There likely aren’t too many family owned companies in the world that are successfully growing under the fourth generation. One of them is Krone. Bernard Krone’s great-grandfather started the company in 1906, and it’s been passed down to his grandfather, his father, and just over a decade ago, to him.
The 40-year-old Bernard Krone (he’s the third Krone son to carry that name), CEO of the company, sat down with Farm Equipment during its 2018 annual sales meeting to discuss the company’s path to becoming a global leader in hay tool sales as well as how its family-owned dealerships helped them better relate to their dealers and in the transition of leadership between generations.
Today the company’s ag focus is hay and forage equipment, but that wasn’t always the case. The company’s first products were tillage tools, but they made the decision to cease offering them in the late 1980s. Krone also owns Europe’s second largest manufacturer of commercial vehicles, trailers, re-fill trailers and semi-trailers, and Bernard’s sister operates one of the largest Deere dealers in Europe.
Tillage Roots, Migrating to Hay & Forage
Bernard Krone says his family’s multi-generational business had humble beginnings. “We started in 1906 in Spelle, a small village in western Germany,” he says. “My great-grandfather, Bernhard, started as a blacksmith and my great grandmother, Anna, ran the farm and a little beer pub. When my grandfather, the second generation, took over, the company was already building small farm machines and tillage equipment.
“The company continuously grew after World War II. Then in the ‘60s my father, Bernard II, was forced into leadership when his father became ill,” Krone continues. “Under his leadership, the company had the fastest growth in our history and also entered the commercial vehicle business.
“We made tillage equipment, tedders, rakes and mowers,” Krone continues, “and in the late ‘70s developed our first round baler. My father wasn’t sure if we should manufacture the round baler or sell it to somebody. We talked to John Deere, but they already had a belt baler. Then my father said, ‘I really like the design; if nobody wants it, we’ll do it on our own.’ After 25 years, they were No. 1 in Europe with this baler, which showed that totally new products can achieve great success.”
The round baler led to specialization in hay and forage products. “The decision to exit the tillage business,” Krone says, “was hard because the turnover [sales volume] was one-third of the company. We had a lot of people working in that area and a long history — tillage equipment was essentially the first equipment we made. While it was one-third of the turnover, it was 50-55% of our production cost. Specializing in one product category, hay and forage equipment, gave us focus and innovation to better serve customers. I think focus — especially in the farm machinery business — is very important.”
Krone says the exit from tillage production challenged the company to look for new products to design and build. “Everybody thinks when you stop a product line, you lose sales and customers and maybe the company is going down. We had to show everybody that we were still there, had good ideas and were ready to grow. Everyone in the company had that feeling, not only the managing directors and my father, but especially the engineers.
“I’m not sure we would have produced something like the BiG M without getting rid of tillage equipment,” Krone continues. “It gave us free space in the development department to think out of the box. We looked at what could drive the development of the company, so we focused on hay and forage equipment, which were going in the direction of larger machines.”
In 1995, Krone introduced its first large square baler. Krone says it attempted a partnership with that product. “We talked to Deere about distribution and worked together for a couple of years in the ‘90s, which was not a success. From today’s perspective, I feel that because it was not developed by Deere, maybe they were not really interested in it enough.”
Rusty Fowler has been the face of Krone North America since 1986 (hiatus between 2014 and 2018). He retired last month as Dietz Lankhorst was named president and CEO. In late February, Lankhorst announced a $1.5 million investment to move Krone’s North American headquarters from Memphis to Olive Branch, Tenn.
While the Deere distribution agreement didn’t pan out, the company continued developmental work on a square baler, later acquiring a high-density technology, which Krone says has been very successful. “That was much needed by professional customers in Germany and Europe. Today, we have a market share of 40% in Germany and nearly 50% in Australia. Large square balers are one of our most important products.
“In the late ‘90s,” Krone continues, “we introduced the BiG M, our first self-propelled mower conditioner, and in the early 2000s our first forage harvester, the BiG X. Later, we produced the biggest forage harvester in the world, with more than 1,000 horsepower. We learned a lot in the first years about how customers operate these machines and design and maintenance in larger equipment.”
Krone-Owned Dealerships Bring Perspectives
Listen to the story of Krone in Bernard Krone’s own voice, recorded during a private interview at Krone’s 2018 annual sales meeting. Listen to the “How We Did It: Conversations with Ag Equipment’s Entrepreneurs” podcast.
The Krone dealer network globally is about 400 independent dealers. Also in the family are 6 stores. “My sister, Dorothee, runs the dealer end of the business under a separate company called LVD,” Krone says. “We have a long history with Lanz Bulldog, which is now John Deere in Mannheim. We’ve sold Hanomag tractors, now Komatsu construction equipment, and later sold farm tractors. I would say for about 50 years we’ve sold Deere tractors. My sister is probably the largest agricultural John Deere dealer in Europe.”
Krone explained that several manufacturers in Germany started as dealers in their early days. His family’s manufacturing company, however, may be the last to still operate retail stores.
“We separated that business out of the Krone Group, so we have no conflict of interest. We have grown the business in the last couple of years and now a Deutz dealership also belongs to our group.” Krone says his sister is a good dealer for the family. “But she’s not allowed to sell every product, like our forage harvesters. That’s also the reason we have another dealership in that area.”
Krone says the perspective with both manufacturing and retail in the same family makes him appreciate the value of a dealer network. “Some manufacturers today believe they can survive without dealers or without treating them in a good way. I’m pretty sure that without dealers, we wouldn’t exist anymore; we have to support them and they have to earn money.
“Nobody knows customers better than dealers and they have very deep relationships. They know their customer base better than any manufacturer could and 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 due to lack of available dealers, but to support our dealers is very important for us.
“For example, when it comes to warranty claims, we believe that giving the dealer a good hourly salary is important. In Europe, our company has the highest hourly warranty support. At the end of the day, the dealer can only survive when they earn money and that is the reason why we treat them so well. Without our own dealership, we wouldn’t have the same knowledge about what is driving the dealer, what is concerning him, and what is bringing him forward; it helps us.”