
Mike Lessiter: The fact that you were following a legend in the industry, someone who held that role for 50 years, that's a challenge by itself, isn't it?
Bernard Krone: Yes, it is. Yeah. But, I was never concerned really about it. Of course, everybody from the outside said, “Okay, it could be very tough for you, Bernard, to lead your father because he is such a strong character and he knows everybody and he knows everything.” And I said, “Yes, but I really have the feeling that he knows also from his time with his father that he has to step back and put me in the role to lead the company and to go my own way and also do my own mistakes.” Because there's, I'm sure there's no other way. We had our discussions and we were arguing and we were screaming.
And we were angry, but the next day we could talk again and say, okay... Sometimes he said, “Okay. You have to go away and we do it like you have said.” And sometimes there is a situation when my father made a suggestion. And he's like, “Hey, I have an idea. Let's do it this way or that way.” And I said, “Ah, I don't know. I think I have a better idea.” I don't know what I said. So he was a little bit disappointed.
But then in the evening I called him and he was together with some friends and my mother, he was at a restaurant. And I talked to him and I said, “Hey, dad, I have thought about it again, and maybe your idea is not bad. We will do it like that.” And that was it. He said, “Okay. Good. See you tomorrow.” And my mother called me the next day and said, “Hey, what have you said to your father?” I said, “Nothing. I just said that, that we will... He had a good idea and we will take his idea and we will do it that way.” She said, “He was in good shape, normal shape. But after that, he was in a good mood,” so what is the right word? Euphoric?
He was like crazy, they were drinking schnapps and beer. She said that was good. And then, that shows me that, even when you're talking and arguing and have different views, when you tell a man who is in the business for 50 years, hey, he has a good idea, we will do it like that. That showed me that is very important. So from time to time, he still have very good ideas, and he tells us, of course, about his ideas. And of course, from time to time, I tell him, yes, that really was a good idea, and it turned out to be a good idea or whatever. And I think he enjoyed that.
Mike Lessiter: How are you different and how are you alike, you and your father?
Bernard Krone: I think I'm a little bit more quiet and relaxed. Sometimes, my father is, when he gets information he directly grabs the phone and screaming and arguing. And I'm more, okay, I take the information, I do some investigation, and look if that is right what I heard. And then, of course, it has same consequences. But, yeah, I try to be a little bit more relaxed — not everything is a big disaster. We will find a way and let's have a look and, yeah. A little bit more patient, I would say. Maybe it will change in the future, I'm not sure, but so far so good.
Mike Lessiter: Tell us about Spelle and if a visitor came there, what they would see and feel and why you’ve concentrated everything right there at Spelle?
Bernard Krone: Spelle is a town in the southwest of the state of Lower Saxony, but in the Northwest of Germany. After the second World War, that was probably the poorest region in Germany, maybe in Europe. There were only a little bit agricultural, no industry or something like that, so a very poor region. Then after the Marshall Plan took place in Germany, you know, Germany grows again. We're growing again and developing.
But for the Emsland Region, it was not enough, so we got an additional Emsland plant, we cultivate land to make it better for farming and everything. Many people from the former, German territories in the east, they moved after the World War to that region and they got a farm and became farmers and worked there. And I would say because the region was so poor people always had to work a little bit harder to get something out of the ground or from their own work.
And that is maybe the reason why we still feel so comfortable in Spelle and in the Emsland Region, because people are still trying to work very hard. The productivity is quite high and they still have a very good knowledge about farm machinery. We have our roots there and, yes, the people are very much involved in that business and also with us as a family and as a company, they are really good and work quite hard. So, yes, we feel very much home in Spelle and I'm pretty happy that also my kids can grow up there. Hamburg, it's, it's just a 2 and ½ hour drive. That is for distances, compared in the U.S. it's close by. Next door neighbors.
Mike Lessiter: So when you take American dealers or some VIP customers over at Spelle and you walk them up to your operation, what do they see or what do they seem to be the most impressed with?
