In this interview, Mike Lessiter, Editor/Publisher of Farm Equipment, takes the rare opportunity to interview four ag executives — spanning two generations — from Vermeer Manufacturing. Sitting around the founder’s family table in Pella, Iowa, the group shares the story of how the invention of the round baler lead to their present-day international operation.
In addition to the whole story they share here, be sure to read about how they got their plants back up and running after a tornado hit during the company’s 70th anniversary celebration here.
Mike Lessiter: I'm Mike Lessiter with Farm Equipment and Rural Lifestyle Dealer and I’m very excited to be in the founder's home here on the Vermeer campus, where Gary moved his family in in 1953 and Bob and Mary grew up in this home. We're sitting with the family today to talk about the history of Vermeer and their story as one of the largest family-run companies in the Midwest — including agriculture. It’s going to be a really good story. We're here just a couple days before Christmas with the three generations.
This is the final interview that we have in the series and one that we thought of when we put this whole idea together. So, thank you for making the time at Christmas rush, the busy end year — and knowing it's been an unusual year with the tornado that hit last summer and all hands on deck to get everything running again. We’re excited to talk about that too, but thank you for this opportunity. This'll be fun for me personally.
Mike Lessiter: We'll start with you, Mindi.
Mindi Vandenbosch: Start with me? I’m Mindi Vandenbosch, and I am the Manager of Distribution Development in the forage division and I've been here for 10 years.
Bob Vermeer: I’m Bob Vermeer, I'm Chair Emeritus, but I worked for the company for 40 years and I was CEO during part of that time, and then Chair, and now I'm Chair Emeritus.
Mary Andringa: I’m Mary Vermeer Andringa, Chair of the Board, but also I have worked in the business for about 36 years, including as Chief Operating Officer, and CEO, and now chair.
Jason Andringa: I’m Jason Andringa. I'm honored to serve as the CEO in the third generation of Vermeer family and I've been at Vermeer for 13 years and was in five different jobs at Vermeer before having the opportunity to move into CEO.
Mike Lessiter: Talk about the very earliest history with your father. When someone asks you, “Tell us how Vermeer got off the ground,” how you would answer that question?
Bob Vermeer: Well, my father was always innovative and if you have the chance to go through the museum, you'll see what his shop looked like initially. But, basically, he was always looking for a way to fulfill a need and started with some product that some neighbors were interested in. It really moved on from there to a variety of items in our history.
Mike Lessiter: That first product was a wagon hoist?
Bob Vermeer: Right, and he basically wanted to find an easier way of getting grain out so he developed that. And there was a lot of interest in that.
Mary Andringa: Yeah, and he initially built that for his own use. He and his father were doing corn picking for a number of neighbors during World War II. And, again, they were trying to find out a better way to get from one farm to the other quickly, and a part of that was creating an easier way to unload the corn out of the wagon — so it was a mechanical wagon hoist.
Then, when he had neighbors start to say, “oh, could you build one of those for me?” He went to a blacksmith shop in Pella, Iowa, and actually tried to do an OEM arrangement with them for a while. That didn't really go, I don't think, as well as he thought it would. So, in 1948 was when he decided to start his own manufacturing business with his cousin Ralph Vermeer. Actually, he was a co-founder initially and, unfortunately, Ralph passed away after about the first decade of the business. But the two of them were the ones that really started the business.
Mike Lessiter: He was a farmer at that point, just had found an opportunity to make something different?
Mary Andringa: He was a farmer, but he was always a tinkerer too. So, as Bob said, we have a piece of the shop that he worked in on his family farm, which is right across from Vermeer Corporation, and was always looking at better ways to do things. So one of my favorite pictures that's in the museum is the cab that he put on a John Deere tractor in 1939. So it was before he was married, where he was working at home and there was an article, actually, in the local paper, Pella Chronicle, that showed Gary Vermeer in the tractor with a cab in April. And it said, “When everybody else was on their tractor with purple cheeks and hands because it was so cold, Gary Vermeer was riding nicely along in his cab on his tractor.” And I said to him once, “Dad, did other people have cabs on their tractors?,” and he said, “No. Nobody had cabs on tractors.”
Jason Andringa: I don't think anybody thought about it. He would tinker for comfort. I mean, we know that when we were in Canada, that he would tinker with things to make it more comfortable.
Mary Andringa: Whether it be the seats on the—
Bob Vermeer: On the boat.
Mindi Vandenbosch: And one thing ... I started working with our forage dealers in the last year and I always like to tell our new dealers that what I think is exciting is a lot of times, his first inventions after the wagon hoist and a few others, are actually our industrial side of the product. But a lot of them were because he was trying to make it easier on the farm. So, at the end of the day, he still had the farm, kind of in the background of his mind all the time. And then those first inventions or second, third, fourth, whatever, were more of, “hey, let's make it easier on the farm.”
Mike Lessiter: What would some of those be — those inventions?
Mindi Vandenbosch: His machine, the stump cutter.
Jason Andringa: Really, the entire business can trace its heritage back to the farm. Even though more than 80% of the business today is the industrial side of the business, and less than 20% is the board side of the business, the entire industrial side of the business can trace its heritage back to innovations on the farm. So about 50% of the business traces its heritage back to PTO-driven tilling trenchers to drain low-lying farm fuels. And then about 30% of the business traces its heritage back to the invention of the stump cutter, which was invented to clear land to be put in to agriculture.
Mindi Vandenbosch: Yeah, and he always seemed to, I think, buy the river bottom land at times, and so it was neeting some way to drain, you know, the water off that land. The original trencher kinda came from that.
Mike Lessiter: Yeah, and that stump cutter story, there was some serendipity in that one as I understand…
Jason Andringa: So, the idea came from a local area farmer who brought it to Vermeer. And they developed a prototype and they had a prototype that they assumed would be most effective cutting forward and backward across the stump. And, as the story goes, someone hit the wrong lever and it swung side to side, and they realized it was five times more effective cutting a stump that way.
To this day, that is how a stump cutter works. It sweeps back and forth across the stump. It’s quite interesting in the history of the company that the heritage of our industrial side of the business actually predates the invention of the round baler, which is the single most iconic invention in Vermeer's history.
