“After the wall came down, I was traveling to East Germany,” Horsch says, “knocking on doors of cooperatives and building relationships. Those people were interested in talking because they never before had access to West German equipment or what was available since they couldn’t travel. Information wasn’t flowing at the time. I sold quite a bit of equipment just on handshake deals, because the only means of payment was the East German deutchmark and there was no plan for business to be legalized.
“The exchange rate was 3 East German deutschmarks to 1 West German deutschmark,” Horsch recalls. “In those days, we were making three-wheeled self-pulled seeders that cost 300,000 deutschmark, so it was almost 1 million East German marks. We signed orders that said, on delivery, we’d get 900,000 East German deutschmarks. But 6 months later, the exchange rate became 1 to 2. I had a couple deals done where I was making quite a bit of money.
The foil maize seed drill was Michael Horsch’s first development of his own, which at that time was designed within the agricultural purchasing and sales company Horsch OHG Landau / Isar. He officially started Horsch Machine Co. in 1984. Photo courtesy of Horsch
“In those days I needed the money, says Horsch. “But my Uncle Walter, who was my mentor and helping me run the business said, ‘We have to give the money back; it’s not right.’ So, I sent the difference back to the farmers. Those people, if still alive, remember it today. Even the next generation of farmers remembers that their father, who passed on the business said, ‘We will remember you, one of the few West German businessmen that did not pull us over the table.’ This is our attitude, not only with East German farmers, but with all customers.”
“Instead of selling equipment, we sold them a different method of farming. I call this Educational Marketing…”
As Horsch’s company experienced explosive growth in former Communist areas, he finally realized his dream. “Obviously not all the cooperative farms survived, and this is how we finally got into farming. Today we farm about 55,000 acres. This is why we’re different than any other shortline seeding and tillage manufacturing company,” Horsch says. “We’re education marketing driven. All we did in the last 35 years is increase the scale of selling with a spade. We have farms in the Czech Republic, Germany and France and we bought a small farm in North America and we have partnership farms in Ukraine and Russia. Now we’re working one in Brazil.
“All those farms are cropping systems centers,” Horsch says, “and trying to develop new regional ideas. I cannot take what I do on a German farm to France, because of different rotations and climates. You have to look at each market when you introduce new tillage methods, the rotations that are common and how to improve with different fertilizer placements or incorporating straw and so on. We’re not competing with scientific research, universities or other research organizations, but in a way we’re trying to bring things together and make it practical.
Read more from Farm Equipment’s candid interview with Michael Horsch and other coverage.
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“We offer seeding, planting, minimum tillage and spraying — those are our four core business specialties. Most competitors in Western Europe build for small-scale farmers. We come from a larger-scale minimum till and no-till farming background. In those four areas we are technology-driven, we have 120 engineers and the R&D is controlled by my brother and me. Most products we develop for our own farming. We have a need for something due to a certain soil issue, we want to grow a different crop, or we don’t like the tillage we’ve done so far, so we’ll build a product for it.
“When we needed a new planter,” Horsch says, “we would build one for ourselves and the design would be unique. We didn’t look for whether there was a market for it and never had an intention to build large planters, with 40-foot to 60-foot bars. But now we’re No. 1 in Eastern Europe, which the dark green guys obviously don’t like.”
Expanding into North America
Horsch says he’s been doing a lot of travelling to North America recently to bolster the company’s presence here. “I know the Midwest like the inside of my pocket, as we say. I like the countryside, the crops, the farmers, the mentality, and for over 40 years I’ve built lots of friendships there.”
There was only one product available when Horsch broke into the North American market in early 2000, a 60-foot air seeder with a 500-bushel seed cart. He says it was only sold in the Dakotas. “Butler Machinery was our sole dealer. Eventually, we went into Canada and south. We were the first ones bringing in the compact disc in the vertical tillage business. I think, by numbers, we have sold the most compact discs in North America. Then we started growing into other areas with more dealers and offered planters, and that helped us grow, especially into the corn belt.
“A lot of products available for Western and Eastern European markets, both in seeding and tillage, also fit the U.S. market,” Horsch says. “We have a factory and engineering in North Dakota, so everything we sell here doesn’t 100% come from Europe. Some of the basic designs come from Germany, but it’s built here with 80% local content and adapted for the markets here.”
Michael Horsch first started participating in farm equipment shows in 1982 in Munich, where he officially kicked off sales activities. Photo courtesy of Horsch
Horsch says some of his peers are trying to bring European equipment to the U.S., but his knowledge of the market makes him skeptical of the potential. “If it’s not Americanized, it will not be successful,” he maintains. “Your ‘taste’ is different. The guys in Russia and the Ukraine have scenarios like in the corn belt with big farms, wide rows and open roads. They could easily buy North American equipment, but they don’t, because their taste comes from the Western European side. That equipment also has a taste.
“Look at the cars,” Horsch continues, “a BMW or Mercedes that’s built in North America looks different than in Europe, because you have different tastes. In farm machinery, it’s very important that things have to look right. We have some products we successfully bring over from Germany and Europe, because they are built to American taste. But there’s certain other equipment which I would not want to bring here because it isn’t right.”
Regardless of the market he’s in, Horsch has witnessed phenomenal growth. “From 2000 until today, we grew by 25 fold,” he says. In seeding, large planters and medium tillage, we only have Deere in front of us by revenue. Everybody else, we’ve passed in these segments.”
While Horsch wants a bigger footprint in North America, he says it takes a serious commitment to sell his products. “In a way I’m not a good salesman for dealers. I can scare them off as well as I can attract them, because I say, ‘Guys, be very careful working with us. It’s a long, rough journey. It could be an expensive journey, not always a win-win.’ If they don’t understand what we’re trying to do, it’s not going to take us very far.” If a dealer doesn’t own a spade and have the desire to get out on farms, he might not fit the culture.
With 2,000 employees, many different products and 6 factories all over the globe, Horsch says the philosophy hasn’t changed. “It’s important that we continue to do what we did when I started 37 years ago, we have to be as close as possible to the customer. That’s what counts, nothing else.”
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