In this interview, Mike Lessiter, Editor/Publisher of Farm Equipment, sits down with Lars Paulsson from Laforge Systems, the North American presence of the company that he cofounded in 1991 with Laforge owner and inventor Hubert DeFrancq of France. The two go way back, and jokes abound, but so does insight on the company that supplies the hitches you see on the fronts of tractors today.
Throughout the below interview — which manifests as part comedy special and part intervention — Paulsson shares his knowledge on many subjects, but rest assured: some of them include tractors and farm machinery business.
Mike Lessiter: You two were hard to find. You guys don't have a lot of history out on the company on the web.
Lars Paulsson: No?
Mike Lessiter: No. Not like some other ones that I've done where it's been—
Lars Paulsson: Right, I mean—
Mike Lessiter: Is that by design or...?
Lars Paulsson: Maybe some, but we're also not as visible as some of the other ones. So I'm humbled that you include me in this group.
Mike Lessiter: You were doing a Midwest around this week, right? Or last week?
Lars Paulsson: Last week, I was. I have to go home sometimes to business, so I can pay my advertising buddy.
Mike Lessiter: You gotta work harder, Lars.
Lars Paulsson: Yeah (laughs). Yeah.
Darren Foster: I think we're pretty good. We're good here.
Lars Paulsson: So are you actually shooting video?
Darren Foster: Yeah.
Mike Lessiter: Some... someday, you know, the podcast is Phase 1, so that's what we're… the near-term thing is, but we're collecting videos this whole time is because I have a dream of making a documentary, a series of some sort on small business and farming, farm equipment. So we're collecting all the video right now so that we have it someday.
Lars Paulsson: So that's for when you retire?
Mike Lessiter: Well, I hope it's before then.
Lars Paulsson: Before then. Before I forget, thanks to your father for sending the book. It's nice. Very, very pretty.
Mike Lessiter: We're proud of him.
Lars Paulsson: Yeah. It's... special guy.
Mike Lessiter: Yeah, yeah. We got to find something else for him to do now, so he isn't in my office complaining about things all the time (laughs).
Lars Paulsson: That's hilarious (laughs).
Mike Lessiter: Yeah, you need a curmudgeon to come out and do any research in California for a minute?
Lars Paulsson: (laughs) Not really, not really.
Mike Lessiter: Well, I do want... I do want this one to be fun. We've had fun with each other, so— let's have some laughs. Let's... well, I have anyway. We can interrupt each other. You can tell some stories. You can tell your dirty jokes, and the really bad ones I'll clean up.
Lars Paulsson: Okay. I will try to behave.
Mike Lessiter: So, first question, Lars, and this one is about as easy as they come here; but tell us about what Laforge is, and when someone asks you, what do you do?
Lars Paulsson: Well, first of all, like I said when you brought this up, the guy is Hubert Defrangq, so Willy founded Laforge as we know it today. At one time, there was a Mr. Laforge, who started a company, a farmer, who got himself into sugar beet harvesting equipment in 1972, so that's the official founding of the company in Europe.
That was Mr. Laforge, Maurice Laforge, yeah. 1984, Hubert took over, and that's when they started concentrating on the front-hitch concept. And now, if you say what do we consider ourselves, we are tractor implement interface specialists, so... and anything, how you hook a piece of equipment up to a tractor, generally fully mounted. We don't deal much with pull-type, but front hitches fit into that and our guided hitch systems that we have for implement guidance. Both have to do with how do the tractor and implement interact with each other and how do you get them to behave the way you want as an operator. So that's what we do.
Mike Lessiter: Very niche.
Lars Paulsson: Very niche, very niche. That also somehow affects how we market ourselves. Nobody will buy any of our stuff just for the heck of it. You have to have an implement, and you have to have a tractor, and we make neither one; so we kind of follow around trends in... in farming, whether it's a need to combine front and rear implements. There is a need for front hitch, and that's really driven by farming practices, and we can advertise until you're blue in the face. It’s really hard to educate farmers, from our point of view. We are not big enough, you know. The big guys, there are John Deere, Case and New Holland. They can do that to some extent, but for a company our size, it's very hard.
Mike Lessiter: We should try out that blue in the face thing one of these days.
Lars Paulsson: We've been practicing for the last 15 years.
Mike Lessiter: Tell me about the history of the front hitch technology.
