“He believed that if you worked together and solved your problems together, then you grew together.”
According to those who knew him best, Joe MacDonald would have been “shocked” by his induction into the Association of Equipment Manufacturers Hall of Fame, November 4th, 2015.
It is an honor shared by such industry legends as Jerome Increase Case (J.I. Case Machinery Company), Simon Ingersoll (Ingersoll-Rand), and the iconic John Deere himself. But for a man who has also been acknowledged as one of the “100 most significant contributors to the mechanization of agriculture” the shock would have only been his for being placed among such revered company.
“If he had been there to accept the award, I can hear Joe saying ‘I’m only here because of MacDon’s employees, vendors, OEM (Original Equipment Manufacturer) partners and customers – people who have been with us through good times and bad to make this company what it is,’” said Gary Giesbrecht, MacDon President and CEO.
“For Joe it was never about him, always the people around him. He was such a humble man that he would have had trouble accepting any credit.”
But the credit was truly his.
If not for Joe MacDonald, the draper technology that today’s high capacity combines rely on might not exist. The implications this may have had on agriculture can only be speculated upon, but what is known is that twenty-five years ago the draper category for combine headers didn’t even exist.
Today, nearly 80 percent of the combines sold in North America are delivered with draper headers as opposed to conventional rigid and flex auger headers, not including combines sold with corn headers. It’s a trend echoed in other markets around the world and with the world’s population pushing 7.5 billion, we can be very thankful that the technology is available to help farmers keep pace with growing global food demands.
Of course none of this future was even glimpsed in 1970 by a 46 year-old Joe MacDonald when he was asked by his good friend Tom Killbery to come to Winnipeg, Manitoba, and help rescue his struggling farm equipment company, Killbery Industries Ltd. It was a stressful period in agriculture due to extremely low commodity prices which had depressed machinery sales across the industry. At the time Joe was President of White Farm Equipment (Canada), the product of a recent amalgamation of the Cockshutt, Oliver and Minneapolis Moline Farm Equipment companies which Joe had helped bring about.
“It was a brutal time at White for Dad,” recalled son and former MacDon Executive Vice President Gary MacDonald. “There were lots of firings and Dad was seeing many good friends go. He thought ‘I have to get out of here or it’s going to kill me,’ so he was more than open to the offer from Tom Killbery.”
What Joe found in Winnipeg was a business that made good products, but was hampered by fixed expenses and declining sales. Joe immediately went to work helping the company revive its business, but it wasn’t long before Tom Killbery confronted Joe with an even bigger challenge.
“So Tom says, ‘let’s cut to the chase Joe. The company needs your leadership and direction. You have to buy us out.’ And Dad looks at Mr. Killbery and says ‘Tom, I would do anything to help you, but I don’t have more than the two quarters in my pocket. How can I buy your company?’”
Under Tom’s suggestion, Joe sought financing from Canada’s big five chartered banks, plus three regional banks. Unfortunately, Joe’s business pedigree wasn’t enough – they also required significant collateral; all five of the chartered banks and two of the regional banks politely turned him down. Then, with just hours to go before the bank was going to shut the operation down, Joe received a call from the Mercantile Bank of Canada, the eighth and final bank that Joe had approached.
“The guy on the phone says I’ve got the regional VP here, can we come out to see you? My Dad, almost resigned to his fate and still feeling the sting of the seven previous rejections, says, ‘I’ve got to be honest with you; if you’re going to say no, I’d just as soon hear it now and then I can figure out what I am going to do with my family, and where I’m going to live and what I’m going to do.’”
But the man from Mercantile was persuasive and succeeded in getting Joe to say ‘yes’ to the visit. It would prove to be the most important yes in the history of MacDon.
“So he comes out with this VP, a young man named John Cleghorn. Now my Dad was 47 and Cleghorn was 30, so he was pretty young to be a VP of a Canadian bank. After a tour of the operation, Cleghorn says to Dad, ‘I’ve got to be honest with you, I know you’ve never started a business before, your business plan could be better and you’ve got no collateral, but we’ve done our homework on you and all of your references are A-plus. I will back you Joe because a company like yours deserves to succeed, and you’re the guy to do it.’”
