Episode #408: Neil Dahlstrom, John Deere – Tractor Wars: John Deere, Henry Ford, Worldwide Harvester, and the Beginning of Trendy Agriculture – Meb Faber Analysis

Episode #408: Neil Dahlstrom, John Deere – Tractor Wars: John Deere, Henry Ford, Worldwide Harvester, and the Beginning of Trendy Agriculture


Visitor: Neil Dahlstrom has spent practically 20 years because the resident archivist and historian at John Deere. He’s additionally the writer of Tractor Wars: John Deere, Henry Ford, Worldwide Harvester, and the Beginning of Trendy Agriculture.

Date Recorded: 4/6/2022     |     Run-Time: 50:43

Abstract: In at this time’s episode, enterprise wars hits the farm! Neil’s e book is a case examine on the evolution of the tractor trade and it’s significance throughout a time the world was experiencing a world plague, World Struggle & meals shortages. We contact on all the most important gamers, together with a younger Henry Ford. We even stroll by way of he totally different methods every firm took round pricing and distribution.

As we wind down, we contact on the way forward for the trade with issues like autonomous tractors and drone know-how.

Sponsor: AcreTrader – AcreTrader is an funding platform that makes it easy to personal shares of farmland and earn passive earnings, and you can begin investing in simply minutes on-line.  Should you’re occupied with a deeper understanding, and for extra info on learn how to change into a farmland investor by way of their platform, please go to acretrader.com/meb.

Feedback or solutions? Concerned about sponsoring an episode? Electronic mail us colby@cambriainvestments.com

Hyperlinks from the Episode:

  • 0:40 – Sponsor: AcreTrader
  • 1:31 – Intro
  • 2:15 – Welcome to our visitor, Neil Dahlstrom
  • 5:07 – The inspiration behind Niel’s new e book, Tractor Wars
  • 7:08 – The transition of farm work from horses to equipment
  • 9:14 – Enterprise wars ways utilized by the totally different corporations
  • 26:47 – How John Deere endured and have become the corporate it’s at this time
  • 31:00 – Neil’s ideas on the development in direction of automation and the following period of farm gear
  • 35:45 – Neil’s private story and course of being an archivist at John Deere
  • 45:07 – The lacking piece Neil has but to uncover
  • 46:32 – What Neil is considering and what’s in retailer on the horizon
  • 47:23 – Study extra about Neil; neildahlstrom.com; Fb; Twitter; Linkedin; Tractor Wars


Transcript of Episode 408:

Welcome Message: Welcome to the “Meb Faber Present” the place the main focus is on serving to you develop and protect your wealth. Be a part of us as we focus on the craft of investing and uncover new and worthwhile concepts, all that can assist you develop wealthier and wiser. Higher investing begins right here.

Disclaimer: Meb Faber is the co-founder and chief funding officer at Cambria Funding Administration. As a result of trade laws, he is not going to focus on any of Cambria’s funds on this podcast. All opinions expressed by podcast individuals are solely their very own opinions and don’t replicate the opinion of Cambria Funding Administration or its associates. For extra info, go to cambriainvestments.com.

Sponsor Message: Immediately’s episode is sponsored by AcreTrader. I’ve personally invested on AcreTrader and may say it’s a very straightforward option to entry certainly one of my favourite funding asset courses, farmland. AcreTrader is an funding platform that makes it easy to personal shares of farmland and earn passive earnings. And you can begin investing in simply minutes on-line. AcreTrader offers entry, transparency, and liquidity to buyers whereas dealing with all features of administration and property administration so you possibly can sit again and watch your funding develop.

We not too long ago had the founding father of the corporate, Carter Malloy, again on the podcast for a second time in Episode 312. Be sure you take a look at that nice dialog. And in case you’re occupied with a deeper understanding, for extra info on learn how to change into a farmland investor by way of their platform, please go to acretrader.com/meb. And now again to our nice episode.

Meb: What’s up y’all? Now we have a extremely enjoyable enterprise wars present for you at this time. Our visitor is Neil Dahlstrom, the archivist and historian for John Deere, and the writer of the brand new e book “Tractor Wars: John Deere, Henry Ford, Worldwide Harvester, and the Beginning of Trendy Agriculture.”

On at this time’s present, enterprise wars hits the farm. Neil’s e book is a case examine on the evolution of the tractor trade and its significance throughout a time the world was experiencing international pandemic, wars, and meals shortages. That sounds acquainted. We contact on all the most important gamers together with a younger Henry Ford. We even stroll by way of the totally different methods every firm took round pricing and distribution. As we wind down, we contact on the way forward for the trade with issues like autonomous tractors and drone know-how. Please take pleasure in this episode with John Deere’s Neil Dahlstrom.

Meb: Neil, welcome to the present.

Neil: Thanks for having me.

Meb: The place do we discover you at this time?

Neil: I’m sitting in Moline, Illinois. We’re about three hours west from Chicago.

Meb: I used to be simply joking with you earlier than the present began, you bought an important new e book out referred to as “Tractor Wars,” and you’ve got a e book poster. And I mentioned, “Son of a bitch, you bought a greater writer than I do,” since you obtained a e book poster. I must hit ours up for some…I assume really, technically we self-published just a few of our books so I’m trying within the mirror at that time. However when did the e book come out?