Bob Vermeer: Regarding the round baler, my dad was out walking with a friend one morning who was putting up square bales and said, “There has to be a better way,” and basically decided he was gonna sell his heard of cattle, because he thought it was too much work. And, from that, dad went to engineering with a gentleman called Arnie Mathis, who had a sixth grade education, but he was a brilliant person. And together, they started developing the large round hay baler. And basically, I started Vermeer in 1974 but the balers started in ‘71 or ’72. And in the 70s, it's interesting because I think probably 75% of our sales were from the baler production at that time. So, that was a really exciting time. And you kind of asked about how we financed that. Basically, dad required a $500 deposit on every baler. So that money all came in when the orders were placed, and those were the funds that helped finance, you know, basically all the production material that was needed for the baler.
Jason Andringa: The business had been in existence for 23 years before the invention of the baler. And my grandfather, their father, Mindi's grandfather, had experience from the depression and that always stuck with him. So the business was always financially conservatively operated. The business had a strong financial foundation to begin with. And then, as Bob said, by expecting a deposit for every order, really it was well-financed for the growth that the baler brought.
Mary Andringa: One of the biggest common themes in the whole growth and new products at Vermeer has always been looking for an opportunity to take waste out of a present system.
Mindi Vandenbosch: Yeah, fix a process or a problem with a product.
Mary Andringa: With a solution. Particularly, Dad said — and Bob and I heard this lots and lots of times and I think Jason and Mindi did too— you know, you don't go and just redo what somebody else has done. His premise, his thought... Now, today, we have to continually enhance products, but his premise was to design something new that's not out in the market now.
Mike Lessiter: That large round bale story is amazing to me. There can't be all that many single revolutions like that one. Prior to your neighbor who he had had that conversation with, he probably needed four or five people to put up his hay, prior to that.
Bob Vermeer: I remember that personally because when I was growing up, we were expected to help in the summer. So he had one person driving the tractor… Well, first of all, you raked the hay. Then the actual putting up the square bales, you had someone drive the tractor that made the square bales. Then you had someone on the wagon who was stacking the bales. Then, when that wagon was full, you took that wagon to where the barn was and you took the bales off, put 'em in an elevator, and they went up in the elevator into the barn. So and then you got someone in the barn...
Mary Andringa: And then somebody has to stack, right and I think—
Bob Vermeer: That was always the worst job, beccause it was really…
Mary Andringa: At least four people.
Bob Vermeer: Because, see, that was when people were still using the barns with the second level where the hay was stored, 'cause quite often they had cattle or livestock down below that. Over the years that has changed, but, certainly, at that time, you know, I still remember the days when, you know, they put up hay with the fork. I mean, it was loose hay. You put a fork in and then you put it up and put it in the barn. That was a very difficult to feed, because it was all…
Mike Lessiter: That's a great story. What are your earliest memories of dad and the company, the earliest memories you remember from back then?
Bob Vermeer: Well, I remember sitting in this house and I remember dad going out and milking cows in the morning. We had two Holstein cows and he would go out and milk them. And, in fact, I had one myself later on. Why? I do not know. But anyway, so I remember that and meals around the table. And when the company started, Mary and I would both go with him to work sometimes, because he wore many hats.
I remember when the company started, some fun trips. The fact that dad loved to fly, so he had the Bonanza and we would go visit customers and the family would go along. So a lot of our vacation time was spent visiting customers. So I think the family in that plane was another great experience.
Mary Andringa: I don't remember Dad milking a cow. When I was growing up, Bob was the one milking the cow, but I definitely remember walking the plants with him. It was the plant that we had on the west side of Pella and it was usually... I remember going in the evenings and so it would be after a meeting or something. Maybe it was after church. I don't remember. And we would go and I would walk with him through the plants and, you know, they were usually not that well-lit at that point. And then I also had a fascination in the office with all the carbon paper. I was sort of a teacher from way back and so I would gather carbon paper then put it in the waste basket. It wasn't gonna be reused...
Mindi Vandenbosch: It's a good reason.
Mary Andringa: But it was, you know, what they made multiple copies of at the time without a printer. And we would take some of those home and have a good time, you know, using those for whatever my projects were at home.
I also remember, as Bob did, those first 10 years of the business. We started a dealer organization for industrial at the end of that decade in the late '50s, '58/'59. So, when we went on family trips, dad was working through shortline manufacturing reps. And so, he would kinda go directly to customers.
One of my best memories was we when we flew to Alaska, in 1960 and I remember sitting through a dinner with my mom and dad. And I'm not sure where Bob and Stan were. They were maybe off doing something more fun. And I was sitting with a customer talking about a trencher. Not that dad brought work home a lot, but we certainly remember the stories. I remember sitting at the kitchen table and dad coming home and saying, “we found this way to be able to go around a tree and spade it so that we can pick it up and transplant it. Just think about that. If you can have a tree in your yard that's already 10 inches in diameter, wouldn't that be great.” And he got really excited about that. And then I remember him also, when I was home from college, talking about the round hay baler and throwing the fence post in, so…
Mike Lessiter: Did the articulating it at the dinner table—
Mary Andringa: Yeah. Well, and I think it was his excitement over it too. Something new. He was always excited about the something new and different and something that would make work easier.
Mike Lessiter: When the two of you were growing up, how big was this company and the size of the plants? Contrast it to today.
Bob Vermeer: Well, I remember, I think that was kind of another fun memory. I remember having Christmas parties with the employees and that was about 100 people. I don't know if I was 10 or 11, whatever I was. But I remember going to those Christmas parties and it was kind of like family. And the talent at those Christmas parties was basically employee's kids. I'll never forget, once they had a magician there, and there was a secretary who was basically a relative of my dad. And they put her in something and cut her in half. And I just remember as a kid I was just floored.
Mary Andringa: You were probably worried.
Bob Vermeer: Well, I was, yeah.
Mary Andringa: We were actually often part of the entertainment as well. Between Bob and Stan and I — we sang and played instruments and, you know, did Christmas carols or something. But there were other young people who did tap dancing and a variety of talent, homegrown talent.
Mike Lessiter: So, throughout the '60s, the employment and number of plants by the end of the '60s, what might it have been?