Bernard Krone: I think Germany is, in many areas, quite well organized. You know, we are always a little bit, maybe a little bit over the top, you know, sometimes a little bit too tidy and everything has to be correct and a little bit too correct, and maybe not a 100%, a 120%, but when you—
Mike Lessiter: Yeah. I'm married to a German so I know that, too.
Bernard Krone: So you know what I'm talking about. Now, but when you come to Spelle, you will find a little town with 10,000 people living there. Everything is quite well organized, tidy, everybody has his own house with a nice clean garden. Roads are very well maintained. You have walkways each side of the road, which are also quite well-maintained, some shops, and especially in Spelle some industry, our company and another company make ship engines or maintenance for ship engines.
And then we have a company for a concrete, concrete company probably the biggest in Europe for concrete. And everything is clean and tidy and well-maintained. And then you come to our company and also, I think, it is for us, it is very important that the impression of about our company is good. So everything has to be clean, no dirt everything has to be well-organized, standing in the right line and tidy. That was always very important for my father, he always said only in a clean factory you can produce high-quality products because that shows the employees but also the customers that you really care about what you're doing. So that is probably the impression you will have when you come to Spelle.
Mike Lessiter: And how large is the factory there and how many people and what kind of work?
Bernard Krone: Spelle is probably our largest factory with around 700,000 square meters of land. And around about 150,000 square meters under roof. We now bought additional 100,000 square meters for the future for parking our equipment and as a parking lot for our employees. We have around about 2,100 employees working in Spelle. Around 200 of them are apprentices and students. Around 100 or 120 are part-time workers. Yeah, the basic figures of the factory.
Mike Lessiter: One of the things that we were talking about last night is how your sister runs the dealer end of the business. A separate, separate company and that is called LVD. So the, the history of having had direct dealer experience coming up through the years must be helpful at the same time as a manufacturer.
Bernard Krone: We got immediately response. You know the business was for a very long time run by, by a cousin of my father, Valta Krone, and when a machine was not working right he immediately said to our people in the factory when there was a problem, “Here, you have to take care about this,” all that. No, but after that we were working as a blacksmith. Soon after that, a couple of years later we started to produce our own equipment, little things and we started to sell other equipment, especially tractors.
So, we have a long history with Lanz Bulldog, which is now John Deere in Manheim. We sold Hanomag tractors, which is now Komatsu construction equipment in Hanover, and we sold a lot of tractors. In the early days, they were thousands of tractors, which we sold from these brands, and then later on we also sold farm tractors and, I would say nearly since, I would say 50 years we sell, about 50 years we sell John Deere tractors. And, my sister is probably the biggest John Deere dealer in Europe.
Mike Lessiter: I'm not certain that here in America that it’s known that you also have very deep dealer roots as a company.
Bernard Krone: I think in Germany, some manufacturers started as dealers and then they developed their own equipment, but nobody is left who still have that dealership business or dealer business. I think Krone is pretty much the last one who's having that. But we also put that out of the Krone group. It is run by my sister, so we have no conflict of interest, and yeah, we still have grown the business in the last couple of years because now also Deutz dealership belongs to our group, so to say.
Mike Lessiter: Is your sister a good dealer for you?
Bernard Krone: A very good dealer, yeah. But, of course, she's not allowed to sell every product, like our forage harvesters. That's also the reason why we have another dealership in that area, which sells Deutz tractors and our own forage harvesters.
Mike Lessiter: You said that that company is the largest in Germany, largest John Deere dealership?
Bernard Krone: She has probably the largest John Deere dealership, yes, but it is probably not the largest dealer, the largest agricultural dealer. They are the co-ops. They have the biggest dealerships, but they work mainly for Claas and Fendt and these kind of companies.
Mike Lessiter: Your sister's name is Dorothee?
Bernard Krone: Dorothee, yes.
Mike Lessiter: Dorothee. Okay. So, that being different than a lot of manufacturers at least over here is that some companies understand manufacturing very well, but don't understand the dealer distribution side well. What do you think, perhaps you learned, your companies have learned because of that type of connection that might be different than someone who didn't have that?