Neil: Yeah, the e book got here out January eleventh. And that’s a kind of issues it feels prefer it simply occurred, it additionally feels prefer it occurred 15 years in the past. However I additionally obtained 5 years that I’ve been engaged on it so it’s been a very long time coming.

Meb: So was the pandemic the ultimate push be like, look, man, you possibly can’t do the rest chances are you’ll as nicely end up this e book you’ve been cranking on?

Neil: It’s humorous, I stored it a secret and I used to be about three and a half years in and mentioned one thing to my spouse and she or he goes, “Is that what you’ve been doing?” I mentioned, “Yeah, however I don’t need to inform anybody as a result of when you say it out loud, then you definitely obtained to do it.” And I began working from residence in March 2020 like quite a lot of different individuals.

And a few months later I mentioned, “Properly, I’m already working all day, day-after-day, I would as nicely throw this into the combination.” And I did that. The final e book I revealed in 2005 it took 5 years to discover a writer and I assumed, okay, nicely that provides me 5 years. And a month later I had a writer and thought what have I performed?

Meb: So you’re of the 400 episodes we’ve performed, to my data, the one archivist we’ve ever had on the podcast. Inform our listeners what that really even means as a result of I’ve a preconceived notion that my spouse actually disabused me of this morning. So inform me what an archivist does?

Neil: Properly, I don’t work in a basement, so that could be the primary stereotype I can debunk. However mainly, we’re within the enterprise of buying, preserving, and making information accessible. And a document is a generic time period for all the things from handwritten correspondence. In my case from John Deere, a letter written by John Deere, {a photograph}, a glass plate detrimental, a movie from the Nineteen Twenties.

Immediately, it means born-digital information, it means archiving the Web. But it surely’s deciding what we’re preserving and who to make it accessible. So if you concentrate on historical past and what we see and what we write, archivists are on the entrance traces of what we all know and what we now have as a result of you possibly can’t hold all the things.

Meb: I informed my spouse I mentioned, “The complementary idea in my thoughts comes like a collector.” She’s like, “No matter you do, don’t say hoarder.” As a result of I give my spouse a tough time for being a hoarder on a regular basis and there’s nothing that basically tweaks the dialog greater than that.

And it’s prime of thoughts for me as a result of we’re renovating our home and I want I had gone again and mentioned, “ what, I’m going to go chilly turkey. I’m going to eliminate all my possessions and begin a brand new.” However I didn’t after which when you’re within the center, it’s this infinite rabbit gap of what do I hold? What do I eliminate?

Anyway, that’s not the subject of this podcast, however it might have some threads. Okay, so what was the inspiration for the e book? As a result of this e book is enjoyable as a result of coming into it I used to be like, okay, that is going to be a John Deere historical past given your place.

But it surely’s very a lot a historical past of not simply machine growth of the final 200 years and the personalities, however the financial historical past of the U.S. and the world in fact. It’s extremely well timed at this time, which we’ll get into later given what’s happening on this planet. However what was the unique inspiration? Why did you resolve to place pen to paper for e book quantity two?

Neil: Actually, it was a very long time coming for me and I assume there’s a pair items to it. One is 2018 was the one hundredth anniversary of the John Deere tractor. So what comes with that’s occasions, and packages, and placing collectively speaking factors, and surfacing photographs, and data, and movies, so you possibly can have a giant occasion and rejoice your historical past.

The opposite a part of that was questions I’ve been requested over time that I’ve been unable to reply or perhaps didn’t prioritize answering. And other people would say issues to me like, “Boy, 1918, John Deere obtained into the tractor enterprise, why so late?” And I assumed boy, 1918, that doesn’t appear late to me. However I don’t perceive the context, the panorama to know if that was late, was it early? What did that imply?

I got here up with this actually a solution that was for me greater than something which John Deere was later than these earlier than them and earlier than these after him. And that’s my manner of going I don’t know and I’m actually bothered that you just hold asking me the query, nevertheless it’s all relative.

Meb: It’s enjoyable for me personally as a result of so many individuals on this nation are immigrants in some unspecified time in the future, whether or not that’s current or not so current. And quite a lot of my crew on my father’s aspect got here from France and Germany, however within the time interval actually profiled within the e book the nineteenth century, principally into Nebraska, and Kansas a part of the world. And that complete aspect of the household, I grew up with farm background and nonetheless farmers there at this time. I’ve quite a lot of fond reminiscences of being on the farm within the early days.

However let’s begin to start with, presumably…and I don’t need to give away all of the secrets and techniques of the e book as a result of we wish individuals to go learn it. But it surely began out not with John Deere however a unique persona and a unique firm that also exists at this time. So perhaps stroll us by way of this transition from…it’s loopy to consider this wasn’t that way back, however from horses to precise equipment?

Neil: In my perspective, I didn’t develop up on the farm I grew up in one of many Quad Cities. My dad labored for Worldwide Harvester he was within the store constructing combines. My grandfather did the identical factor. I’ve obtained relations that work for John Deere. My grandparents met at Minneapolis Moline, an organization that comes out of this later within the ’30s.

