Q&A: Howard Dahl

Communism is now on its last legs. Back when Howard Dahl spent a summer split between Austria and Hungary in the early 1970s, though, Communism ran full throttle across Eastern Europe.

"I spent a summer in Vienna working on Steiger [the tractor company then owned and managed by his family] business and a joint venture with the Hungarian State Railway Works (RABA). Dahl now serves as CEO of a joint venture, AGCO-Amity JV, LLC, in Fargo, North Dakota.

"Experiencing the Communist environment of Hungary, I kept asking 'Why is Communism so attractive?' The comparison between Vienna and Budapest at that time was so striking. I felt I needed to understand the world a little bit better."

So, Dahl spent a couple years at the Trinity Evangelical Divinity School in Chicago, earning a master's degree in philosophy of religion. He wrote his master's thesis based on Karl Marx's (the founder of Communism) economic philosophy.

This sharply contrasted with the bachelor's degree in business administration he earned at the University of North Dakota and with a family background steeped in entrepreneurship. Dahl's grandfather, E.G. Melroe, founded the Melroe Manufacturing Company in Gwinner, North Dakota, in 1947. Melroe Manufacturing is best known for its Bobcat Loaders.

"The year I finished college, the company was sold," he says. "The company was such a central part of my formative years that it was a shock when it was sold."

About that time, though, the Steiger tractor company had moved from the northern Minnesota farm where it originated into Fargo. "My uncle, Les Melroe, bought control of the company that was struggling. He persuaded my father to come in as a partner and as CEO. He (my father) told me that blood runs thicker than water, and he needed to go in and do something to help his brother-in-law."

After attending the seminary, Dahl returned to Fargo, planning to work at Steiger. Instead, he started the air seeder company Concord in 1979.

Below, Dahl discusses his business experiences, philosophy, and what it was like to do business in the former Soviet Union.

SF: How did Concord start?

HD: It started out not as an air seeding company, but in trying to develop a tractor for the poorest of the poor in Africa. It was a need I became aware of while working at International Harvester while in seminary.

We shifted gears in 1979. Air seeders were just coming into the Canadian market as well as into North Dakota. We had an idea through an engineer working with us that would change air seeding. It took us until 1989, though, to know we would really be successful.

SF: What made Concord successful?

HD: We set the standard for what air seeders should be. Everyone else (after Concord) then went to floating hitches and row-by-row precision packing.

They (Concord air seeders) reduced fuel used and conserved moisture. They gave the ability to no-till, but if you wanted to do conventional tillage, you could do that, too. It planted seed at an even depth and had really good packing. Out of the 5,000 Concords that we built, many are still running, planting wheat and soybeans. One unit in South Dakota just put in its thirty-ninth crop.

We actually had farmers planting corn, where they would plug two out of every three runs (to create 30-inch corn rows). It was almost bulletproof.

We surveyed farmers as to what value their Concord brought them. We figured it had a $14 per acre value in 1990 dollars. In today's dollars, it would be even more significant.

SF: Why did you sell Concord?

HD: On June 11, 1995, Case came to visit me in the morning, wanting to buy the company (They did). That same afternoon, Deere called, asking if they could buy the company.

The main reason we sold is that it had been a tough, tough, 15 years for everybody in the machinery industry. My mom's health was also not good, so a big determination was giving financial freedom to my parents.

SF: Was it emotionally difficult to sell Concord?

HD: It still is. It was the happiest time of my business career, almost magical in so many ways. From 1989 to 1995, we grew at a rate of 70% a year. It was an embarrassment of riches that I'd never experienced before and will never experience again. Dealer recruitment can be so difficult, but dealers came to us asking, "Could I sell your product?" We had many farmers in the 1980's tell us that had they not bought a Concord, their farm would not have survived.

I was committed to staying long term on the air seeder side and developing the markets in Russia, Ukraine, Kazakhstan, and China. All that changed when Case sold out to Fiat. I think Concord would have remained the air seeder leader, but Fiat had a whole different view when they shut down the Concord operation in 2000 in Fargo.

After that, most of my time was spent focusing on sugar beet equipment, a product line we owned that did not go to Case in the sale of Concord. We have shipped almost 1,000 sugar beet harvesters into the export arena and had tremendous success in Russia and Ukraine in the 2002 to 2010 era.

SF: When did you first do business in the former Soviet Union?