Bernard Krone: I think some manufacturers today believe they can survive without dealers or without treating the dealers in a good way. I'm pretty sure that without dealers, we won't exist anymore, and we have to treat them well. We have to help them. We have to support them, and they have to earn money. They are family-owned businesses in many cases or in most cases in Germany. Nobody knows the customer better than them. They have very deep relationships with the customers.
They know who got married, who wants to invest into a new tractor and maybe who is going out of the business or whatever. They knew their customer bases very well, better than any manufacturer could ever work like or have that. Not even our own employees could get into such a deep relationship with our customers. So, selling via dealers is the best thing to do. Of course, there are regions in the world where we have to go our own way because of lack of good dealers, but to help the dealers and support the dealers is very important for us.
And for example, when it comes to warranty claims, we believe that giving the dealer a good hourly salary or hourly wage for what he's doing is very important. And in Europe, our company belongs to the, to the companies who has the highest hourly warranty support or the highest money we can give to the dealer. So, that is, is very important because at the end of the day, the dealer only can survive when they earn money and that is the reason why we treat them so well.
Mike Lessiter: Mm-hmm. You understand that 'cause that was part of your business for many years.
Bernard Krone: Yes. That's the reason. I think without our own dealership, we won't have the same knowledge about what is driving the dealer, what is concerning him, what is bringing him forward. So, that really helps us I would say, yes.
Mike Lessiter: You're the second German company that I've interviewed for this series, but the first that would have had to survive through the wartime era and I would like to get your perspective on what you understand those times were like and the production I imagine for the military and surviving on the other end.
Bernard Krone: I heard a lot of stories. You know, in our area, the Nazis was not as popular as for example, in the South of Germany or Eastern part of Germany, but of course, they were everywhere since 1933. Our family was not in the party, and there are stories about my great grandmother that she was not in favor of Adolph Hitler. That was also the reason why she got in trouble a little bit during these days. The Gestapos, okay, the secret police, the Gestapo came and asked my grandfather what her mother is doing, what she's telling and all these kinds of things.
But he said, “Listen, the old lady, I cannot control her.” And then they went away, but I would say, especially what makes me proud is that the prisoners of war from Poland and Russia, France, even from France were treated very well. In our, my father told me that they were all sitting together for lunch or dinner, treated properly. That was also the reason why many of these people from Poland and also from France, we had very good relationship until the late '60s, or '70s, until these people might die. So, my father told me that he visited these people many times in France and they visited us. So yeah. Very interesting stories. And that was also the reason why after — during, or after — immediately after the second World War, maybe he was put in charge by the British forces, my grandfather was a mayor of Spelle. He was, I think, put in charge from the forces because our prisoners of war told them that he's a good guy.
Nevertheless, it was a hard time, my father told me after the second World War, we started the production again. You know, during the war, the second World War we had to produce for, I think it was a plane engine factory in Bremen where we had to produce parts. You know, after, I think after 1939 or '40 or something like that, every manufacturing place had to produce some parts, which could be used in the war. And at Krone we had to produce parts for the plane factory in Bremen or something like that.
But immediately after the Second World War we tried to re-organize our manufacturing business and sales and everything. I remember a story, which my father told me that they went over the, you know, you couldn't buy anything for assembling or industry proposed or whatever. So they went to the Netherlands and they bought bearings. And they had to put it in the car, underneath the seat and there was smuggling, so that they had bearings for assembling machines. That is what I remember from stories, of course.
Mike Lessiter: But the factory was not hit?
Bernard Krone: No. No. There were not much fighting going on in Spelle. In a town close by, which is called the Rheine, the city of Rheine, they had a big train station. Because in that area was a big textile industry. So, there was a big train station and that was hit by bombs but in Spelle there was not big fighting. There were some, I'm pretty sure that it was U.S. military tanks came through Spelle and one was hit right at the intersection, close to our factory and they were shooting down the road and you still can see the, I call it bullet hole — shrapnel? In the wall of our restaurant, which is still the original wall from the old days, the old die wall and you still can see the little holes from that shooting.