Lars Paulsson: Great. So it's something that really started in Europe more than 50 years ago. When I was in college back in Europe, it existed, and the first guys really got into it would be Fendt and Deutz in Germany. They, in Germany... I’m sure Germans that are listening to this are going to complain about how I look at Germany. But there is a lot of farms that are in town, and they have a few cows in town, and then they have the fields several kilometers out; and they do green feeds. They go out and cut some green grass every day and drag it back to town to feed the cows. So, they come up with this idea of putting mower on the front of a tractor and the self-loading wagon on the back, and the guy can just go out and mow and load up the wagon and take it home in one pass. And those guys, they made a tractor, they made a wagon, they made a mower, so they could do a turnkey project.
Mike Lessiter: I want to ask you about your path.
Lars Paulsson: Okay. So, like I say, I did not... I was not on the ride from the beginning with Laforge, so Hubert really got into the front hitch business, and I ran into Hubert in 1988 at the SIMA show in Paris; and he was showing—
Mike Lessiter: Because you didn't want to hang with the pack anymore, is the story I heard.
Lars Paulsson: (laughs) I was practicing my French, I guess, and wandered off and ran into him. He had a display there with a front hitch and front plow and stuff, and so I started thinking. I was in the business importing stuff back then, so why isn't anybody doing this in the U.S.? I didn't see really anybody doing front and rear combinations. Couple of guys made things that were not really... the three-point is Harry Ferguson's idea from 1926, that you can do more with a smaller tractor if you used implement to get some traction, and it is a true interface that can understand the next categories here, one, two, three, four. That everybody is supposed to know, it doesn't matter who makes the tractor or who makes the implement; it's a pretty slick working system; it's well standardized. And what the guys were doing here, like Orthman was probably one of the most prominent one. They had their out of beans. They had it mounted on the front on something that was a little bit like a three-pointer. It had three links, like a three-point fast, but it was not done to Harry Ferguson's idea for meeting standards; but it was three points, and if you welded it together with something else that had the same three points, you could use that for things.
So that was probably the biggest niche that I saw where it was used, and you actually did something on the front. And then out in California, you had bedders, where they're bedded up for the vegetables; they were front mounted, but they used different, what we call, training arms, which are more like loader contraption things. But nobody was doing two, three points, so I thought that would be a niche we could really get into.
Then starting talk to Hubert, and he says, well, he really wanted to expand into the U.S. markets, and he had already contacts with John Deere, was in the process of becoming an allied supplier for John Deere. I think by then he already had or was about to get approval from John Deere for U.S. made tractors sold outside North America. So what he wanted to get in, North America was excluded from that agreement, so having an importer, so that's kind of how I viewed it from the beginning, was an importer. So we had it in 1989 at the, was then, California Farm Show in Tulare. It was the first time we showed, and I sold two right out of the show. It was just… looks like promising.
But then Hubert wanted to actually have dedicated entity in North America, and we came to an agreement, starting that up together. We went... started our business first of January 1991. That's been paying our bills ever since, even to Lessiter.
Mike Lessiter: (laughs) Appreciate that, Lars. Gonna have to get that... we're going to have to record my child's hand surgery on here, why he didn't get anesthesia, at some point in here.
Lars Paulsson: (laughs) Yeah.
Mike Lessiter: So this happened really pretty fast. You met—
Lars Paulsson: Yeah, yeah. I met him in '88, and by Jan. 1, 1991, we were up and running.
Mike Lessiter: What were you importing at that time?
Lars Paulsson: I had a little company that imported specialty equipment, precision seeders for, you know, seeding carrots and onions and broccoli and that kind of stuff. We did nomadic fertilizer applicators for dry fertilizer, and we actually for a little while did a tractor. The company isn't in business anymore. I don't think that has anything to do with what we did, but was a tractor basically set up as a road grader, so you could have implement in front of the operator cabin; you could have [on the front axle, and you could have it on the rear. That's three.
So just little specialty stuff that we tried to avoid compete with the big guys. Well, then, my biggest competitors were guys like Solex and Gearmere, and well, I was working with Gearmere a little bit. So but, yeah, it was because we were doing what the front agents could fit in that. Started up in the Case dealer in Salinas, sold about 50 units in two or three years. This fellow, we said, “Oh, yeah.” And what were happening is they were doing varied drip tape for drip irrigation, and they do pretty much continuous cultivation, so if you destroy the old crop on the front and you build a bed backup on the back in one pass, you're pretty sure it'll be ripe for the drip tape once in the first place. So we sold a bunch of those. That's a good example. I don't think that came about because of our hitch, and because they needed our reach to do what they were doing.
Mike Lessiter: You were there to respond to an application, all right?
Lars Paulsson: Yeah. And the thing, like I said, they had been bedding up on the front before, but they didn't use a three point, so they had a bedder tractor, and it was build on there as a bedder; and I couldn't do anything else for that tractor all year long. Build it with a three point is when you're done with what you're doing, you park your implement, and you go do something else with it. Or nothing, just for carrying weights on the front.
