Creating a dynasty: Ag machinery families look to past, present and future for success
--THIEF RIVER FALLS, Minn. -- The region's agricultural machine history reads like a multi-season championship sports dynasty, with interlocking heroes taking the stage at different times -- Melroe, Keller, Dahl, Steiger and Christianson.
THIEF RIVER FALLS, Minn. - The region's agricultural machine history reads like a multi-season championship sports dynasty, with interlocking heroes taking the stage at different times - Melroe, Keller, Dahl, Steiger and Christianson.
The famous ag machinery families developed famous brands - Bobcat, Steiger, Concord and Amity - and thrived when many didn't in the 1970s and '80s.
Agweek recently sat in on a conversation between Douglass "Doug" Steiger, 83, of Thief River Falls, Minn., and Howard Dahl, 67, of Fargo, N.D., whose families played key roles in the development of the machines.
Dahl is president and CEO of Amity Technology Inc. in Fargo. His maternal grandfather, E.G. Melroe, owned Melroe Manufacturing Co., which built the Bobcat skid-steer brand. Howard's father, Eugene "Gene" Dahl, played pivotal roles in growing both brands and launching Steiger Tractor Co. into worldwide fame. Other branches of these roots have led to breakthrough products in air seeders, sugar beet harvesters and tillage equipment.
In 1929, E.G. Melroe invented the windrow pickup on his farm. He sold early units to neighbors and patented it in 1940. As the fable goes, E.G. sold the patent to John Deere to pay medical bills after his leg was amputated. He built an improved windrow patent, which became the standard of the industry.
In 1947, the Melroes formalized the company as Melroe Manufacturing Co., and in 1948 built a factory. After the war, E.G.'s sons, Les, Cliff, Roger and Irving, joined the business. Son-in-law Gene Dahl - a University of North Dakota-educated teacher and basketball coach - joined the company in 1950.
E.G. developed the Melroe Harrow Weeder in the early 1950s, but died in 1955, leaving the family to continue the business without him.
Meanwhile, about 80 miles east near Rothsay, Minn., blacksmiths Louis and Cyril Kellers established a company called Keller Manufacturing. In 1957, Eddie Velo asked them to develop a machine to clean out a turkey. The Kellers made a prototype of a three-wheeled light loader, which could turn 360 degrees in its own length, according to a history by Joe Keller.
In 1958, the Kellers' uncle, Allis-Chalmers dealer Anton Christianson of Elbow Lake, Minn., introduced his nephews to the Melroes.
As soon as he saw the Kellers' loader, Les Melroe is said to have exclaimed: "That's the future!" And so it was.
The Melroes invited the Kellers to show the Keller Loader at their commercial exhibit at the Minnesota State Fair. Based on the reaction from fair-goers, the Melroes reached a deal to get exclusive manufacturing rights and hired the Kellers.
By 1962, the Melroes dubbed subsequent models "Bobcat" because they were "tough, quick and agile." The Melroes sold the company to Clark Equipment Co. in 1970 for a substantial amount that wasn't disclosed.
While the Melroes were busy with their Bobcats, John Steiger was farming near St. Hilaire, Minn., with his sons, Maurice and Doug. Steiger Farms Inc. was noted for its grain and purebred Wessex hogs, and the family had done well farming, but excessive rains in 1956 and 1957 influenced them to do more custom labor with a crawler and a tractor.
If they could build a large tillage tractor, Maurice and Doug reasoned that John could stay home and do all the fall work by himself, and the sons could do custom work.
The Steigers built the first tractor - with 220 flywheel horsepower that used planetary axles and transmissions from mining equipment on the Iron Range - in the winter of 1957 and 1958.
In those days, Steiger says, the local bank didn't require any security, and loaned money on the family's good name. They would build roughly 100 tractors on the farm over the next 10 years, including 100-, 160- and 220-flywheel horsepower models, tractors and log skidders.
Significantly, Earl Christianson, son of equipment dealer Anton Christianson, became heavily involved. Earl Christianson urged the Steigers to build tractors from new parts, and shared in the patent. The Steigers incorporated an articulating, oscillating frame, with steering aided by modern hydraulics. The first tractor from new parts was built in 1963.
Meanwhile, the Melroes were paying attention. Howard Dahl remembers riding from his hometown of Gwinner, N.D., on the way to the vacation home on Otter Tail Lake, Minn., and seeing some of the first Steiger tractors in the field in the Wahpeton, N.D., and Breckenridge, Minn., areas.
Steiger Tractor was destined to outgrow the farm. Doug Steiger had been responsible for sales, service and financing for the farm-based Steiger Tractor Co., Anton Christianson died and Earl focused on the family retail dealership, Christianson's Inc., which promoted Steiger tractors.
In 1969, the Steigers sold 52 percent of Steiger Tractor to eight businessmen, some of whom had been with another ag equipment maker. The group moved the company to Fargo and Doug Steiger initially was chairman of the board.
Les Melroe invested $750,000 in Steiger in 1970, and about a year later, Melroe asked Gene Dahl to become involved with both resources and management. In documents associated with the company, Dahl said he'd guaranteed $1 million, and Dahl became board president and CEO. He brought in former Melroe executive Jack Johnson as chief operating officer, as well as Len Odde as vice president of sales.