Mary Andringa: Well, at the end of the '60s was when — in the mid-'60s — we started building out here, on the east side. And the story goes, and I heard this not too long ago, that dad wanted to expand on the west side and so he tried to buy land from a farmer and that farmer jacked up the price pretty high. And he was offended by that, that someone would try to take advantage of him just, you know, jack the price. He said, “We're gonna go find land somewhere else,” and that's when he bought the farm, which is right where the campus is today. I do remember, and this was in the early '70s… probably 'bout the time you started, Bob, I mean the company was 15 million in volume.
Bob Vermeer: Right.
Mary Andringa: 'Cause we did have a buyer who wanted to buy us and we had a family meeting in this room, when it was the living room. Bob and Stan were both married and I was not yet. Maybe it was more like '60s. We talked about, this company came to us and would like to buy us. What do you think? And we, couple of us, said, no, we think we might wanna be involved in the business someday. So we decided not to sell.
Bob Vermeer: I think probably in the early '70s, I think when I transitioned to Vermeer, that was '74. I would just say in '73 we were about 15 million in sales but then we jumped to, like, 30 million in sales in 1974. I wanna say we had about 500 employees at that time.
Mindi Vandenbosch: And Plant Two was there by then, right, 'cause in the pictures of the baler I thought that Plant Two was already built.
Mary Andringa: I think '64 and '68 were when those two plants were built.
Bob Vermeer: Right.
Mike Lessiter: And fast forward to today where it's about a billion dollar company? What is the total number of employees and square footage?
Jason Andringa: More than 3,200 employees and—
Bob Vermeer: Worldwide.
Jason Andringa: Yeah, worldwide, we have about 2,800 that are based in Pella. And, before the tornado, we had about 1.5 million square feet of space. The tornado took 400,000 of that.
Mike Lessiter: Tremendous growth story here. In '74/'75 was when the round baler—
Jason Andringa: Invented in '71 and then immense growth through the 70s. We've had periods of really strong growth. The '70s being one of them, with the round baler. And then the '90s being the other real prominent one, which was horizontal directional drilling. We're a market share leader today in horizontal directional drilling, and one of the first to jump onboard with that technology. And that really fueled our growth in the '90s. So those were two very significant growth periods and then, post downturns of 2001, 2004 and then also the 2009 downturn we had significant periods of growth after both of those downturns.
Mary Andringa: Yeah, we've just about doubled since '99. And that was the beginning of our LEAN journey.
Jason Andringa: Well, we've actually more than doubled. Well, right at double.
Mike Lessiter: Question for Mindi and Jason. So we heard about their earliest memories. What were your earliest memories and how they were different from Mary and Bob here?
Jason Andringa: Sure, I was born in 1975. So my first memories kind of late '70s/early '80s with regards to Vermeer were definitely all around the round baler. If you had asked me in the late '70s or early '80s, you know, “What does Vermeer do? What do they make?” Round balers. That would've been what I would've said.
And I do remember growing up with four older cousins, two of whom were Bob's kids and two of whom were my Uncle Stan's kids. Then my sister and then two younger cousins. My earliest memories with regards to Vermeer were our family pride with regards to the round baler. And we have classic pictures from those times when all eight of us were on a round bale of hay. That is when Vermeer was growing dramatically.
At that point, Vermeer was already located here, right across the street from the founder's house. And my earliest memories, we had four production plants and we had covered storage, which is now our parts center and our clinic and pharmacy. There was still a field in between Plant Four and my grandparents' house. And, as time went on, we built more plants and eventually, when I was in college, we built the global pavilion, which is across the street from my grandparents' house.
So, growing up, there was already, in my mind, this significant company that made round balers. And then it just kept growing and it kind of gradually dawned on me that we make a lot more than round balers and we make trenchers and we make stump cutters. And now we're involved in this new thing that's super exciting, horizontal directional drilling and we make horizontal wood grinders and we make terrain levelers. And it just sort of gradually dawned on me how broad the business was and how global it was.
When I was in college, I had the opportunity to make a couple trips to Russia with my mom to visit customers that were putting in significant natural gas infrastructure. And those were impactful trips for me to recognize the incredible impact that Vermeer machinery can have. The work Vermeer machinery does can make a significant impact on the lives of people a long ways away. And it’s machines that came out of this factory that was doing that work. Those are some of my significant memories growing up with regards to Vermeer.
Mindi Vandenbosch: My stories are a little different than that, I think. For me growing up, one, I came a lot with my mom to work. So Jason was already in school and I was not in school yet. So I would get dropped off here at grandma's house and a lotta my memories were riding the bike around. She would go get baby pigs outta the barn for me so I could play with them, 'cause I loved animals. I remember jumping around bales of hay. He'd have 'em all stacked up and I'd start at one end and hop 'em all back and forth.
When it comes to Vermeer itself, again, going to work with my mom, I remember when Plant One, when you walked in the door, offices to the right. But, to the left, was a completely open space and I would roller skate all through there. I walked around and I talked to everyone. When I got a little older, I'd ride the bus to Vermeer after school and I'd go and get everyone's recycling 'cause, at the time, there was one shredder.
And so I'd go down and I'd shred everyone's papers. And so I think, for me, it's a very different... I'm pretty social so I'd go just kind of talk to everyone and see how everyone's doing. My first time really being employed I worked in marketing as a high schooler. But I think the one to talk about kinda the impact was I came back here the summer before my senior year of college and I worked out in Plant Six in the factory. And that's when we were really launching LEAN as a new way to manufacture.
Mike Lessiter: What year was that?
Mindi Vandenbosch: It was '99. I don't want to date me here. I think what I loved there was I loved the people. I love the product. I love being in manufacturing. I love seeing our team members hard at work problem solving, just kind of hearing more about the company. And so that's kinda what got me excited. I actually kind of changed my career path after that and went into manufacturing, just 'cause I loved seeing product being built, so—
Mary Andringa: You learned how to weld.
Mindi Vandenbosch: I learned how to weld that summer. I wasn't great, but I built racks to put jigs and fixtures on for our machine shop... I just had a lot of fun that summer. I used to file engineering prints for engineers, and so there's a handful of those people who are still around. So it's kinda fun to see them still as I'm back here on the day-to-day basis. I mean, as far as grandma goes and this house, uh, lots of memories, you heard from Bob and Mary. She loved to be hospitable. She loved people to come over. She liked to cook for people… And Jason has 'em too. Lots of memories of just getting into trouble around the farm kind of too and things we didn't get to do at our home. I have a lotta great memories of this house and, you know—
Jason Andringa: Me too.