So my perspective was very a lot from the company archives of once I see information, I’ve an curiosity in personalities, I’ve an curiosity in individuals, why did they make choices. So it’s very a lot a unique perspective versus trying particularly on the machines.

However there’s this transition happening, particularly in the USA within the early twentieth century, a few of that’s led by the inner combustion engine which we begin to see on the farm in these small stationary engines or one and a half, three horsepower engines. That unexpectedly, now you’ve obtained mechanical energy to run an irrigation pump or a threshing machine. Bigger type of which are these large steam engines.

However you get into the 19 teenagers World Struggle I, you see different sort of world occasions. Now unexpectedly, you’ve obtained personnel shortages, you’ve obtained a necessity to provide extra with much less. And that’s actually what it’s all about. It’s the identical story we now have at this time.

And you’ve got an organization like Worldwide Harvester that’s 10 occasions the dimensions of John Deere. They’re the fourth or fifth largest firm in the USA. Immediately, it’s exhausting for us to imagine, you concentrate on a farm gear producer, they’re one of many prime producers, and half of their gross sales are exterior of North America. They’re very a lot main the cost from steam to gasoline tractors. They’re additionally within the automobile enterprise like quite a lot of these early producers are. So that you begin to see this overlap between early vehicle producers and early tractor producers. And that was one thing that basically drew me into the story.

Meb: So what was the preliminary growth and rollout of tractors? Place it for us on the timeline. And was it a state of affairs the place it was only one individual, one firm that develops it and turns into a monopoly or was there like 100 of those corporations all rolled out on the identical time? What 12 months sort of timeline would this be?

Neil: So in my thoughts, 1912 is sort of a giant 12 months, and there’s 5 or 6 tractor producers. And in reality, it’s actually exhausting to inform as a result of nobody was preserving the info. Nobody is preserving the statistics as a result of a tractor producer actually isn’t a factor. You had a lot of early corporations that began within the late nineteenth century they usually’re constructing one or two or three machines. They’re all totally different, they’re crudely manufactured so the concept of a tractor producer doesn’t actually exist.

The trade whole is a pair thousand machines. In order that goes from 1908, 1910, you could have an organization like John Deere whose board passes a decision in 1912 that we’re going to research the tractor market, and we’re going to determine whether or not or not there’s a future, as a result of they didn’t know, and determine all of the several types of tractors. A few of these issues are 50, 60 horsepower, they’re monumental machines, there are some smaller ones that don’t work, they tip over.

In order that’s 1912, there are 6 million farms in the USA. Most of them are lower than 50 acres. So examine that at this time, the common farm is 440, 450 acres. There are about 2 million farms in United States so a 3rd of what there was 100 years in the past. So tractors as much as that time are principally large, they’re constructed for large farms out West. So in case you’re in Illinois, in case you’re in Kansas, you’re not shopping for a tractor since you don’t have sufficient land. It doesn’t make monetary sense for you however between 1912 and 1918, you see this big growth.

What actually modifications the sport is 1913, an organization referred to as the Bull Tractor Firm bursts onto the scene. Now its founder, that is his third or fourth go round within the tractor enterprise, he hasn’t gotten it proper but. So he’s a serial entrepreneur, he’s making an attempt to develop the following factor. Properly, what he develops is a small tractor. Pulls one or two plows and most tractors are used really to simply pull a plow. It’s used for tillage work in that time frame. But it surely goes from nonexistent to market chief in a interval of a 12 months.

It’s not very efficient, it’s not mechanical tractor, it breaks down, it ideas over. That is large heavy gear nevertheless it’s small and most significantly, it’s reasonably priced. So if I personal 50 acres, I can afford to exchange two horses with a tractor. So it’s obtained to make monetary success to make that funding.

Now unexpectedly, you’ve obtained a handful of producers, it goes from a dozen to 100 in a pair years as a result of they are saying oh, we are able to design and construct a small tractor. In order that was actually the impetus for this simply big explosion in producers and totally different kinds of tractors within the 19 teenagers.

Meb: It’s humorous, I used to be watching some Historical past channel overview of the tractor area. And it’s enjoyable to place photographs to what’s happening since you neglect a few of these designs. Such as you talked about just like the Caterpillar, identical to these big machines and a few have been steam-powered, and a few had the metal wheels and the pneumatic tires like on and on, these little improvements.

However the origins in lots of circumstances, Ford and others, it was individuals designing this stuff of their kitchen as a result of these have been within the early days. So going again earlier to what you consider once you consider invention and innovation. You touched on one thing that I believe is necessary, as you concentrate on know-how adoption on the time, farming in that interval was very a lot a household endeavor. 5 hundred acres remains to be rather a lot however for a lot of, manner smaller than the large farms of at this time.

However farming has additionally been a narrative of booms and busts. Even not too long ago, farming quite a lot of crops within the final decade has been fairly subpar fashion returns however not as dangerous as again to the overleveraged, what was it, ’80s I believe when quite a lot of farms actually struggled. However take us again to the early twentieth century, you had quite a lot of geopolitical stuff happening, World Wars, a pandemic, we are able to say that, the Spanish flu, a bit extra acquainted at this time.