HD: The fall of 1991, when we shipped our first five Concord units. We had a tremendous response. I believe we sold 500 Concords into Russia before John Deere sold their first air seeder.

SF: What differences stuck out doing business in a Communist country at that time?

HD: In the early years (1992, 1993) we would meet with the management of a company. The Communist party secretary for the factory would sit in the meeting as well, just to make sure things were going OK.

During negotiations, I would say, "Well, if we're going to do a joint venture, could I see your income statement and your balance sheet?" They said, "What's an income statement? What's a balance sheet?" They had no idea. It was a command economy. They were just told what to build.

SF: What were the Soviet people like?

HD: Culturally, I felt right at home with them. Anyone who loves the great music of Tchaikovsky or loves reading Tolstoy realizes we have a lot in common.

I still have deep, deep friendships with both Russians and Ukrainians and have many great memories, including vacationing together. They (historically) have had bad leaders. Forgetting their political leaders, there are some great leaders leading a number of companies. It is relatively easy to do business there, as for the most part, contracts are enforced, and the rule of law is fairly transparent.

SF: Are entrepreneurs born or made?

HD: Probably both. I learned so much through the terrible time in the 1980s (farm crisis). Between 1981 and 1987, farm equipment sales declined every year, and 1987 was the bottom. We were trying to start a business (Concord) during that time. We struggled for survival and almost did not make it.

Those really tough times have really helped shape my own equilibrium. With the tough times now, I can compare it with the past and say, "Yeah, I have been there before."

I also had the privilege of watching my grandfather, father and uncles who were passionate about innovation. When my father was in hospice two weeks before he died, I asked him, "What do you want to talk about?"

"What are you doing that's new?" he replied.

SF: What role has your religious training played in your career?

HD: There is the whole idea of trust, of being truthful in all that you do. I've never seen a time when the Golden Rule of "Do unto others as you would have them do unto you" didn't apply in business. There's no good business transaction unless it's good for both parties.

We saw that in Russia and the Ukraine. There were a lot of companies that came in and would charge double over there what they charged here. Back then, the average Russian didn't know the value of money. For many during the 1990s, privatization was like playing with Monopoly money. Many western companies charged extremely high prices to buyers that did not know any better. Later on, those customers would find out the true price and feel ripped off, taken advantage of.

We had the same pricing for all of those customers as here (with freight added in). There was a lot of trust that we built up. So, I think in that regard, my faith has helped guide a lot of complex business decisions. Imperfectly, I try to live out the motto on a beautiful piece of art I have hanging in my office: Soli Deo gloria—to God alone be the glory.

SF: What was one of the biggest things you have seen that impacted U.S. agriculture?

HD: The Russian drought of 1972 (that sparked massive subsequent U.S. grain sales).
Everything was different after that, with the amount of income that U.S. farmers got in 1973 and 1974. It was the (per bushel) equivalent of $52 soybeans, $28 wheat and $16 corn in today's dollars.

SF: What's sparked all the machinery innovation coming out of North Dakota?

HD: Compared to the heart of the Corn Belt, we have greater weather problems normally. We can have early frosts, and the window of getting the crop in and getting it off is a little bit narrower. That may be one of the reasons we see so much innovation in our region.

SF: What's new now?

HD: We're constantly talking to the most innovative farmers on what they want to see as far as innovation. One of the fun things we've done in the past few years is with Riverview Dairy (Morris, Minnesota). They want to find a way to keep trucks out of the field when it's really wet. So, we built a bunch of silage carts on track carts for them designed to their specs that can fill a truck in about 80 seconds.

SF: Where do you see the machinery industry heading?

HD: The Steiger tractor really changed things. High horsepower tractors became the norm.

But there's been a lot of speculation that we're going to see autonomous farming, with smaller tractors but more of them. Instead of having 60-foot planters, we'll see more 10-foot planters. That remains to be seen. I think directionally, though, we are going to see the autonomous farm become a part of the future.

Background: Howard Dahl received an early introduction to entrepreneurship as an 8-year-old, taking inventory with his father, Eugene, at the Melroe Manufacturing Company in Gwinner, North Dakota, that his grandfather, E.G. Melroe, founded in 1947. He eventually helped test attachments on the firm's popular Bobcat skid-steer loader and also worked as a draftsman.

"I had a wide variety of wonderful experiences," he says.

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