The next kind of wave that we came into full application was triple mowers. Are they... that came like late 1990s, early 2000s, and so we... I think Krohn was the first that was interested in working with us. We did some trade shows with them, and we had their mower on our reach. Krohn came along, and he got Claas, J.F., and Feller. They are all now the majors, all offering that concept, so they needed a hitch.
Mike Lessiter: I want to back up to some history on you as well. Tell me about growing up in Sweden, what life was like on the farm and what you dreamt of doing back in the day.
Lars Paulsson: (laughs) So I grew up on a puny, little farm, less than 50 acres. Probably 40-something. We had ten milking cows, kept all the bulls, and ten to a dozen chicken, a couple of sows, a dog most of the time, and we'd grow two acres of sugar beets, five acres of potatoes, because we'd do processing potatoes for starch and for Lapshinit Company. And then, sugar beets, we had a one row sugar beet harvester, I would say, in 1960. We were probably the only one who mechanical harvested around. It was original built for horses. My dad converted it, so he could pull everything. It was a miserable thing, but harvesting sugar beets is really a miserable job. Pull them out of the ground, put them... however you put them on the row, and then you have a woman come and knock them off and put them in a pile, and then you drive home with the truck, and you have to load the truck by hand. That is a lot of work. That's not what I wanted to do for the rest of my life. But you know, I like farming, and I like tractors better than cows, so I got myself a degree in ag mechanization, and—
Mike Lessiter: And what did you think you would do with that pursuit?
Lars Paulsson: My thinking was, back then, I was tired of growing potatoes and sugar beets and that kind of stuff, so I was looking at getting out, traveling the world, maybe work for FAO or something or grow bananas and coconuts, that kind of stuff.
Mike Lessiter: Tell us how you ended up in the United States.
Lars Paulsson: So I ended up in the United States as a sales support engineer for a planter manufacturer, a Swedish planter manufacturer, and an importer of Gearmore so I was kind of assigned to Gearmore to help them get that going. I mean, the planter was kind of interesting in that prior to that, I lived in France, and I was running a forest tree nursery together with a person, who luckily knew something about trees, because I didn't know anything about trees. But I worked on this planter that was relatively flexible to make seed things, like spruce and pine and the small, small tree seeds, so there were no... nothing like that in the manual for how do you seed this stuff to result for cabbage and broccoli, and so I figured out how to make that thing work.
And then, I was living there, in France. It was a good life. Southern France, I recommend it for visit and living. Good food, good wine, nice people. And that was kind of a project on, I think it was a two year project, to set up the forestry nursery. So when that went up, some guys from Delaval Corporation in Sweden called me, because I'm originally a Swede, and said, “Hey, you got the engineering degree, and you speak half a dozen languages.” Because they were... their main markets were U.K., Ireland, Holland, Germany, and France, and I speak all those languages, so they say, “Hey, why don't you come over here and work for us?”
So I went to work for them outside Stockholm, working in the office and traveling from one daughter company to the other and never saw any farmers or any cows really. Just running around to meetings and writing reports and stuff, and that's not really my style, so saw a little ad for somebody looking for a sales support engineer at a planter I already knew from, so that's how I got that job. And California sounded like a nice place to live, and Stockholm, we had snow up to the windows and scratching the windshield every morning, battery dead and shit in the morning. California, you don't have that, so that's where I went.
Mike Lessiter: Where you married at that point?
Lars Paulsson: I was married at that time. Still with my starter wife.
Mike Lessiter: (laughs) You did well for yourself, I gotta tell you that.
Lars Paulsson: (laughs) You think so?
Mike Lessiter: Yes.
Lars Paulsson: Yeah, I met here in college in Holland, so we had been together for a long time. Long, long time. So they say being married is like having cable TV with just one channel.
Mike Lessiter: (laughs) You're lucky to get that channel, Lars, I'll tell you (laughs). And by the way, you got to give me more dirty jokes to tell my wife, because she's familiar with the Lars collection (laughs).
Lars Paulsson: Oh, man.
Mike Lessiter: Tell me about growing up in Sweden, what life was like on the farm and what you dreamt of doing back in the day.