Mindi Vandenbosch: This farm.
Jason Andringa: Yeah, I mean, my mom, as she was ramping up her career at Vermeer when we were young, we were here a lot. You know, weekends, when she was traveling with my dad for something. Once we had switched schools and we were going to school in Pella. We'd stay here for a whole week and, I have a lotta memories of this house and the proximity to Vermeer.
Mike Lessiter: A question about how you're all here today. We all have seen the statistics on family-run businesses. I'm second-generation. I'm going to learn from you today with free consulting, right? So, how are things set up that, so well, or the vision that was had to get to the third generation and have everybody working, keeping this a family-run business that's seen tremendous growth and innovation? Tell us a little bit about that.
Bob Vermeer: Through the years, we certainly went through some difficult times. And I think that, uh, we really felt that when we saw the third generation coming along and some of them were in college already, uh, we thought we should work with a family firm that would help us through some of these difficulties.
So, in '89 we worked with a group out of Minneapolis, a family succession group and basically, they along with us, and Mary was real involved in that also, and Mindi, and then my wife Lois, and daughter-in-law were real involved working with this group but also developing like a family employment policy, a family creed and just a group of different documents, you know, how we keep moving forward.
And also during that time, as I mentioned, some of the third generation in college and some were still in junior high, but we went through a whole evaluation process. Each one met with someone from this firm and they had to put together a five year plan and I remember very well my youngest daughter, who was in junior high, couldn't quite figure out what her five year plan would be.
But I think for some of those, like Jason, who was in high school, and some of the college students, that was very valuable. So and then we rotated to other, you know, family succession type groups. But I really believe starting that was very important. Because there's a lot of emphasis on communication. And I think also the fact that we put, you know, some, I guess, rules and regulations together, on if you want to be involved in the business, what you needed to do was helpful.
Mary Andringa: Yeah, I think we put a lot, really started working on governance for the family. And realizing that you've got the family and you've got the business and you have shareholders. And the shareholders and family aren't necessarily the same, so a lot of processes we've been through. And as Bob said, we started with a small group. We called it our Family Council. And that evolved over the years, where now what we have is an Ownership Council and so Mindi's chair of the Ownership Council and she followed Bob's daughter who was the first chair of the Ownership Council. But there's a lot of guidelines around that — how you serve, what the roles are, what you have to work on. And to be honest with you, the family ownership council deals with a lot of hard stuff.
Bob Vermeer: And maybe another thing we've started more recently is the fact that we do have shareholder directors on the Board. But if they want to be a shareholder director, they have to go through an evaluation process, we put together a plan on areas of—
Mindi Vandenbosch: A development plan, yep.
Bob Vermeer: Strengths and weaknesses, the development plan. And I think that's invaluable too because I think for a period of time, you know, there were some people who were on the board, family members, there were really no requirements. And I think we're in a much better place right now, whereby people have to apply and have to be approved.
Mary Andringa: So the whole idea that, we didn't want entitlement. Whether it's family members in the business or, as Bob said, family members on the Board as shareholder directors, it's not an entitlement that it's your turn now. And so Jason and Mindi can talk about the fact that they had to follow the family employment policy which has certain requirements, it's not an entitlement.
Mindi Vandenbosch: Yeah, and what I was going to say, I think the most important thing, back even in those early discussions was there were expectations set. So to the point, it wasn't just I get to show up here and you're going to let me be this role or let me be on the Board, it was, early on — junior high for me — there was expectations of how you needed to get there. And if you wanted to put the work in, you could come back to Vermeer. So, I think it was really good, and, yeah, setting the expectations so we all kind of knew what we were getting into versus being surprised — well, I don't know that I had to do this.
Mary Andringa: And I think we also made, tried to make a real point, and that was part of the family constitution that we did early on, is that we wanted to support each person in the family wherever their passions were. And if they had a true passion and they had a skillset to come to the business, that was great and then we'd have a way to do that. But it was not expected that everybody had to come into the business either. So I think, you know, it's that balance.
Bob Vermeer: Well, I think you certainly want to keep the business open to non-family. And that they have an incentive to come here and a desire to have a very important part of the development of the company and the future of it. So, I don't know if it's mentioned, but we had three of the third generation who required we get a college degree, worked somewhere else and get an MBA. And I think that kind of set the bar if you want to be part of management in the future.
Jason Andringa: Yeah, for me it was very helpful that we already had the family employment policy in place before I went to college. I selected my major thinking that it would be a good major to eventually go back at Vermeer with. But right off the bat, I was already thinking, well what would be an interesting thing to do for a period of time before I eventually go back to work for the company. And, you know, I'm just glad that that was my mental expectation from the beginning. I never thought, “Well, maybe I'll go straight to the company,” because in my mind, it wasn't an option. I knew right from the beginning that I would do something else first. Mindi and Allison have done the same thing, we all worked outside of the business for a period of time before coming to work for the business.
Mike Lessiter: So were there guidelines that said five years or…?
Mary Andringa: At first it was a range, but I think most of you, you all did at least four.
Mindi Vandenbosch: Yeah.
Bob Vermeer: And I think we learned from the fact that when they worked for another company we would have liked to see them have had a promotion there.
Mary Andringa: Right.
Bob Vermeer: Possibly supervise other people. We went to the extent that, you know, when they came to Vermeer, they would be respected by people who worked here with the background they had prior to coming to Vermeer Corp.
Mike Lessiter: Very good point. And you walked into the organization on that first day, accomplished, confident, ready to go. This wasn't just a boss's kid scenario.
Jason Andringa: And at the same time, we, I can say from my own case, I think it's for you as well, that very first summer, I did a lot of Kaizen work and support. I had worked at the Jet Propulsion Laboratory, the NASA Center for Robotic Space Exploration and, I do remember thinking that I'm glad I had this experience. I remember thinking that first summer as I was at one point, you know, rearranging all these dirty, greasy parts as-as part of setting up our model line for brush chippers. We had all these parts that we had to re-sort and, uh, at times I was painting lines as we were re-arranging things in Plant Three. And, uh, I remember thinking to myself, “You know, just a few months ago, I was designing spacecraft.” And you know, now here I am, filthy, and it's the summer so it's hot, kind of like Bob's story. And I thought, "You know, I’m glad that, that this is how we do it.” That we bring us in, into jobs, where we can build respect within the organization. I think it's been a good process that we've had in place.