However there have been quite a lot of macro tendencies happening and certainly one of which was the battle growth of tanks and different issues like that. Speak to me a bit bit concerning the influences that performed out, was {that a} huge push for the event of equipment on farms on the time, or was it completely pulled from precise farmers themselves?

Neil: I believe it was actually all of the above, you’ve simply obtained a altering demographic. Individuals are youthful there’s quite a lot of new tech on this planet, superb issues like electrical energy, indoor plumbing, radios. There’s additionally quite a lot of actually well-paying jobs within the cities. You consider vehicle producers in Detroit going to New York Metropolis, the attract of the large metropolis just like at this time.

So you could have younger individuals simply leaving as a result of they need to do one thing on their very own. They don’t need to keep on the farm. It’s too conventional, it’s been this fashion for 100 years, 200 years, I need to exit and do one thing new.

Along with that World Struggle I begins in 1914, the USA enters in 1917, that does quite a lot of issues. However one is now younger persons are leaving to go to battle. We’re additionally delivery hundreds of thousands of horses abroad. So now you could have a horse scarcity in the USA and you bought to exchange that energy with one thing. So there are quite a lot of components.

After which, in fact, you bought your early adopters such as you do in any trade of farmers who’re going, okay, nicely I need to enhance my productiveness. I need to go from being a self-sustaining farm which means I can develop sufficient to feed my household perhaps a few employed fingers. To okay, nicely, now I can produce sufficient that I can really run an extra enterprise, I can purchase extra land, I can make investments extra.

Know-how allowed farmers to try this actually for the primary time. So it’s actually a sea change. They referred to as it energy farming. That’s what producers began to make use of as a phrase to speak about this alteration within the farming panorama.

Meb: Speak to us a bit bit how this performed out with the totally different gamers jostling for dominance? You may have quite a lot of the…what everybody acknowledges lemonade fashion one on one enterprise ways happening. You had worth wars between the choices and differentiation between options, you could have some corporations which have gross sales and distribution which are extra localized and extra international. Which of the businesses survived and thrived on this setting? After which are there any good tales or ideas you suppose actually outline that interval of the origination of those tractor manufacturers?

Neil: I imply, there are quite a lot of these tales. Actually, the narrative of the e book follows John Deere, Worldwide Harvester, and Henry Ford. And actually once I began the analysis, it took me three years to determine who these corporations have been and the way these narratives have been intertwined. In 1910, there’s a handful of corporations, by 1920, there’s over 160 corporations manufacturing tractors. So you could have this big bubble they usually’ve all obtained totally different concepts.

If we have a look at the three predominant corporations, Worldwide Harvester is the mainstay. They’re the gold commonplace, they began growing what they referred to as an Auto-Mower. They get within the vehicle enterprise, they begin growing a few totally different kinds of tractors that are dependable they usually’re profitable, however they’re costly. We’re speaking, it’s going to value you in 1915 $1,200 to purchase a tractor. It’s 3 times your annual earnings so these aren’t cheap purchases.

You may have an organization like John Deere that went from $3 million in gross sales in 1910 to $33 million in gross sales by 1918 by way of principally acquisitions, mergers, consolidation of gross sales branches, and issues. What which means is that they borrowed some huge cash with a view to make it occur. They’re a bit hesitant as a result of they don’t perceive the market. And so they obtained to get it proper as a result of in the event that they don’t get it proper, they’re going to go bankrupt. And so they can’t discover a banker who’s going to present them sufficient cash to construct a tractor manufacturing facility or to even facilitate designing a manufacturing facility.

After which you could have Henry Ford. The Mannequin T is launched in October of 1908. And in November, he sends a photograph and a brief letter to the “Farm Implement Information,” which is a farm publication out of Chicago, and says, “I’m growing a farm tractor.” And most of the people who had learn that might have mentioned, yeah, so is all people else, and who’s Henry Ford?

Six months later, all people knew who Henry Ford was. He’s obtained to cease taking orders on the Mannequin T, and unexpectedly, what he has is scale over the following couple of years. And I really like the Henry Ford story. This is without doubt one of the issues that sucked me into this total. The meeting line is actually what accelerated the tractor trade.

Henry Ford grew up on a farm. He typically talked about simply how monotonous farm work was. He used the phrase “drudgery” on a regular basis. He didn’t perceive traditions on the farm and the way a farmer simply did the identical factor over and over and it simply drove him loopy. He noticed a steam engine when he was 12, and resolved that he was going to construct one thing to scale back drudgery on the farm.

However the meeting line permits him to try this. He designs a tractor and now he can crank them out. However his mannequin is totally different. His mannequin, just like the Mannequin T, is one dimension suits all. Worldwide Harvester has a lot of totally different fashions, a lot of totally different sizes once we speak about horsepower. In order that they’ve obtained a greater understanding of their clientele as a result of they know that each farm is totally different, each crop is totally different, each geography is totally different, strategies are totally different. And it modifications from 12 months to 12 months, relying on quite a lot of various factors.