Lars Paulsson: (laughs) So I grew up on a puny, little farm, less than 50 acres. Probably 40-something. We had ten milking cows, kept all the bulls, and ten to a dozen chicken, a couple of sows, a dog most of the time, and we'd grow two acres of sugar beets, five acres of potatoes, because we'd do processing potatoes for starch and for Lapshinit Company. And then, sugar beets, we had a one row sugar beet harvester, I would say, in 1960. We were probably the only one who mechanical harvested around. It was original built for horses. My dad converted it, so he could pull everything. It was a miserable thing, but harvesting sugar beets is really a miserable job. Pull them out of the ground, put them... however you put them on the row, and then you have a woman come and knock them off and put them in a pile, and then you drive home with the truck, and you have to load the truck by hand. That is a lot of work. That's not what I wanted to do for the rest of my life. But you know, I like farming, and I like tractors better than cows, so I got myself a degree in ag mechanization, and—
Mike Lessiter: And what did you think you would do with that pursuit?
Lars Paulsson: My thinking was, back then, I was tired of growing potatoes and sugar beets and that kind of stuff, so I was looking at getting out, traveling the world, maybe work for FAO or something or grow bananas and coconuts, that kind of stuff.
Mike Lessiter: We'll talk about Hubert, and you've introduced me to him before…
Lars Paulsson: Have you ever met him?
Mike Lessiter: We had dinner in Jacksonville a few years ago if you remember. Tell me about his story and how he got into Laforge, and some of how he got to where he is.
Lars Paulsson: He's a more interesting individual than I am, very similar background. From a small farm in the southern part of France, and he came up with this idea that you could have a plow on the front of a tractor as a teenager; and he did prototypes by backing up with his dad's tractor. He tells me he backed up for hours and hours and hours before he figured out how to do that, because if you have a mobile plow front or rear, you probably don't figure out a way to do it not in furrow. You know what I'm talking about when I say in furrow? And pretty much everyone in Europe plows in furrow. So you put one set of wheels in the old furrow, and if you have a front in the rear plow, then you put the gauge wheel of the front plow in the old furrow; and you drive the tractor in the furrow that the last moldboard is making on the front. So it becomes an in furrow plowing setup, except the front plow is actually kind of on land.
And they have, you do flip plows or reversible plows, so when you turn around, the front plow has to... from being here, it only has to flip over. It has to be there when you go the other way, so it takes a little mechanism to make that happen and happen without getting screwed up every time. So he got a patent on that, when I think he was 16 years old, he got a patent on that front plow. And that's kind of part of his folder of patents that he has. He has quite a few patents, and so then he pedaled that patent to some plow manufacturers in Europe, and I think there is probably three or four left that still make from that plows. For a while, every time they sold a plow, there was a little check going to Hubert.
Mike Lessiter: So he had came up at this invention and sold the manufacturing and distribution rights to another?
Lars Paulsson: Yeah, for the plow, he did. That made him interested in front-mounting stuff in general by some kind of coincidence. He ended up doing a project during his study time at the factory, at the Laforge factory, and Mr. Laforge had to offer him a technician to help him to weld and do things. He was doing automatical sampling for sugar and sugar beets, because the way they take samples is usually at the sugar factory, and they take that in the corner of the load, and that's not really a representative sample for all field, so he had this idea… And eventually, they got in a discussion... most people do in France, and Mr. Laforge told him, “If you think you can run this company better than I can, why don't you come and do it?” And he started working there, and eventually became the owner.
So and then, the way the sugar beet equipment worked that he mounted the defoliator for the sugar beets on the front of the tractor and had a digger on the back. He needed some kind of a three point hitch on the front. So, the first Laforge hitch was built in 1979. We're coming up on 50 years of operation. And it was a little different from the Germans, the Deutz and the Fendt guys.
A mower is really the nicest thing you can carry around out in the field. It usually sits on springs and is just floating out there, as opposed to a sugar beet defoliator that rattles and shakes, and so you need a starter hitch, not to speak about, if you're going to plow with it. You need a stouter hitch, and we run into that all the time, even now. We get situations, say “How much can it lift?” Well, if you sit in the yard and stand still, you can lift all kinds of stuff, but do you actually want to push something? That's when you need some beef in your stuff, so that's kind of where Laforge has prided itself over the years, that we build stout stuff that lasts. And probably also why we have been relatively successful in North America in that we are a little tougher on equipment here than Europeans are. Some of it has to do with the quality of the drivers and a lot of owner operators in Europe.
Mike Lessiter: What year did Hubert buy Laforge?
Lars Paulsson: I would say it was '84.
Mike Lessiter: But you have three facilities in the United States, correct?
Lars Paulsson: Sure. So we started out in California, because that pays the bills. That's where I was at by the time when my import business that I had before... so it really started out as a Laforge Systems, Inc., which is the North American company. It started out as a one-man operation, me unloading trucks and loading trucks and demonstrating and driving around doing stuff, and then I got my family involved in it. Kids started getting a little older, so... I have two certified forklift drivers that put that one their college applications.