"He wanted to help his brother-in-law, he came to believe in the product," Howard Dahl says of Gene. "He took a real long view of things and put together a good team."
Gene would lead the company into an unprecedented decade of growth in agriculture. The Russians had poor crops and bought large amounts of U.S. grain in the early 1970s. In 1973, U.S. Secretary of Agriculture Earl Butz urged farmers to plant "fencerow to fencerow" and to "get big or get out."
Farmers leveraged and grew rapidly, using large, four-wheel-drive Steiger tractors. Steiger moved from rented manufacturing plants into a large, modern facility, and employment peaked at 1,200. Soon after, International Harvester took one-third of the ownership.
By 1981, loan interest rates peaked at 20 percent. Farm debt-to-equity ratios were at 29 percent (compared to 11 to 12 percent today, Howard Dahl remembers). In 1982, International Harvester, which had long been the No. 1 in agricultural equipment sales, was on the ropes.
Despite the increasing U.S. pressure, Steiger made a profit in 1984, buoyed by Australian sales, which accounted for one-third of the total. But when that country experienced drought and an economic collapse, the banks in Australia, Canada, and later the U.S., "turned chicken," Doug Steiger remembers. In 1982, International Harvester had sold its one-third ownership in Steiger Tractor to Deutz-Fahr in Germany.
In 1986, CEO Irv Aal, announced the company would file Chapter 11 bankruptcy reorganization. Doug Steiger says the company had a net worth of $44 million, but the banks were taking all of the receivables, so it was running out of operating cash.
In 1967, Tenneco Corp. of Lake Forest, Ill., purchased a controlling interest in J.I. Case. In 1984, Tenneco Case took control of International Harvester's agricultural division and changed branding to Case IH.
In 1986, J.I. Case purchased Steiger Tractor out of bankruptcy reorganization, but after reportedly losing $2 million per day Tenneco sold its oil company. In 1994, Tenneco sold Case to Fiat, which in 1999 merged with New Holland Ag to form a parent company, CNH Global. The company continues to operate a tractor and wheel-loader plant in Fargo.
Howard Dahl and Doug Steiger think J.I. Case might have gone bankrupt too, had the company not been purchased by Tenneco, which put billions into Case through the 1980s. Mark Andrews, a Mapleton, N.D., farmer, former U.S. senator and long-time U.S. House member, joined the Tenneco board in 1987.
After the Steiger sale, Doug and Maurice Steiger continued part ownership of Hydra-Mac, a Thief River Falls, Minn., firm that made company garbage compacting equipment and, at the time, skid-steer loaders. By the 1990s, the two parted ways to pursue separate ventures.
Gene Dahl helped his sons, Howard and Brian, who in 1977 had formed Concord Inc., develop the Concord Air Drill. After surviving the downfall of the economy in the 1980s, the company grew by 50 to 70 percent annually in the 1990s, in part because it cut costs while increasing yields.
Peter Christianson, son of Earl and grandson of Anton, in 1988 joined with Dave Meyer to form Titan Machinery of West Fargo, N.D., the world's largest agricultural equipment retailers.
In 1996, Howard and Brian Dahl sold Concord to Case, but kept sugar beet equipment and continued to market drills in Russia. The same day, they restarted as Amity Technology, primarily as a manufacturer of sugar beet equipment. They added Wil-Rich Manufacturing Co. tillage in 2001.
In 2008, Gene Dahl died at age 83.
In 2011, Amity entered a 50-50 joint venture with AGCO for making and selling on tillage and seeding equipment, but other Steiger veterans like Barry Batcheller went ahead to form Phoenix International, now a division of John Deere and Appareo Systems LLC.
Case New Holland builds all the large four-wheel-drive farm tractors and wheel loaders. The lime-green Steiger color was retired before 1990, in favor of Case-IH red, and CNH still offers large horsepower STX Steiger models, with Quadtrac tracked options.
Through the years, the Bobcat was named by Fortune magazine as one of the 100 best products of the U.S., Clark Equipment was sold to Ingersoll-Rand in 1995 and then to Doosan, of Seoul, South Korea, which does business as Bobcat. It is headquartered in Fargo, and employs about 1,600 people in Gwinner, N.D., and a similar number throughout North Dakota.
'Hold your breath'
Howard Dahl and Doug Steiger, whose families survived the last farm crisis, see key differences with today's commodity price declines.
Dahl says a big difference is farmers today have 11 to 12 percent debt-to-equity, compared to 29 percent coming into the 1980s. "A lot of farmers are not cash-flowing; they're borrowing money on their land to put in a crop," he says. "There are going to be casualties."
Dahl says equipment dealers are ordering equipment only when it's sold at the retail level. "When retail is off - and on some products 70 percent - it's a really challenging time," Dahl says.
"I think times like this are times to make sure that what you're doing is going to add value to farms," Dahl says. "If it is worthwhile, we're going to find a way to match our sale with their purchase."
Doug Steiger thinks it will be several years before agriculture sees a recovery, which would be helpful to machinery makers. He thinks neither major political party has a "vision for agriculture," and he is concerned about either administration artificially imposing trade barriers that can affect U.S. grain exports.
After going through the 1980s, he is loathe to make predictions. "If you're a prophet and you don't put a date on it, you're going to be right," he says, smiling. "If you're young enough, and healthy enough, you can hold your breath through it."