Henry Ford mentioned no, “I’m going to construct quite a lot of them, I’m going to construct them cheaply.” And when he made that announcement that he was going to carry a farm tractor to the USA, individuals simply waited. They mentioned, “I really like my Mannequin T, I’m going to attend for Henry Ford.” Properly, it took till 1918 for Henry Ford to carry a tractor to the USA. Worldwide Harvester is the market chief.

An organization like Caterpillar will not be actually within the combine as a result of, nicely, initially, Cat doesn’t exist till 1925. The businesses that went on to kind Caterpillar, they’re constructing these truck-type tractors, they’re delivery them abroad for the battle effort. Their technique is totally different. We’re promoting to the federal government. These different corporations are promoting domestically. So when the battle ends, that shakes issues up fairly a bit.

And then you definitely see all these nice of us. Daniel Hartsough is certainly one of my favorites. He’s the founding father of the Bull Tractor Firm that builds this primary small tractor. He’s a pastor from Minneapolis, and he sells his automobile and buys some farmland out West. He and his son develop and construct a farm tractor and no person needs it. They’re capable of finding one individual to purchase it they usually say, “Okay, nicely, we didn’t get it proper, we’re going to design one thing totally different.” They do. They don’t get it proper, they’re capable of promote it and construct one thing totally different, which finally turns into the Bull Tractor Firm, they usually sort of get it proper.

When that fails, he goes on and does one thing else. And so that you see all these individuals who come and go. They fail, they elevate some extra capital. So it’s a really dynamic trade, which isn’t what I used to be anticipating. I used to be anticipating, nicely, right here’s a dozen corporations, they figured it out they usually simply slowly grew the market. It’s much more chaotic, it jogs my memory very a lot of the dot-coms of the Nineties the place unexpectedly in case you’re constructing a tractor it’s very easy to lift capital. And 6 months later, you’re most likely skipping city and hiding out of your collectors.

Meb: Properly, most of those that did elevate capital, was it family and friends or financial institution at the moment as a result of there’s not an entire lot of the Silicon Valley enterprise trade at this level that’s funding tractor growth, or was it companies, like who was funding most of those?

Neil: It was principally family and friends, then you definitely see these different massive organizations that have been self-financing. Within the case of Worldwide Harvester, they’re self-financing. And Harvester is attention-grabbing as a result of they grew out of two big corporations, McCormick and Deering, who had cornered the harvesting enterprise. So 80% of the merchandise bought on the farm was grain harvesting as a result of that was the place you have been making the best productiveness positive factors.

So as a result of they have been fashioned of those two corporations, they’d two separate vendor networks. And so they developed two separate traces of tractors, they’re referred to as Titans and Moguls that have been mainly distributed by way of these totally different vendor channels. They have been self-financing. They went from just a few machines to a few thousand machines and that was sufficient to guide the trade.

John Deere, who’d gone by way of that interval of acquisitions and mergers had entered new companies, they have been going to the financial institution and saying, “Hey, that is the plan, what are you able to do for me?” And so they mentioned, “Properly, we’re not going to do something for you till we begin to see some returns on the earlier loans.” In order that they went about it in a really totally different manner.

And what they wished to do was determine the one kind of machine that was going to fulfill essentially the most variety of farmers. In order that they have been very a lot within the Henry Ford camp greater than the Worldwide Harvester camp to begin. In order you possibly can anticipate, it runs throughout the board.

Meb: Right here we’re clearly, with Deere and Firm, John Deere is now over $100 billion market cap firm, it’s clearly survived and performed exceptionally nicely. And is near all-time highs on the inventory I believe, over 400 bucks a share.

Within the ensuing many years, inform us what the story was. Was it a narrative of conventional artistic destruction and easily survival auto the businesses fall away within the free market competitors? Who turned the juggernauts of this area over the following many years?

Neil: It’s actually a narrative of ebbs and flows and ups and downs. And the e book ends within the late Nineteen Twenties. And sort of the remark I’ve had from most individuals to date is “Okay, nicely, clearly, that is the primary chapter. What occurs subsequent? The place’s the sequel?”

Meb: Say, good, it is a trilogy, child.

Neil: Yeah, that’s proper, the tractor battle trilogy. I began already, we’ll see the way it goes. However you go from this handful to 160 plus producers, after which by 1930, you’re all the way down to 30. So this sort of sparks this era of consolidations the place you could have early innovators within the tractor trade. Now unexpectedly, there’s three or 4 of them getting collectively and saying, okay, we now have to develop what they referred to as the total line. Which is we simply can’t construct tractors, we simply can’t construct plows, we obtained to construct all the things that you just want on the farm, we’ve obtained to be a one-stop-shop. And that’s what actually emerges out of this era.

You additionally begin to see a significant shift in machine types. And that’s actually the place Henry Ford obtained into bother as he mentioned, “Properly, right here’s my tractor, one dimension suits all.” That’s nice for the primary couple years now you realize all of the issues you really want so that you need to see an evolution of the machine types. And also you see that with a lot of producers.

However then it will get to some extent the place you’ve obtained to provide so many, you’ve obtained to construct an infrastructure, you want mechanics, you want gross sales branches, you want dealerships, you want ongoing service, all of this stuff, so it turns into very capital intensive.