Mike Lessiter: Mm-hmm. Wow.
Bernard Krone: That reminds me everyday when I’m sitting outside there, how important it is to be, you know, have good relations with your friends and then how important peace is and that is something you have to work on. It is not, you know, peace is not something which is just there. You have to live it.
Mike Lessiter: When you look at the work that your sister had put together here with the book, what are the stories that you're most proud of, or ones that you want to make sure that your children learn about the heritage of this company?
Bernard Krone: I'm very proud that my sister wrote the book. She's a journalist in Frankfurt and I think there was no doubt and it was the first book, the ‘Hundred Year’ book in 2005, that my sister should write the book that was clear. And, especially, the stories about some older guys, especially some friends and customers of my father where he had long relationships with. I know some of these people from my very young days. Also, our kids, my kids can read it and, and learn from it. I’m really happy about that.
Mike Lessiter: Mm-hmm. What will you say today to the team that you've assembled here?
Bernard Krone: Yeah. At the moment, we have a little bit challenging time I would say. You know the last couple of years, we had quite some good growth, but since last year, the sales are going down in the North American market. So, for me it is very important to tell the team that we can see after some good years, we have some bad years and we have to focus on our strengths and what has made us strong in the past.
And then if we focus on our customers and drive forward what we have in our own hands, what we can control about, then I'm pretty sure that we also see better days again. That is for me very important that our staff here, our team sees that the Krone team and the Spelle, the owners, shareholders, is right beside them and we all stick together. That is very important.
Mike Lessiter: Mm-hmm. Will we expect to see some new product developments coming over here to the North American market in the next couple of years?
Bernard Krone: Yes, of course, you will see products, new products coming every year. Sometimes they are only new options, which we add to existing machines and sometimes, they are new releases, new generations. Of course, when it comes to the whole development issue, we have to focus on which way the whole industry is going the next years. You know, all these data systems, GPS driving, independent driving. Driverless technology. That is all an issue, where we have to think, if in a couple of years you still need a tractor. Because at the end of the day, the tractor cost money and the machine behind earns money. So that is what we want to focus on. And that is important for the future. So, that, in this direction, all these new technologies, but we don't forget about the hardware, that is what is in our focus in the next couple of years.
Mike Lessiter: Darren and I were talking about family businesses that transition with passing generations. And how there can be a temptation to sell or go public, particularly as successor generations get involved. Now in 4th generation, what is your view of family ownership?
Bernard Krone: That is something which was always very important for my father, that we keep the business in our own hands. We never wanted to go public and for my father it was always important also that there is only one successor in the family. You know, my sister got a business, the dealership business, and I'm not involved anymore in the dealership. My oldest sister, Nicola, is not involved in the company. She is a journalist in Frankfurt and lives with the kids and her husband there.
And, so, the Krone group itself was a commercial vehicle and the trailer business. Sorry, the Agri business is totally in my hands and a little share still in the hand of my father. So, there's always only one successor and one leader of the company and also one owner. That was always very important, and we always found good ways to refinance the company and we have very good relationships with our banks and with our finance partners. We have Asset-Backed Commercial Paper program and all these kinds of things, which really helps us to refinance the business. Yeah.
Mike Lessiter: Yeah. That’s an interesting observation that you shared there because I was talking with the director of the Farm Equipment Manufacturers Association here, and talking about the history a lot of those short-line companies, and he said often the companies were formed right after World War II, and there was often just one of the children was involved. When you had more than one, that didn’t make it to the fourth, third and fourth generation. So, I see the wisdom in what...
Bernard Krone: Yeah. It could work, of course. There are good examples also in our industry that it could work, but in many areas, you see that brothers or sisters could work quite good together, but then when you get cousins or great cousins or something like that, sometimes they are not so much, not so close family members anymore and then it rashed.
Mike Lessiter: Yeah. I think we got it.
Bernard Krone: Thank you very much. I really enjoyed it. I hope you can understand my bad English. I learned it in Ireland, you know.