Mindi Vandenbosch: Same thing. I think for me, that one summer of doing LEAN, I think I did the same thing. I loved being on Kaizen events with everyone on the floor, and I typically didn't tell them my last name, you know, I wore my badge down on my jeans so they didn't know my last name. And I loved that, seeing the realness before they realized, you know I'd hear people say, “I can't believe you put Mary's daughter out there welding.” And I'm glad they did because they maybe wouldn't have if they would have known I was Mary's daughter at the time.
I think that's one thing I appreciate about Vermeer. I feel like everyone's always treated as, whether it's because of the process of us coming here and the jobs we've taken, but feel respected. I don't feel like there's people who are, you know, telling me something just because of who you are. I think they're pretty real and I appreciate that about the employees.
Mike Lessiter: And they see you rolling up your sleeves and getting after it too, right?
Bob Vermeer: And I think, humbly, Mary and I both here, that we've done a good job of raising the third generation that was involved in the company. The fact that they're not looking at being entitled, they're working hard, probably as hard or harder than anyone else, and people in the company and outside of the company really respect that.
Mindi Vandenbosch: I wanted to go back to the Ownership Council a little bit. As Mary talked about, we had a Family Council for a while and as we've pulled, you know we have over 70 shareholders and that usually shocks people. So as we've pulled all these shareholders back into kind of communication, that's when the Ownership Council kind of started, and so our Ownership Council is actually eight individuals. And we haven't talked a lot about my grandpa's brother Harry was also involved in the business for a while so he's got his descendants, and they're part of the shareholder group. And so, the ownership council's eight of us, and we're the representative body to voice our concerns and have conversations with the Board.
And so we really tried hard to have, we don't want every shareholder calling Jason with complaints. He may take the call, or Bob and Mary at the time, but we want to have a communication flow. It also gets a lot of people involved, so on the Ownership Council, I'm the only one who works in the business day to day. But the rest of them are seeing what's happening, they feel that they have a voice, they feel that they're shareholder engaged in the conversations. And so I think that's been really beneficial too. And we've got an education group which Bob's daughter leads, and we’re really trying to already think of that next generation.
And so our fourth generation is 22? And so there's a lot of focus on, you know — how do we get that next generation excited? The stats go down to 10% to get from the third to the fourth, so we need to continue focusing on showing them the pride and the excitement, and especially as we give more diversity and geographical diversity from our shareholder group. You know, we'd love to get a fourth generation who grew up in a different state to come back and work at Vermeer.
Jason Andringa: To some of the points that have made earlier, even though we have had challenges and undoubtedly will have challenges within the family side of the business, really the passion and the commitment to the company is ubiquitous and is solid. So, we do have a shareholder agreement, and in that shareholder agreement, people can sell stock if they want to and there has just been zero interest from anybody to sell their stock. So, the passion and the commitment to the company is completely solid. Which is pretty tremendous.
Mindi Vandenbosch: And I think it's important too, we've got, as we talk about some of these documents, I mean we have a Vermeer Family Constitution which is kind of our leading values and mission statement and that sort of thing. But in there, we talk about our focus is on the business first and then we come second. Not in a bad way, but just, there's 3200 employees who rely on this business. So at the end of the day, again, it's that expectations, you know, we know that we're keeping the business focused on the business and we try really hard to keep the family side of things focused on that Ownership Council family side. So we can keep the business going forward.
But, again to the point, every shareholder stands behind that constitution. I think our family office person said today, our constitution's almost a hundred pages now. So we keep adding more guidelines, processes and policies to it. But again, then it kind of helps set the rule book. So, everyone knows what they're getting into in a sense of being a part of the family.
Bob Vermeer: Well, and I think going through the whole tornado and the tremendous leadership that Jason and Mary and the team gave at that time, we just realized once again for those of us living here, how important Vermeer is to so many employees and their lives. Because people lost cars, people lived from paycheck to paycheck. And I think for me personally, I think that invigorated me, realizing, I think that third generation said, “We celebrated 70 years, but we want to go to a hundred.” And I think, “Good for you, because I may not be around, but God bless you.” I just feel that, you, what we went through, just for me, made us realize even more how important this company is to our employees and the community. Yeah. Yeah.
Mary Andringa: And we do — this is maybe going in a different direction — have a lot of added benefits for people, whether it be our medical clinic, which is on the mile. These are for Pella people, we realize this is not at every location, a pharmacy, right north of this founder's home is the early learning center which Mindi helped get started—
Mike Lessiter: I love that.
Mary Andringa: …which is a phenomenal, phenomenal educational opportunity for children and grandchildren of our team members with great curriculum and fantastic atmosphere. And we now have four chaplains — Bob got this program started to walk alongside with people through financial, marriage, family, crisis, you know, just to have someone to talk to sometimes. And it's, all these things are run by third party groups, so it's separate, you know, so we're not Big Brother watching everything going on. But we just know that a person comes to work with a whole lot of attributes and if we can help them, whether it's from a physical standpoint or from childcare or from any kind of just soul kind of spiritual aspect, that we've got sort of the ability to do that.
Mike Lessiter: I was going to ask about principles of the company. I'm also impressed by how evident the faith is here. And a lot of companies do not go down that path today, or at least it seems so to me.
Mary Andringa: Well, maybe I'll just mention that when Bob and I and our other brother, Stan, were involved also in the business for a while, my dad had never wanted to do goal setting. I think he always felt if you had a long term goal and you didn't make it, then it was kind of like a failure, although he certainly had mental goals — short term goals all the time for his own life and for the company.
But we went through and started putting goals down and then we realized that some of them really weren't goals, they were sort of boundaries that were values. For instance, we've never really had any long term debt. We've always been very proactive, since the early days in promoting from within, wherever we could, helping people use their skills and find new opportunities at Vermeer.
We started realizing that some of those were more values, and meanwhile I was reading a book about Lee Iacocca, and talked about people focusing on product and profit and I thought, “You know, that's really kind of what a lot of these boundaries are around. The people part, requiring excellence in our product, putting money back into the business to be able to finance it.” And I thought, if we put principles with that, then principles which for us are biblically based, then that really would say who we are, what our values are.