One of many issues to me that’s actually fascinating about this era is the best way they have been shopping for uncooked supplies, they have been shopping for a 12 months upfront. So mainly you’re projecting what you wanted. This concept of real-time manufacturing that we now have at this time, we don’t construct it until you purchase it, didn’t exist. So on this interval, it was okay, nicely, we’re going to construct 5,000 tractors, we higher promote 5,000 tractors. You’re in bother when that doesn’t occur. It occurred to John Deere in 1921. They went from gross sales of just about 6,000 tractors to beneath 100 as a result of the economic system stalled publish World Struggle I.

Now unexpectedly, you’re sitting on all this stock and it’s a kind of seminal moments in firm historical past when the board of administrators obtained collectively and mentioned, “Is there a future on this? Is that this our exit? As a result of we’ve solely been doing it three years, and we haven’t turned a revenue but.” And in reality, they wouldn’t flip a revenue till 1926 I believe.

So it is a very long-term enterprise. Should you’re a small producer, you possibly can’t afford to drift that for that lengthy. And also you begin to see simply the economies of scale for these massive producers they usually’re capable of take a bit extra threat than perhaps the small producer can. That interval within the late Nineteen Twenties, early Thirties, of trade consolidation actually modifications the panorama, however by then, no less than within the tractor enterprise, John Deere and Worldwide Harvester have 80% market share. So everybody else is preventing for that 20%.

Once more, following the parallel paths of those corporations, Worldwide Harvester went from market chief to a distant second behind Ford, to unexpectedly trade chief once more. John Deere is sort of gradual and regular. And that’s what intrigued me. It’s a wierd factor to say once I actually began writing the e book I didn’t know if John Deere had a spot in it as a result of I knew they’d a small market share when this all began.

They purchased the Waterloo Gasoline Engine Firm in 1918 in Waterloo, Iowa, they bought 5,000 tractors that 12 months, which is a robust exhibiting. It’s prime 5. However in comparison with Henry Ford who bought 30,000 that 12 months, after which bought 100,000 a pair years later, and was telling everybody he was going to construct 1,000,000 a 12 months, it’s small potatoes. And I assumed, okay, nicely, perhaps John Deere doesn’t match.

However then you definitely quick ahead a decade, and now you bought 25% market share, and then you definitely obtained 30% market share. It was simply an attention-grabbing juxtaposition for me that typically gradual and regular wins the race. Within the case of farm gear, we all know that John Deere surpasses Worldwide Harvester in 1963. So this e book covers the primary third of that story in case you wished to concentrate on the John Deere/Worldwide Harvester story.

Meb: It’s the prequel. So good, give us a bit preview of e book quantity two. However you’ve talked about Deere earlier than. So what was the story of survival and excellence for Deere? Was it merely identical to a blocking and tackling, constructing a greater product? Was it a gross sales and distribution? I do know it’s a global story quite than only a home one. However in case you might look again as an archivist, what do you see as the principle inflection factors for Deere as an organization and why it survived to be 100 billion-plus market cap firm at this time?

Neil: On the finish of the day, this all comes all the way down to choices. And we at all times concentrate on the fitting choices. I are likely to concentrate on the 100 mistaken choices that allowed you to make the fitting resolution. And I believe one of many formulation for Deere traditionally, is the flexibility to alter and rework. I spend quite a lot of time fascinated by these eras in firm historical past. And it was once that there’d be a sequence of strategic choices which are made, and also you’d journey on that for the following 30 or 40 years.

In enterprise at this time, in fact, you make that call and also you’re going to journey it for a 12 months perhaps, in case you’re fortunate, since you’re continuously evolving and reworking. For Deere you could have eras like this era of 1910 to 1918, they went into the harvesting enterprise to compete straight with Worldwide Harvester for the primary time, went into the tractor enterprise, added these competing traces, you develop your small business.

You even have the opposite aspect of that which is you’re providing inventory for the primary time in firm historical past. You’re making investments in workers, you’re attracting expertise. We expect these are trendy ideas, they’re not.

When Deere opened its present headquarters in 1964 in Moline, designed by Eero Saarinen, it was to draw prime international expertise. They wished to construct a showplace within the Midwest to showcase know-how to draw expertise. And I believe that’s one thing Deere’s been superb about over time.

You additionally make choices that you just don’t know the way it’s going to prove and typically it takes 20 or 30 years to determine it out. Whether or not it’s going into the tractor enterprise in 1921 saying, nicely, we all know the development now in farm tractors goes from a two-cylinder tractor to a four-cylinder tractor. Nevertheless, we predict we perceive our buyer higher, we’re going to stay with the two-cylinder tractor, which John Deere did all the best way till 1960.

Lots of people nonetheless affiliate John Deere with these two-cylinder tractors, the Johnny Poppers, and there’s quite a lot of loyalty that grows and develops out of that. So I don’t know that I gave reply. It’s quite a lot of small choices alongside the best way. However on the finish of the day, considering by way of eventualities, determining what’s subsequent, placing your assets into it, it goes a good distance. And you realize which you could make actually large errors. Fortuitously for a corporation like Deere, Deere has gotten it proper over time, no less than large image.