And so with nothing more than Joe’s good name, MacDon was born. It was also the birth of a long and fruitful relationship between John Cleghorn and MacDon. Joe remained loyal to John for the faith that he had shown in him, so much so that when John joined the Royal Bank of Canada after The Mercantile was purchased by the National Bank of Canada, Joe would eventually bring MacDon’s business over to the Royal Bank.
“Dad wouldn’t have been in business if not for John Cleghorn. He was smart enough to figure out that in spite of my Dad’s lack of capital and inexperience in putting business plans together, that he was a quality guy. For years, Dad would never go through a meeting without telling people what John Cleghorn did for him. And John never seemed to forget it too, for whenever business brought him through Winnipeg, even when he was Chairman of the Royal Bank, he never failed to pay MacDon a call.”
That early financing deal provides a glimpse of the magic that was Joe; a man who could win contracts almost on the strength of his personality alone.
It was a skill that would serve him and his company well in the years ahead. Joe’s plan was to not just rename the company MacDon, but also remake it into an OEM focused powerhouse based on Killbery’s proven swather business. However, instead of producing products under its own brand and competing directly with much larger companies like International Harvester, John Deere and Massey Ferguson, Joe determined that the company’s path to success would be to turn competitors into partners and sell MacDon-built equipment to them as an OEM supplier, even Joe’s former employer White Farm Equipment.
“His vision was that we weren’t going to put our name on all of our equipment, but rather other companies’ names. We were going to paint our equipment red, blue, yellow or green, it didn’t matter. As long as we were building and selling equipment, the company was safe, jobs were safe.”
Gary Giesbrecht says that MacDon’s becoming an OEM supplier to not just one, but several large equipment manufacturers at the same time shows how much respect Joe had already earned in the industry.
“The OEM supplier relationship is a tough dance because what you’re doing is building a product for another company and putting their name on it and in some cases, the same product under different brands. It does take a special person to navigate that kind of relationship. If you don’t have strong ethics like Joe had, that relationship doesn’t even get started.”
Compounding Joe’s challenge was the fact that he wasn’t negotiating typical OEM contracts.
“We weren’t just building small ticket items,” says Giesbrecht. “We were producing harvesting equipment that would carry a company’s reputation. Believe me, those companies had to pick the right partner; more than just trusting the product they were buying, they were trusting the people they were buying from. And they trusted Joe.”
Key to that trust was Joe’s overall approach to business. He didn’t think in terms of suppliers, dealers or customers. Instead he saw partners. His philosophy was that you didn’t get ahead by making an extra dollar at the other guy’s expense; you got ahead when everyone made an extra dollar, including the end user.
“He believed that if you worked together and solved your problems together, then you grew together,” recalls Giesbrecht. Joe taught us that every person, every vendor, every supplier, every customer is important. If he found out someone was in trouble, he would be the first person to come to the rescue.”
Giesbrecht says that even when circumstances forced the ending of a relationship, Joe made sure that bridges were never burned, and that the respect remained.
“He had an ability to diffuse even the most tense situations. In business meetings he would take time to listen to everyone’s opinion, even the most junior person in the room. He treated everyone as an equal.”
Gene Fraser, MacDon’s Vice President of Global Sales and Marketing who joined the company in 1981, says that treating people well was central to Joe’s character. He was known for picking up employees at bus stops on his way into work, or secretly paying for an employee’s dinner if he saw him or her out for dinner with their spouse at the same restaurant. Many of his acts of kindness were known only to the employee themselves, such as when an employee experienced an unexpected death in the family and was told by Joe himself to take as much time as he needed to return to work. Touches like that helped instill a sense of “family” early on among MacDon employees, a sense that remains today even though the company has now grown to approximately 1,350 people. He was loyal to his employees, and they were loyal to him in return.