And I believe, and I just started talking about that, and would write some articles for the Powerline, always run those by Bob and say, “Do you agree? Is this what we're all about?” And that's how our 4-P philosophy started. And it was interesting, when we rolled out a brand promise about seven years ago and later on went to check with people if they knew what the brand promise was, most of them said, the 4 Ps — because that's what they knew, because we've all been talking about that. And that's part of our constitution too —
Mindi Vandenbosch: The family values.
Mary Andringa: …that everybody buys into that and when we go to shareholders and say, “What are the most important things we keep doing?” It's adhering to the 4-Ps.
Mike Lessiter: And can you restate those for me?
Mary Andringa: Sure, we talk about trying to manage the business by principles, which for us are biblically based. And those principles have to do with people, where we believe people are—
Jason Andringa: People is the second one.
Mary Andringa: Yeah, uniquely created. And we just want to help them be the best they can be, giving them opportunities at Vermeer, also sharing the first part of profit with people.
On product, we talk about excellence, innovation and quality in our product and that we don't settle for a product that's not to the Vermeer standard. And believe me, we continually work on all these, all the time. We're never there. And then on the profit piece, it's really from us, our standpoint, not only do we know that if you don't have some profit, you're not going to have a sustainable business. But for us, it's always been reinvesting profit back in the business to really finance our growth. And to be financially stable. So those are the 4-Ps.
Mindi Vandenbosch: And that's, I think, one of those key issues between generations that we've heard or read, it's not putting adequate money back in the business for growth, that at some point a generation says, “Well, we're just going to take that.” And then that's where the company starts to fail. I think that's a, that's one been kind of instilled in all of us and we'll instill in fourth generation of, you making sure we continue that-that focus of profit back in the company.
Bob Vermeer: And I think just going back to the chaplains and how that kind of evolved. You know, I remember 20 years ago, working for the company and talking to supervisors and they were talking about how, “I have to be a dad to this employee because they're going through a variety of things and I just really don't know, I'm not trained to do that.” And then we started working with an outside firm who had some psychologists, and that was helpful, but I think really that evolved eventually to the chaplains. Because there's a lot of dysfunction out there in society, I think you're all very much aware of that and for some employees, really probably the most stable thing in their life is their job.
And you know, the chaplains walk alongside these people as mentioned earlier. And also, if there's people that need more counseling, they can also help them in that area also by referring them.
Mike Lessiter: The newest innovation that has come out of here, the self-propelled baler, can you put that into context for me on how important, if you were looking at your top five greatest product innovations ever, where would that fall and some context on that?
Jason Andringa: To this day in our 71-year history, the invention of the round baler continues to be number one and then you know, where you slot some other innovations in there, but on the forage side of the business, I would say the zero turn, self-propelled baler is number two. The ZR5 is the second most significant innovation on the forage side of the business in the history of the company, and a creative person within the company who came up with that idea and because of our heritage of innovation, resourced that project. Every step of the way, we've been surprised in a positive way by what that machine has been able to do, the enthusiasm for it, and we have now the first five machines out in customer's hands and are gonna be ramping up production next year, but the machine is really exceeding expectations. It is able to do approximately the same amount of work as two tractors and two balers. That is the type of productivity improvement that we were hoping to achieve with the machine and it's just extremely fun to operate. So you know, not only is it incredibly productive, but I think it's gonna be relatively easier for farmers to be able to get the labor to operate a machine like this as opposed to get two people to run two balers and two tractors. We've got five machines in customers' hands already. We were completely ready to support them if there were quality issues, etc., and of course we've had some, but it's been a lot less than what we were prepared for and it is just exceeding our customers' expectations already with regards to productivity and quality. We look forward to ramping production up next year.
Mary Andringa: I'd say not even just the productivity gains which are huge, one of the comments is too, that when I get out of it I don't feel like I baled all day. I'm comfortable in there. The suspension's amazing and the cameras and not having to turn for and get… I've bailed a couple times with a ZR5, so I'm jaded now into what this is. But those who do this, you know—
Mike Lessiter: You're not going back, are you?
Mary Andringa: Yeah, those who do this all day long for a month, or for weeks on end, that comfort level and to the point getting someone to be able to jump in that seat and bale is gonna be a whole different story than trying to get someone to the traditional tractor baler route. It's been exciting.
Bob Vermeer: Some of the engineering people have been very accommodating to family because I know my grandchildren, fourth generation rode in it and basically baled a bale and he was only nine years old.
Jason Andringa: That's child labor, Bob.
Bob Vermeer: Maybe you want to cancel that.
Mary Andringa: I think it's one of those disruptors again. It's turning heads. It's getting the attention. We have some exciting things hopefully that we can push out this summer to get more people seeing the product.
Mindi Vandenbosch: We got this space where we're gonna manufacture it. We've got that cleared out, ready to go.
Mary Andringa: To get the excitement and not, you know, post tornado, that's always my question is, I hope we have the line ready to go. I hope we know we're building and we do now. So that's a good thing.
Jason Andringa: Because of the location, we were originally gonna build, it ended up being taken over for another more important line a more immediate need for production, but we were able to build the five ZR5s kind of in an engineering bay, which is one of many examples of us putting what I say ‘the big league hat’ on to make the right decisions for the business and, as Mary said, we've now cleared out additional space and completely reoriented it so that we will have production space for the ZR5. But as Bob said, it's a machine — when a, when a nine year old can get in a machine and operate it easily and effectively, that just tells you how incredibly easy and comfortable this machine is going to be to operate.
Mike Lessiter: Numbers are still gonna be relatively small next year. Five in 2018. What might be 2019?
Jason Andringa: Two, three dozen is possible in the next year and then we'll see where the market goes from there. So you know, certainly small in the context of pull type balers, which of course we always anticipate will be the bigger share of the volume, but the fact of the matter is for significant custom balers doing multiple thousand bales, this is going to be a very compelling machine right off the bat. One that's gonna make sense from an ROA, ROI perspective. It's very exciting and we just look forward to seeing how the market draws it out into the market.
Mike Lessiter: From a perspective of someone like me, it’s the big story is the innovation process and, and what that must say, I think about it a dealer or a customer, the story of the innovation and then the skunk works model that, that put it together is remarkable, right?