And business started in the '90s to become more spread out. In the very beginning, we were just on the west coast. Especially snow removal made that happen. It made sense to have a snow blower on the front as opposed to backup. A lot of people get tired of backing up with snow blowers. And we also got into business on the east coast, especially crops and New England and the Southeast.
So the French were thinking about getting something more central for distribution point of view, and we really didn't want to start building a factory from scratch. Looking to buy a company somewhere in the Midwest that was already up and running and doing bending and welding like we do and machining, but we didn't really want to get into equipment manufacturing, because it makes you a competitor of whoever. That's one reason why we didn't go with importers and distributors. They tend to be carrying a line of hay equipment. Well, then you become a competitor of all the other hay equipment manufacturers, because you are seen as part of their business.
So we find this company called Bruns Machine... Bruns Machine in Cedar Falls, Iowa, and on the map from France, looking at it, it looks to be nice, in the middle of the country. All our three point systems are based at the factory in France. We take them in by ocean containers. The quickest way and the smoothest way to get them to Iowa is through Halifax, Nova Scotia, take a train from there to Chicago, and then a truck from Chicago out to Iowa. That's part of why I have gray hairs, the transport challenge, just being located where we are, but you know, it's nice to have a facility in North America with a factory backup. So we moved our warehouse over there, our warehouse facility, and people there to take care of shipping and receiving. And our Dynatrac classic guided hitch systems are made there, and that is a North American product where the volume is really here. Makes sense.
Mike Lessiter: Is there a third location?
Lars Paulsson: In Iowa, technically, there are two.So we... we bought a company. Bruns Machine is located in Cedar Falls, and we needed to expand somehow, and it turns out it was more advantageous to build a brand new factory; so we did that, and that happens to be in Waterloo. As far as the Waterloo and Cedar Falls operations go, there are kind of one. It's kind of like having two buildings in the yard, so you know, some stuff is made... main of the CNC machines are in Waterloo facility so it definitely needs to be... run through that, goes there. But it's really the Bruns Machine and Waterloo are operating as one. You can get a lot of front hitches in a container. But then, you know, the factory in Waterloo is really kind of a miniature copy of what we have in France, so we can make everything we do in France, we could make here. And then of course, we have a factory in France making our two distinct, separate operations in France.
Mike Lessiter: Is there something technically challenging about the front hitches that you chose to bring them in from France rather than make them here, or is it—
Lars Paulsson: No, it's the sales volume. It is infinitely higher in Europe, there are take rates in some areas that are like 50%. Half of tractor sale in front hitch in Europe. In U.S., it's like single digits, so and like I said, since transport is not the issue, just build all farm equipment. Shipping costs are not really a big issue. Basically, this thing you can get volume; you can get significant cost advantages.
Mike Lessiter: What are the manufacturing operations that we would see in Waterloo?
Lars Paulsson: Get plates in tubes, cut and weld, machine assemble and paint, or paint and assemble, depending on the product.
Mike Lessiter: You're kind of a frequent recipient of the AE50 awards, correct?
Lars Paulsson: We've racked up something like nine now total, all the years. We also tend to get awards in Europe that are... I think awards are more valued by customers in Europe than here. There's the AA50 award. It gets some peer recognition, getting awards.
Mike Lessiter: When you look back at the product innovations that have come out in your time, going back to 1991, what are you most proud of?
Lars Paulsson: What I'm most excited about right now is our DynaTrac setup. That is something that makes so much sense, and you don't really have to change the management style on the farm. The problem we had with front hitches is that you have to find two things that you can do at the same time, at the same speed, and the same width, farmers don't think like that. You know, we do this, and then we do that, and this is faster way to do this and that.
But the precision positioning of seeds and nutrients in depth and distance between in all directions, that makes a lot of sense, and farmers spend a lot of money on getting auto-steer on the tractor. They get the RTK and you get subinch accuracy on the tractor. Well, it's nice to know where your tractor's at. But if you can be subinch, there's little things that the tractor does that easily move your implement off way more than an inch. There's little things people don't think about. You're on a side hill, and the tractor will grab like this, the implement's going to be even further off. Or on the side hill, your lower wheel is going to be compressed more than your up side wheel. Well, then tractor is no longer parallel with the ground, so all... if we're going with these kind of accuracies, what is unique with what we do that nobody else does is that we couple the implement free from the tractor. The tractor calculates the ideal guidance line, and then we make sure that the tractor is not pushing the implement somewhere, and the implement isn't pushing the tractor somewhere.