“As astute a marketer as Joe was, he was even more a guy who loved people,” says Fraser. “It was typical for Joe and his wife Anne to host get-togethers, not only at their house, but also on the road at conventions or association meetings. He never talked about himself. Instead it was always ‘How are you doing? How’s your family?’”
And when it came to business, Joe always found a way to make it personal. He didn’t just sign contracts, he made friends.
“I think that Joe’s communication style, the way he treated people with honesty and integrity, his ability to make friends with everyone, was central to being able to forge a lot of those OEM contracts. Those friendships built the trust that was necessary for MacDon to be able to sell machines to companies that were not only competitors with each other but also competitors with MacDon itself.”
Of course, no one succeeds in business by just being a nice guy. Joe also brought to the table an exceptional set of skills that set him apart from most business people.
“Not only did Joe have an amazing marketing and sales mind, he was unbelievable with finances as well,” says Giesbrecht. “Very seldom do you find a person good at sales who is also solid financially. He was extremely detailed in his approach.”
Another quality of Joe’s that would prove invaluable to MacDon was his shrewd ability to turn a business weakness into a strength. While the large manufacturers of the day were able to devote significant resources to product development, that wasn’t the case for a smaller company like MacDon. The solution was for MacDon to basically “listen to the customer”.
“We had some great engineers, but not nearly enough of them,” says Gary MacDonald. “While the larger manufacturers had no need of – let’s call it – the brilliance of their customers, for us it was essential. We didn’t have enough money to hire all the engineers we needed, so we relied heavily on our customers in those early days, and they provided us willingly and eagerly with
their best ideas.”
Many of those ideas resulted in fruitful paths for MacDon’s engineers to explore, eventually finding their way into MacDon’s products. Farmers benefited by having access to machines that better served their needs, and MacDon benefited by having unique products that kept the company competitive, product drive and always looking forward.
Building upon strong business and work ethics, combined with the right products, MacDon was able to forge successful OEM relationsips with several leading agriculture equipment manufacturers.
But as mutually profitable as MacDon’s OEM partnerships were designed to be, it would prove to be one of those partnerships in the mid-80s that would hand MacDon its biggest crisis in its history, as well as the most stern test of Joe’s mettle to date. The crisis would fall with surprise and suddenness when the Vice President of MacDon’s largest OEM partner arrived one spring day at MacDon’s headquarters to deliver an unwelcome ultimatum; his company was experiencing financial difficulties and wouldn’t be able to pay for the $13 million worth of equipment MacDon had been building for it since the fall. As a take-it-or-leave-it proposition, the VP suggested that MacDon consign the equipment over to his company’s dealer network and only receive payment when, and if, the equipment was sold.
Scott MacDonald, former Vice President and youngest of the MacDonald brothers, picks up the story: “that guy was handing MacDon a devastating problem. Here we had all of his product ready to go and sitting in our yard, painted and decaled. The sinister part about it was that he had waited precisely for this moment when we would have zero options but to agree to his dictate. Worse, he was doing something our Dad would never do in business; trying to bully us into doing his bidding.”
After hearing what the VP had to say, Joe calmly got up and walked the man to the door saying to him “thanks, but we’re perfectly capable of going broke all by ourselves.” It was a pivotal moment for Joe and his company of about 500 employees. He was abruptly ending the company’s relationship with its biggest customer; everyone’s livelihood was up in the air.
“Dad was singularly minded in a moral way so that in any given circumstance, no matter how dire or stressful, he always found a way to do the right thing by those that depended on him. He understood in that moment that one of the industry’s largest manufacturers was trying to harm his company, and everybody associated with it. So even though he didn’t know where the path would lead, he knew that the right thing to do was to distance MacDon from this company. He made his decision in a nanosecond, and never looked back.”
