Most seasoned salespeople will attest that the toughest and most time consuming sale occurs when having to educate customers about how products will benefit them. Teaching customers never deterred Michael Horsch of Horsch Manufacturing. By using a spade to turn over soil to show farmers and dealers how a new way of farming, along with his product, could improve soil, he built a $600 million global shortline company. By nature, he’s a farmer first and a manufacturer second; but his solution-driven design process, coupled with extensive travel and interaction with end-users, has enabled him to outsell much larger companies in niche markets.
Michael Horsch’s story starts in Germany, where his father, uncles and cousins got into farming in the early 1960s. Horsch says after the end of World War II, Germany was in the middle of the industrial revolution. “All the labor was going into industry and there were no cheap workers left for farming,” he says. “There were 200-500 acre farms run by Dukes and Lords and their labor ran away. So, they were looking for a way to either rent it out or sell. This was a chance for my father and his family to take over land in the ’60s and become crop farmers.”
Horsch says his family quickly realized that a two bottom plow and 35 horsepower tractor was not the tool for farming 1,200 acres. Plus, some of the land had just 5 inches of topsoil, with many rocks below. “As a 5 year old driving a tractor,” Horsch remembers, “I was pulling a trailer with guys walking behind, picking out rocks and throwing them in. There was a need to figure something else out to become more efficient, other than plowing the ground. Our family started looking into a min-till/no-till farming system, but there was no example for that. The scientists, local agriculture institutes and neighbors all said it would never work!”
During that time, the family’s farm was considered large, but Horsch was facing another issue; the land would not be enough to support everyone. “I had four younger brothers that also wanted the home farm,” Horsch says. “So, it was clear that not all five of us would be able to take it over from my father.”
Finding a Passion for Machinery
Horsch Manufacturing’s first advertisement in Farm Equipment appeared in the October/November 2007 issue. The company was branded as Horsch-Anderson in its early days in North America. Horsch came into the North American market through Kevin and Kory Anderson.
As a Mennonite, Horsch took advantage of a church-sponsored program to travel to the U.S. and work on farms. His father had been a part of a similar program in the late ’50s. “He always talked about this and showed me pictures from Nebraska and Iowa where he was a trainee. In the ’70s, that was the only way to stay here for at least a year and have a working permit, otherwise you could only come for 3 months. So, I used this with the idea of finding a piece of land and becoming a farmer in North America. That was the dream of an 18 year old.”
“I had to go back in late ’79 because my visa ran out,” Horsch says. “It had to be resubmitted from Germany and my intention was to immigrate here. The problem was the German government didn’t let me go, because I hadn’t done my service. In those days, you had to do army or civil service and without it, you couldn’t get another permit to leave the country. That was the start of the company, I had to do my civil service and then during evenings I was drawing up machinery and building no-till seeders.
“Problem was, there was no machinery available,” Horsch says, “so we had special machinery built. Then, we’d start cutting it up and rebuilding it. My father, who was rough on machinery, was always getting his ax and cutting stuff up, attaching railroad ties to it and changing openers. I always hated that he’d cut up the nice machinery with paint on it and didn’t put paint back on. So, I had ideas that when I built my own machinery, I would make it nice and work the first time.
“I made simple drawings and then went out in the workshop and started putting steel together,” Horsch says. “I had to find a way to lift up the straw, place a seed underneath, and then put the straw back on top. When my father and uncles found out I was onto something they said, ‘Get it done. Here’s some money if you need it. Build me one also.’ This is the spirit in our family; if somebody has a good idea, nobody says that you shouldn’t do it. Sundays after church, we walked fields with a spade, dug holes and learned how soil changes. Earthworm population went up and water infiltration went up with less tillage. We dealt with issues with weeds and so on and that was the start of the Horsch Machine Company.
“In 1980, I had the concept going and, in ’81, I built the first Seed Exactor for my father,” Horsch recalls. “The machine was the first rotary base with a seeding bar underneath; it was a no-till or maximum no-till seeder. Disturbance in those days wasn’t quite the way we wanted to place seed. Obviously, we’re not in a corn and bean country where I grew up, it’s mainly winter wheat. So, instead of putting seed down in rows, we wanted to scatter it. It was a solid seeding system with no rows, but with no contact with trash because we had problems when we had too much residue in contact with the seed, it was rotting.”
Horsch, at the age of 21, had the opportunity to refine the machine due to family demand. “Every three or four weeks I had to build one for an uncle, and then another uncle, because the whole family wanted one. They told me if it didn’t work, they’d help me make it work. As I kept building machines, I realized that it was a way to make money and to get into farming in a bigger way. Then obviously, I got stuck with debts and commitments, and the dream of becoming a farmer drifted away. In 1984, we officially started Horsch Machine Company.”
Horsch was ready to take on the world. “I thought I could sell all farmers my no-till seeder, teach them how to use it and make them stop plowing. It didn’t take long to figure out I had something nobody wanted. I couldn’t tell farmers, ‘This is what I have and you better stop plowing.’ The guy would say, ‘You’re 23 years old, have no degree, and telling me what farming should be like? Get outta here.’ They wouldn’t believe me.”
Listen to the story of Horsch Manufacturing in founder Michael Horsch’s own words on the “How We Did It: Conversations with Ag Equipment’s Entrepreneurs” podcast.
That’s when Horsch hit on an idea to show the concept using the shovel, or spade. “I had to go far from home and find larger farms that had heavy soils or lots of rocks and a problem with plowing and efficiencies. Then invite them to come to our farm, take the spade out, dig holes and explain, ‘Look what happens after 15 years when you don’t plow.’ The structure changes, the earthworm population goes up, soil gets more active, water infiltration goes up and the yields are not any worse than plowing.
“We started with a spade, selling the idea, but not machinery. It took ages — they came back and looked at it again in springtime and summertime. Eventually, they wanted to implement it on their farm and then needed equipment. Instead of selling equipment, we sold them a different method of farming. I call this ‘Educational Marketing.’”
Horsch says his break came when East and West Germany were reunited in 1990. “My home farm was half an hour from the iron curtain. Before, we never went there because it was really a wall. Then, overnight, we had access to large cooperative farms between 3,000 and 10,000 acres in our backyard. Those farms had never ever had any western equipment; it was all Eastern European and Russian — you can’t imagine what junk it was. Those farmers were desperate and wanted only machinery from the west.
“Nobody was ready for the wall coming down. I had maybe 20 people employed and was breaking even, with revenue of probably $2 million in 1990.” Horsch continues, “Those cooperative farms were pushed into private hands because the communist governments pulled out. The farmers didn’t necessarily own the land, but they had a right to farm it, and had good people willing to work for little money to continue. If you had a crop, you could sell it for real money instead of rubles or East German deutschmarks, which weren’t worth anything. If you could survive for a year or two and have a good crop, you could start buying equipment.