And especially now with the three point mounted systems, you get an intelligent quick coupler on the back, and it can move in all directions, and what is moving it is the implement. It doesn't move the tractor. It moves the quick coupler. The interface between tractor, it moves that so you stay. The implement is actually going to be more accurate than the tractor by doing that, and it's something you can use in almost all crops. Especially if you use GPS as your signal and you record, then you know exactly where the seeds are when you put them in the ground, and you can go in and cultivate before the plants come up. Or in going along with your dad, with things like strip-till, then you can strip-till in the fall and put in your own nutrients; you'd know exactly where your rows are. You put your seeds, your seeds an inch off, you put them on the inch off; you know where they're at. That is something that's exciting.
Mike Lessiter: How did that development and invention come to be?
Lars Paulsson: That comes really from Hubert and the design of the front hitch system, where you also have to know what is right. If you do this on the front, what is the tractor going to do? If you have something on the front that doesn't have like a wide tube and some of the shanks go down a little deeper, then that's where the tractor's going to go. And you can fight it with your steering all you want, but that's what will happen. So you get an intricate knowledge base of exactly how the behavior of the tractor influenced the implement and the implement influences the tractor, and you see as if you didn't tow it by hand or by the rear, you have to figure out a way to couple and uncouple them both this way and that way and this way. And well, he came up with a little, nice patent.
Mike Lessiter: What are the best application for that that you see here in North America? Who's buying them?
Lars Paulsson: A simplified version of that is what we call a DynaTrac classic, which works on tow-behind implement, where you don't need to worry about this so much, but you steer the implement with a tongue rather than trying to steer the wheels. If you steer the wheels with the implement, you have to shove the shanks that are in the ground sideways somehow, so you're fighting that all the time. If you steer with your tongue, it'll follow you like a wagon, and that's taken off with corn and soybeans, even in Wisconsin. Right now probably the leading state is Nebraska, for some reason. We have sold some in Wisconsin too, so basically in this corn-belt: Iowa, Minnesota, Illinois, Ohio.
Mike Lessiter: You've been working with us and with who we are to the Precision Farming Dealer Summit, and come to the National Strip-Till Conference.
Lars Paulsson: Sure. This is right up there. It's exactly what it's intended for. And getting back to this, about me being alone, we hired Kyle Frazer. Really good guy who's kind of taking care of the eastern part of the country now. He lives in Illinois, and he used to work for Orthman. Came highly recommended and hasn't disappointed us, and he has taken the guided hitch setup kind of under his wings. That's his shtick.
Mike Lessiter: What's a little known fact about Laforge? What would people, our readers or our listeners, be surprised to know about your company?
Lars Paulsson: I think maybe that there are actually French engineers. It's not just cheese and wine. There are actually some guys with brains. I think we see that quite often, that people are surprised. I say that, and I'm not even French.
Mike Lessiter: What's the size and scope of the operation over in France?
Lars Paulsson: It's bigger than it is here, but it's definitely considered a small company. Now in the little niche of front hitches, we are relatively big. But in Europe, we have 20 competitors.
Mike Lessiter: Wow. So, 20 competitors overseas, but only a few here in the states?
Lars Paulsson: Three points on the implement are standardized, so everybody knows what a Category 2 and a Category 3 three point is, but on the tractor side, it's all different. I think we have something like 20 different just for John Deere or 8 series tractors, depending do you have suspended ax or non-suspended axle? Do you have the Tier 4 engine, the interim Tier 4 engine or a Tier 3 engine? It makes all the differences, so if that's not your core business, there is no way a sales guy can stay on top of that, and if you don't discover it, then the guy will spend 15 hours in the shop trying to install it.
Mike Lessiter: What you just described there, 20 different configurations for a single tractor, and thinking about what you do and your very lean operation, I think it'd be fair that you say Laforge in the U.S., and everyone thinks of you, right?
Lars Paulsson: I've done this now for 30 years, so people recognize my accent over the phone, and they know.
Mike Lessiter: Plus, you have an attractive wife that you bring to the farm shows who–
Lars Paulsson: Oh, is that why (laughs)—
Mike Lessiter: You work to death in the mud fields in Wisconsin.
Lars Paulsson: Yeah, there's a picture of that (laughs).
Mike Lessiter: But how did you handle that, bringing a new product into the States, having multiple configurations? You have sort of thousand different dealers?
Lars Paulsson: I think we have 1,100 open accounts with the help. We are an allied supplier for John Deere, we do the other major guys also, but we don't do Chinese tractors and compact tractors and that kind of stuff. But one reason why we don't use importers, for instance, importers and distributors, because it's extremely challenging to keep the right stuff in inventory and the factory has a month lead time, and then there is a lead time, over a month, to ship an ocean container across, so you have to see that far ahead in your forecasting. Getting the right stuff in inventory is very challenging, and you hate paying freight for these things that are two-three thousand pounds a piece. So there is no reason to have importers, because having one big inventory or one inventory is challenging enough.