Mary Andringa: As we continually look for dealerships to sell our products across North America, that is one where they'll come in and say, “Well I don't have that ability in my area because of the five by six bale,” but Vermeer's innovative. They're investing back in product and so it just gets them excited about being a part of the Vermeer dealership team because of the fact that we're continually innovating and trying to, you know, move the, the product line. So I think it's exciting just that the investment to put back in.
Jason Andringa: Absolutely. And, obviously we compete with the Goliaths when it comes to agriculture and forage, for being the inventor of the round bailer in 1971, but still, this day, we are the ones that came out with the ZR5. The first in the world zero turn self-propelled baler. We continue to be very proud of our focus on that part of agriculture, and therefore the innovation that we can uniquely bring to the part of agriculture that we serve.
Mike Lessiter: Mm-hmm. I want to talk about lean. The very first time I heard you speak and met you, Mary was on a lean principle talk. Your organization is very much viewed as a leader in lean manufacturing. Tell us about that initiative, when it started and what you remember about getting that going.
Mary Andringa: There's always more to do on that too. Bob and I went through several board meetings in the mid '90s with one of our independent directors who kept saying to us, “You cannot just keep building buildings and adding machine shop and adding people, you have got to understand what Kaizen's about.” And so, actually both Bob and I went over to HON Corporation in Muscatine. And he started to explain waste to us. You know, how you identify waste and flow and those sorts of things. And then he was helpful in setting up opportunities for some of our key leaders to go be on a Kaizen in different other plants. So that was, you know, the investigation of, “how can this work for us?”
But right across town, was Pella Corporation and they had been on the lean journey for a number of years already, also influenced by the HON Corporation. And so I remember going over there with Dad actually, and the Chief Operating Officer at the time, who later became CEO, Mel Hon, took us through a walk down the line and talked about putting process together and flow. But then what really made an impression on me was he went then to a whiteboard and he said, “You know, when we're manufacturing, we're adding value for two minutes here. And then the products sits or it moves, and that's all waste. And then we add another little bit of value added. And then it sits or it moves, and that's non-value added.” And it was all the white space, and he said, “That's what you go after in continuous improvement.” So, um, we as a leadership team decided we needed to pursue this and we actually brought in a consulting company, which got us started and then we went to the same consulting company that Pella Corp was using, TBM.
At the time, I also went to an Inc 500 meeting down in Arizona and I sat next to Art Byrne, who's one of the gurus in continuous improvement, I love that guy. And he said to me, “Mary, if you're serious about this, you've got to be on a Kaizen event once a month. You've got to be able to take one week a month and you've got to be on a Kaizen event. You will learn more about the strengths and the weaknesses of your people, your product and your processes by being on events, on the floor, out of your office than anything you can do.”
I took that very seriously. I went back and said to Bob, “Okay, I think I just need to make this a priority for me,” I was Chief Operating Officer, “and just get on a lot of events.” And I kind of thought, “How in the heck am I going to do that? I mean, I actually meet customers too. I'm talking to dealers and doing other things.” I went, on the average, to one every other month for the first two years.
And the first, the very first week we kind of rolled it out, Bob was on a hay baler event and I was on a stump grinder event, and I know you were on at least six that first year too. Virtually everybody who I think had to do with operations was on at least six events, so we did the full force of getting people to understand. And I think, you know, what was great is that our CFOs today, will be on an event. And he made sure all of his team were on events. And finance people love it because it is all about great metrics.
Mindi Vandenbosch: Cost reduction.
Mary Andringa: And we had consultants who helped us realize that at first we really weren't seeing it hit the bottom line, but we definitely saw the importance on the balance sheet because we almost immediately, within the first year and a half, reduced work in process by 50%. That's a lot of inventory that is moving instead of sitting. And that makes a huge difference. And so one of the things we did early on, after two years, we did really see a whole lot more for the bonus for people but we gave everybody an “inventory day” because we had all helped reduce inventory by being involved in lean and continuous improvement process. And that hit home with a lot of people. A lot of people said, “Oh, okay, so that's what kind of this is about. Yeah, that makes sense.” And I think we turned some minds. And we also worked really hard and we're doing it again now to get people on an event just because it's such a great training opportunity to identify waste — every day, no matter what you do, when it's business process, it's manufacturing, it's out in our dealers. We've expanded in most, in all of our industrial dealers. Many of them have a CI person on their staff that works continuous improvement.
They look at their payables, they look at their receivables, they look at their service texts, they look at their trucks that go out to customers and how can they have workplace organization in all those areas, how can they find what they need when they need it. We will often say, “If you're looking for anything, a file, something in your computer, or something on the shop floor or in a service bay for more than 15 seconds, you have opportunity for workplace organization.”
We've all been involved. We've all been involved and are very supportive and a great joy for me is to see that we are now getting back into the regular cadence of good Kaizens at post-tornado with variety report outs. And one of the lines that was moved from one of the demolished plants to Plant One, just this week from a Kaizen last week has gone from two machines a day to three with the same people in the same hours. That's the power of Kaizen.
Mindi Vandenbosch: What I think too, what I like about lean manufacturing and Kaizen in general is it's typically something that's very frustrating — that is, the waste. And so, what I found is that you've got to get your team members excited about making change, because change is hard. But if it makes their day easier, or their job easier, or their life better, they typically then get on board. And even like, in a business process, it's “Oh, I always hate, you know, running this report.” Well, do we have to run the report? How do we run it differently? What information's used in there? And so it's challenging them also to own the change, and then it typically gets the buy in a little bit better. I know it was a struggle at first, change management back in the 90s and the early 2000s, but I think that's what's exciting now is kind of empowering our people to own where they see opportunity. Because they see it if they, if they're working every day in that world…
Mary Andringa: Yeah, and post-tornado too, it's been fun. Several of the people I've been on Kaizen events with when I walk through the plant will tell me how they're rearranging the shelving, or how are they rearranging where all parts are that they have to pull for a line by what do they pull for 80% of the time and where is that located. Because their mind is thinking about how to make the work easier and take out the waste.
Mike Lessiter: I usually conclude an interview like this about talking about the, the future of the company and I recently learned about the Yellow Iron Academy and your awareness of birth rates and labor that'll be needed in manufacturing and agriculture all the way around. I would like to talk about your view of the next generation workforce and what you are doing today with very young people to try to meet that.