With millions of dollars worth of swathers needing to be quickly sold, Joe reached out to Westward Parts in in Red Deer, Alberta, a company that was already selling MacDon pick-up reels. Even though Westward wasn’t interested in selling swathers, its owner Al Harris liked Joe and agreed to help him out by accepting the product and reselling it with a Westward decal. Although it was only supposed to be a short term arrangement designed to help get MacDon out of the jam, it turned out to be a profitable one as well; so profitable, in fact, that it would continue for another 25 years until MacDon’s purchase of Westward Parts in 2012.
But Westward Parts, and the Western Canadian market, could only handle a portion of the inventory that MacDon had to sell. The rest would have to be sold in the U.S. Unfortunately, there wasn’t a distributor like Westward in the U.S. that MacDon could approach. After considering all the options, it was decided that the equipment would not only be sold under the MacDon brand, but that the dealers of its former OEM partner would be approached to sell it as well. It was a move that would not only annoy its former customer, it also had the potential of alienating MacDon’s remaining OEM customers. But MacDon tread cautiously, being careful to offer its MacDon branded products at a price fair enough that none of its customers could complain. It was the start of the MacDon we know today.
“The irony of the story is that OEM did us a huge favor because it was the event that launched us into having our own dealer network and selling our equipment under the MacDon brand.” Scott MacDonald says that the OEM incident would also prove to have significant educational value for he and his brothers.
“That moment has been huge for myself and my brothers in how we run the company. Hundreds of times, tons of important times, the lessons of that moment have shown up in our decision making. One thing that it taught me personally is that it doesn’t matter how big or small the customer is you treat them all the same way. Whether I’m standing in an alfalfa field with one of our customers, or standing in a boardroom with the executive of the largest agricultural manufacturer, everyone deserves the same respect and should be treated the same way.”
Gary MacDonald points to another important legacy Joe would pass on to his sons: his clear vision for how the company was going to succeed long term. He knew that as a smaller ag manufacturer, the company had to find a manufacturing niche where it could be recognized as the industry leader.
“He used to say to us ‘whatever we’re going to do guys, we’ve got to be the best at it. We can never get distracted from that.’”
Gary MacDonald says it was his Dad’s commandment to “be the best” that led MacDon to vigorously pursue the development of draper technology in the mid-1980s that has become so dominant for combine headers today. At the time Western Canadian farmers were starting to use conventional auger headers to direct cut their grain, and that gave MacDon’s leadership an idea.
“We were really trying to protect our interests. We asked, can we take our draper technology, which we believed we were leaders in at the time, and put it on the front of a combine?”
It was a simple question, but it proved to be an immense challenge for a small company like MacDon with limited engineering resources.
“There is no way the big companies would have invested that amount of time into a project like that. The development was arduously slow. There were many times we asked ourselves, are we throwing good design time away on something that won’t work?”
In the end, it took about eight years for MacDon to develop a product it could bring to market. Unfortunately, Joe would not be there to witness the growth which came over the mid 1990’s, having passed away in 1991.
“It took us years to get there, and many more years to make our money back, but when we got there it was worth it. We found ourselves in a place that only we occupied, and we were leading the charge with our technology.”
Gary MacDonald says that Joe would have been proud, especially seeing the impact draper technology has had on world food production today.
“Even though Dad was gone at the end, it was him speaking to us on the project. His words were always with us urging us on, reminding us that our mission was to be leaders in something.”
“MacDon relies heavily on good strong ethics, and that’s all thanks to Joe and how he raised his sons, to whom he turned the business over,” says Gary Giesbrecht. “In many ways you could say that Joe is still a part of everything we do.”
Back when MacDon was just starting to grow as a brand, the company employed the tagline “The Quiet Leader.” At the time it was a reflection that few people – even the farmers who depended on its equipment – knew that MacDon was a leading producer of harvesting machines in North America. But, perhaps, the true quiet leader all along was Joe MacDonald himself; an accomplished, yet humble, man of business who was able to rescue a company with his handshake and then set it on a path that has allowed the farmers of today to keep pace with an increasingly hungry world. For a man who never failed to lend his hand to someone in need, there can be no more fitting legacy.
Thank you Joe.