We decided to do it full run. There were some bad apples out there, but if you have a specialized product, the guy knows that he will eventually need a spare part. If he didn't pay his bill the first time, he's not going to get any parts, so I will say... I don't usually worry about that stuff. If they are, we look them up on the internet, and we see what the building looks like in the picture. Then I say, “If you don't pay your bills, I come and visit you.” And yeah, extremely few non-payers over the years. I think I've lost like 2,500 bucks total in 30 years.
Mike Lessiter: Oh, yeah? Doing well.
Lars Paulsson: Yeah, that side I'm proud of.
Mike Lessiter: Let's say you take a dealer call. How many configurations can you personally walk a dealer through?
Lars Paulsson: Well, so dealer calls and he wants a hitch, what he's used to is a rear hitch. All they worry about on the back is how much can if lift, because it has to be some really strange thing if you're going to drive away with a tractor and a hitch still stuck on the implement back there. That's not going to happen, and lifting, that's a challenge. On the front, you know, there's not that deal. The meanest thing you can put on the front is dozen blade weight. Has no give in it. Guys push silage. Yeah, a typical Wisconsin guy, yeah, I guess we want to push some silage, and then new light hitch. Oh, and it only weighs 1,500 pounds, except I don't make anything that lifts less than 6,600, so the lifting is not the thing. The thing is you push silage, and then you back down, and you happen to catch the corner of the blade out on the concrete wall. There goes the hitch, if not the tractor.
That's the kind of stuff, so when the dealer calls, first thing: “what is he going to do with it?” And you're surprised how many dealers have no idea… “Oh, he just want a hitch. It's all.” That somewhere in the picture he wants a hitch. So most tractors, we have like three hitches: a good, a better and a best. The guy who also drives a Cadillac than Chevy, he should get the best one. They both do about the same thing, but he's never going to come back and complain. And we probably end up about at least 50% doing the middle one, especially on the mowing side, and we have most tractors. It can fold up. If those guys have a loader, you fold it up, and you're driving three loader. So yeah, I mean, there's thousands of different combinations you can come up if you see how many tractor models are there.
Mike Lessiter: Most of our listeners or readers here are going to be North American. You have a global perspective that you bring to this, of course. What do you think the ag market in Europe and the ag market in Unites States doesn't know or recognize about the other?
Lars Paulsson: There is a misconception on both sides for how subsidies work, and I am not a specialist on either one, European or American to understand exactly how it works, but I know that farmers are protected in a way that no other group of people are, on both sides, in one way or another; and I think it's exaggerated somewhat how much subsidies American farmers think Europeans get and vice versa actually. There are some things like trade barriers that come up all the time. For a while, there was a serious discussion about... in Europe, they have this C marking of equipment if it is approved, and you are... it's up to you. You self-audit. You put that sticker on there, and you are not going to be able to sell your equipment if your bolts and nuts were not metric. I think they kind of stepped away from that, but those are little things that... Europeans do not like American meat that is hormone treated. They do not allow that, and that is an issue of some discussion. Roundup is another one that comes around.
Mike Lessiter: What would be one of the things, something that you have to remind Hubert on, the things that he may be wanting to do or is frustrated about here in the United States, and you have to say, “Hold on a second, Hubert. This is the North American market. This is what you need to understand.” What would some of those things be?
Lars Paulsson: One that sticks out is how much we spend on advertising.
Mike Lessiter: (laughs) You mean so little that you spend? Is that what you said?
Lars Paulsson: (laughs) Right. I wish. You wish. Well, I mean, Hubert is not really a good representative, he comes here almost five-six times a year, especially now since he has to watch the Iowa operations, so he goes to Iowa all the time, and so I don't really have to remind him all that much, but something that is different, in general, he is... especially on the west coast, how many hours we spend on equipment a year. That is way different from what they do in Europe, and if you take the Midwest, you have the width of equipment that is way different than what they do in Europe, which was an argument for us on the front three point thing. Okay, there are only three ways you can be more efficient with a tractor: you can go faster, you can go wider, or you can try to do more than one thing at the same time, and you can only go so fast. The life expectancy of a shank in a ground goes down by 50% for every mile an hour that you increase your speed. Plus, your accuracy tends to suffer from that, and you can... even here, you can only be so wide. Eventually, your stuff gets so heavy... you can fold it up, but then when the folding up gets so heavy, it gets out of sight and expensive. So the combining passes we thought would be a bright idea but still after 30 years, hasn't really taken off. There's special things they do with the front hitches that are not really the cutting down on passes.