Meb: It’s at all times attention-grabbing to see the present occasions and the way issues play out. Clearly, farmland and farming, usually, is a large essential piece of the worldwide human story. You have a look at what the disruptions occurring in Russia and Ukraine at present and that turns into very actual.

You may have individuals within the U.S. moaning about excessive costs, and I can sympathize with that. However then understand the knock-on results of disruption and even one nation of massive producers akin to wheat and the consequences that has in lots of different poor international locations, particularly Africa in addition to the Center East, and it’s very actual impression.

However what I used to be going to say was, John Deere is having a social media second the place in case you watch among the footage within the Ukraine, you could have all these cellular phone digicam capturing Ukrainian farmers towing away the tanks. Have you ever seen these movies? You see this farmer simply pulling away a Russian tank. I don’t even know in the event that they’re all Deere tractors however all of them get related to being John Deere having the model. Have you ever seen any of these tales?

Neil: I’ve seen a few of these movies.

Meb: You by no means know this present day of pretend information. However I noticed one image the place there was a photograph of John Deere’s grave, wherever that could be and it had a bit John Deere tractor toy with the Ukrainian flag towing a tank. I don’t know if it’s actual, nevertheless it was enjoyable to see.

So we’re seemingly at an inflection level in historical past the place you had this big interval of historical past the place it was human and animal powered. Then you definately begin to have this age of machines that you just doc however actually, that continues for a century or so plus.

After which right here we are actually in 2022, and I’ve been speaking about this the final handful of occasions I come again from the farm over time on the podcast, and I say you realize, I go searching, and I believe individuals have these vacuums that simply clear their home 5, 10 years in the past uninterrupted. And speak about straightforward, you realize, on a sq. grid out in the course of Illinois, Iowa, Kansas, the place you stumble upon one thing, no matter, there’s nothing on the market. Alluding to the truth that we’re coming into this era the place there is probably not any human involvement in any respect, or if that’s the case very restricted.

And this might simply be you speaking however perhaps that is e book three within the trilogy. What kind of impression, and what kind of developments and ideas do you could have on the brand new development in direction of automation, in direction of autonomy? And it could possibly be drones and planes spraying crops and all the things. I imply, I see dozens if not a whole bunch of startups on this area happening. Any common ideas on this subsequent period?

Neil: I have a look at it very generically as that is what’s subsequent. On the finish of the day, the drivers haven’t modified in 100 years which is we have to be extra productive, we now have fewer individuals feeding extra individuals. There are lower than 8 billion individuals on this planet at this time and there’s going to be 9 billion by 2050. So how do you feed them with much less land, and fewer individuals engaged on the land? So that you’ve obtained to resolve for that on some degree.

I believe additionally you possibly can’t get too far forward of your self. And what I imply by that’s, if I’m going again to tractor introduction, tractors didn’t outnumber horses on American farms till the Nineteen Fifties. So it’s not an on the spot adoption. I examine that to at this time if I used to be an alien and I sat down in Neil’s front room and watched TV, I might suppose that each vehicle constructed is an electrical vehicle as a result of that’s all I see. Lower than 1% of cars on the street are electrical.

So this stuff take longer to undertake and develop than I believe we predict they do. If we’re speaking about autonomous tractors, if we’re speaking about utilizing drone know-how, this stuff are occurring, they’re being developed, they’re being revised and improved. However that doesn’t imply that everybody goes out tomorrow and buys one as a result of there’s quite a lot of different components within the combine and it’s going to proceed to evolve.

I do suppose a giant change is the speed of adoption is faster. I believe it’s a slower turnaround time now, and the following innovation is quicker than it was once. You possibly can’t journey that know-how for 10 or 15 years as a result of somebody’s going to beat you to it. A few of this you see with Henry Ford entering into the tractor enterprise. That’s not a shock as a result of he was a farm child who was at all times occupied with tractors.

I believe the fear of disruption could be very totally different than it’s at this time as a result of you possibly can come out of nowhere and introduce know-how on the farm. And also you don’t need to have any background in that since you’re designing know-how versus a machine for the farm. And I do suppose there are some variations there.

So, on the finish of the day, I believe it’s all simply very thrilling. I can’t declare to grasp most of it, however you’re feeding extra individuals with fewer individuals. And persons are going to undertake that as a result of they need to be extra worthwhile. If that is my operation, if I’m a farmer, I’ve to be extra worthwhile with a view to sustain as a result of I’m going to earn extra on my land and I need to proceed to construct my operation and go that all the way down to my household and the following technology.

Meb: Yeah, the story is private for me as a result of I handed on an automation robotics firm that John Deere then purchased for 1 / 4 of a billion {dollars}. The funniest half is there are issues which are completely inside my wheelhouse and I believe I’m simply too near it. I actually principally put money into issues I don’t know what I’m doing. So the stuff that’s near me…and I believe that is…Bear Flag perhaps was the identify of it. I can’t keep in mind, one thing like that.