Mindi Vandenbosch: This was seven years ago now 'cause my daughter's six, and it's opened right around the time she was born. We had heard for years from our employees mainly that it was hard to get their child to childcare before they started work — some of our plants started about 5:45 and so that was kind of one of the first things that hit us, but then we also got excited about the Yellow Iron, which is really focused around a lot of science, technology, engineering and math. So they focus on math. They focus on you know, some engineering stuff. Language. Get kids moving and thinking differently, and so what I thinks been exciting too is we've partnered a lot with our engineers to go over at times and teach the kids some engineering things or help them draw up something. I think it's been neat to kind of align the two together. As far as, the growth of where our labor's going, I think we definitely see the need for more skilled labor.
Especially in our area. I think all over probably the United States, but the Yellow Iron's been an awesome thing. I think it's been a cool way for parents to kind of tie in a little bit more with their kids and proximity was the kind of the big thing too, of having your child down the street versus maybe in a different community.
Mary Andringa: But we’ve been investing in the talent pipeline for a number of years, so not only do we have 500 courses available for our own team members, but we've been, for the last five years now —this year we had to do something a little different — inviting students in sixth and ninth graders to see what manufacturing's all about. We'll have 30 to 35 hands on activities and we do a pre- and a post-test, so when they do the weld simulator, the HTD simulator or currency tables, there's activities for those five or six kids at a table at a time and we ask them if they're interested in a manufacturing career and at the beginning we had 39% say yes, but when they left, 70% said yes. So it's expanding the perception of what manufacturing is today and understanding that we've got a global aspect. I mean, I had a mother say, “Oh, I really want my son to go into technology.” I said, “We have technology all over the place.” Every part of manufacturing has technology in it. And then we've done a lot with that. We have interim students who come from one of the high schools, about 12 of them, for seven days in January and they do a shadowing. I loved one of the students when he said he followed a programmer for a whole week and he said, “I actually saw a real world application for algebra. I'd never seen that before.”
We bring in K-12 teachers. We've had over 70 teachers come in for a two to three week experience learning everything about manufacturing. One teacher said, “I was a manufacturing snob when I came and I never encouraged any of my students to go into manufacturing. Now I'm reformed and I encourage students to think about the great opportunities in manufacturing.” A lot of our team, Jason just spoke to a whole high school about the opportunities in manufacturing. Our team goes out and speaks about this. And then we have the traditional things, which Bob started many years ago, scholarships for sons and daughters. We give out 35 to 40, This next summer we'll have again 45 to 50 summer interns. We do a lot for the talent pipeline including being very active with our own building in the research center at Iowa State where we are able to work with co-ops and with part-time students who work for us for 10 to 20 hours a week, but they're also still students, because it is difficult and it's difficult all over the country. Actually it's difficult around the world to find the skilled workforce that we need. So we've gotta tell our story about manufacturing. We've gotta tell our story about Vermeer.
Mike Lessiter: You're taking it into your own hands to solve it.
Mindi Vandenbosch: And I think to the point of it's the manufacturing days that she was talking about where kids from the local schools come in. I think what's exciting there too is that it's not what they think of as a dirty manufacturing environment. I mean, there's people who are programmers out there. There are people who are doing stuff with some of our automation, which is really neat and as well as the people who are still assembling and welding and that sort of thing, but at the end of the day, it's a good career. And so I think it's just again enlightening them of the importance of what our employees do every day.
Mary Andringa: The last time, with all the 35 activities, there was a placard that said what kind of education would you need for this engineering tech job or project engineer or a welder and then how many hours of work does it take to buy an iPhone? So, trying to put it into monetary, the fact that these are great jobs.
Mike Lessiter: I applaud you on what you're doing there. That's amazing.
Jason Andringa: Trying to develop the workforce, I think Vermeer has a very bright future. Bob talked about the fact that we as third generation and fourth generation shareholders, we've been in existence for 71 years and it is our strong desire to go through the 100 year mark 29 years from now. That's just one of the advantages of being a privately held company. We can think about and strategize for being around 29 years from now. Public companies can't do it the same way that a privately held company can. Our markets are strong. We are gonna take this tornado opportunity to rebuild better and stronger than what we were before. We have good insurance coverage from what happened to us. We're a financially strong company and so we're gonna take the opportunity to build better and stronger than ever. Our first offensive announcement after the tornado was that we're gonna build a new facility called Shop 48 and that is where we're gonna bring all of our engineering um, technical people and prototype build back on site into one centralized location.
That's going to allow us to continue to leverage our number one core competency, our number one brand pillar, which is designing and manufacturing innovative products for niche markets. Our commitment is strong and we feel very confident that we're gonna continue to grow and succeed into the future.
Mary Andringa: And I think another thing is that we are really expanding globally as well and looking at the ways in some cases where we've moved some manufacturing already over to Europe and we already are manufacturing in China. So I think we're being pretty proactive, but on a very reasonable sort of growth path for growth internationally as well.
Jason Andringa: The US only represents about 20% of the world economy, and yet at Vermeer, we sell about 80% of our volume into the US. So we're selling 80% of our volume to 20% of the world's economy. As Mary said, international growth has been a priority for us for years and continues to be a really nice opportunity for us.
Bob Vermeer: And I really believe that was the real interest of our father, too. I think we started shipping internationally in 1959. I think he was really an initiator of thinking globally.
Mary Andringa: We've talked about this from the family side, but as an ownership counsel group, we read a book this past year called Being a Century Club Company, and at the shareholder meeting we had last week, we talked about it a little bit more with the idea hoping that all shareholders read the book, but you know, at the end of the day, it's, it's five main qualities. We're there. I mean we've got a lot of them, so I think it's just having all of us get excited about rallying around that. To the point of our shareholders, especially the third and fourth who will hopefully be here when we hit 100 years, there's a focus on really driving us to get to that level and again, it's getting our fourth generation excited.
Mike Lessiter: Very good. Very much appreciate you doing this. This was something I was really looking forward to and personally proud to have done this one with you. So thank you. Thank you very much and—
Mindi Vandenbosch: Great. Well thank you.
Mary Andringa: Thank you very much.
Jason Andringa: Happy to do it. Good work team.
To find out how the company stayed “Vermeer Strong” and recovered from the tornado that reduced their manufacturing capacity by 30%, read our bonus interview.