One sector that I forgot that's come up after we talked about the triple mowers that is really coming strong now, both on front hitches and on the rear guided hitch, is the organic growers. They run the rolling crimpers. Well, it's typically something you should do before you drive over the stuff, because the... the crimper's not going to work in your tracks; so they need a front hitch, and they do a lot of passes through the field. They use GPS for their planting. They can come back and cultivate, and they can spray without crop damage. That's really a sector that's coming strong for us, and you might not always agree to the philosophy of organic in principal, but growers can make money doing that, and why not? And they pay their bills. Why not work with them?
Mike Lessiter: We're doing a study of some opportunity in cover crops right now, and I imagine that that crimping that cover crop would probably be an application that we could see some promise in. It's slow here for you after 30 years, you know, looking back 30 years ago... but what do you think the next 10-20 years looks like for application of Laforge?
Lars Paulsson: There is steady growth in what we are doing. There’s some talk about these guys that do other vehicles and tractors, and when they go autonomous vehicles, when the Canadians come up with that deal that they have, I still think the tractor is going to survive for another 20-30 years. It is still a versatile vehicle that does a lot of different things. It can stand still and power stuff. It can run fairly fast for transports, and it's adaptive to pretty much anything; and it has become a comfortable working space for the operator.
So different ways of attaching stuff to it, there's going to be a need for it moving forward. Challenge will remain for us as a specialist in what we are doing to stand apart from the majors, so that there is still a reason for us to exist.
Mike Lessiter: That's a nice segue into a question that I'm asking for this project, this series.
Lars Paulsson: Is there a right or wrong answer?
Mike Lessiter: Well, I'll tell you... I'll let you go, and then I'll tell you it's wrong afterwards (laughs). That this whole series is about innovative specialty manufacturers, like yourself and all the other ones we've done. Tell me what life is like for the American farmer if we don't have this strong, specialty supplier What would it be like, you know, to remove it for a moment?
Lars Paulsson: Well, I mean, pretty much all significant innovations that you can think of have come from small companies and later been adopted by the bigger guys. So if we disappeared, innovations would stop, and—
Mike Lessiter: You think the farmer stops to think about that?
Lars Paulsson: Well, I mean, a lot of our small companies started out as farmers, so one way or another. If the farmers stop to think and come up with solutions for issues that they encounter, and if it is a good enough solution, they can make a company out of it. And I don't think that would ever stop. I think we are an essential part of the whole picture. We all fit our little niches, wherever we're at, and we try to stay alive as best as we can with honesty and integrity and a smile on our face.
Mike Lessiter: Your smile usually comes only after I've endured a beating (laughs).
Lars Paulsson: No (laughs). I have so much respect for you.
Mike Lessiter: I've told Darren this — I don't handle many accounts anymore, but I handle yours, because one, I enjoy working with you, and two, I feel like you're capable of educating me. On every call that I take, I get smarter.
Lars Paulsson: Oh, yeah? (laughs) You're making me blush. What makes us kind of special is that we have been around doing this for 30 years here and not working out of Europe, like a lot of other Europeans do, having a rep over here. You need some spare parts, you have to wait for three months to get that from Europe, and we do speak half as decent English. I think that's what sets us apart. We have, like I say, 1,100 dealers with open accounts right now. Another 1,300-1,400 probably have contacted us one time or another, but we've never been able to close the deals; so they have never gotten to set up an account, but they are in my CRM system. So there is sales support, warranty support everywhere. For a small company like this, I think that is a valuable asset to have, and I don't really know any dealer who is mad at us. We try to support them and support the farmers.
Mike Lessiter: I've never heard a bad word said about you, other than in our office (laughs). Most of that was from Darren.
Lars Paulsson: Yeah, I'm sure (laughs).
Darren Foster: One thing I just thought of though as you were saying that: a lot of the large dairies... I live in Indiana. A lot of the large dairies, the ownership is from European, Dutch and other places. Is that beneficial to you, having—
Lars Paulsson: Yup, it is. I mean, I speak Dutch, so I get some business coming my way. It helps in that—
Mike Lessiter: You negotiate like a Dutchman.
Lars Paulsson: Huh?
Mike Lessiter: You negotiate like a Dutchman.
Lars Paulsson: (laughs) Yup. You know—
Mike Lessiter: It's not really negotiation when he gets whatever he wants. (laughs) Well, I think I got what I was looking for today.
Lars Paulsson: Yeah? I'm glad.
Mike Lessiter: Thank you for doing it. I appreciate taking the time. This was fun to do.
Lars Paulsson: It was. Entirely my pleasure, well, telling stories to Mike.
Mike Lessiter: Good.
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