It’s going to be enjoyable to see what occurs. I believe this fixed human battle between progress, this Malthusian kind of us growing into billions of individuals. And the battle between costs and innovation and know-how has been one which’s been a really human story and it’s going to be loopy attention-grabbing to look at how all this performs out. We speak rather a lot about farmland as an asset class and investing on this podcast, and so I believe very a lot most people have under-allocated to this a part of the world. So I believe it’s enjoyable to see some developments there.

I need to begin to dig in a bit bit, would love to listen to about your story as an archivist at Deere. I used to be considering the opposite day…and you may right me by the best way. However in my thoughts, it’s half Sherlock Holmes, half detective, half merely curator. And as somebody who’s been by way of…you realize, my dad handed years in the past, going by way of all his outdated stuff and discovering issues that nobody else had recognized or issues each good and dangerous, or surprises. You learn this on a regular basis the place individuals discover letters they usually’re like, “Oh, my God, it is a revelation,” good, dangerous, in between.

Inform us a bit bit concerning the course of, was this one thing that was very front-loaded on the work, and now it’s about sustaining and curation, or is it one thing that’s an ever-evolving story? Simply inform me a bit bit about your job, what you’re doing?

Neil: It’s modified for me personally over time. I went to highschool to be an archivist as a result of I realized at an early age I cherished historical past. As soon as I lastly volunteered at an archive and I used to be going by way of letters written in the course of the Civil Struggle, I simply thought it was the good factor that right here’s somebody writing a letter and I’m holding it. And I can’t imagine it survived, eager to know extra concerning the individual, their household, who learn the letter, these kinds of issues. In order that’s actually what obtained me excited.

I’ve realized that I actually simply very very like going by way of different individuals’s issues, which is at all times quite a lot of enjoyable. I grew up in an period of Indiana Jones so I went by way of that part the place I wished to be a world-renowned archaeologist. After which realized I didn’t need to be on my fingers and knees within the solar all day lengthy digging and discovering nothing.

However for me, it was the evolution, I’ve at all times been a researcher at coronary heart and I very very like to survey the panorama and see what we’ve missed. And in my world, there’s going to be 1000 vintage tractor exhibits throughout the USA this 12 months, individuals swapping tales speaking about machines. You should purchase loads of books on the topic. Attempting to determine what we’re lacking, what the teachings are.

And for me a few of this…I spent 5 years doing aggressive intelligence and market analysis. And I have a look at historical past in precisely the identical manner. In CI work, we do state of affairs evaluation. You may have these instruments and processes to determine what may occur. It doesn’t damage to try this for one thing that occurred 100 years in the past to say, okay, nicely, what was the panorama? What have been the issues they may have performed? What did they do? And is there one thing that we are able to be taught from that?

The distinction between libraries and archives is, is archives are main sources. To allow them to be simply misinterpreted particularly in case you can’t put the total image collectively. So I do like that needle within the haystack. I just like the lengthy search. It’s a really anti-Google view of the world, which is I can’t simply kind in and say why was John Deere towards the tractor enterprise?

Particularly, our CEO on the time, William Butterworth, the query that nagged me took me 5 years to search out the reply and nearly 300 pages. However I believe there are quite a lot of classes to be realized there that there’s forces appearing on individuals and what drives you. And I attempted to correlate that to my very own life, which is, nicely, typically I’m simply having a horrible day as a result of I didn’t sleep nicely, or I solely had one cup of espresso.

Properly, in case you’re William Butterworth in 1918 making choices about the way forward for the tractor enterprise and John Deere, I don’t need to oversimplify, however he could had pressures appearing on him and he’s identical to, “Overlook this, I obtained greater fish to fry.”

Meb: What’s attention-grabbing about your function is quite a lot of the data compounds too as a result of there’s context and also you learn one thing that lots of people would most likely skip over. However as you accumulate data on the subject you get to triangulate what’s happening.

Would love to listen to one, two, three tales about both stuff you got here throughout or tractors, letters, no matter, thrilling, miserable, good, dangerous, in between that have been both simply attention-grabbing to you, surprises, issues that modified your perspective on the corporate, or the historical past of what you’ve been engaged on.

Neil: There’s a pair that pop into my thoughts. One, one of the vital fashionable tractors of all time was the Farmall from Worldwide Harvester they usually had a small group of engineers who have been constructing a brand new machine kind. And so they lastly figured it out. There’s this nice scene within the e book in December of 1920, the place these engineers get collectively in a room at Harvesters headquarters in Chicago, they put the movement image on the reel, most likely the 16-millimeter projector, they usually present a movie testing in early experimental Farmall.

And the longer term CEO Alexander Legge seems to be at it and says, “That is nice we don’t have any cash. We will’t do it as a result of we simply invested all the things into what turns into the McCormick Deering 1530 and 1020, these two machines.” And we acknowledge it, we most likely come up with the money for to construct 4 or 5, which they approve, after which they lower that down to a few. It takes one other three years for them to begin understanding that there was a extremely large marketplace for it. And unexpectedly they obtained a machine to compete with the Fordson and Henry Ford.

And it’s one of many issues that drives Henry Ford out of enterprise, no less than within the tractor trade, a few years later. A type of nice, nicely, this nearly didn’t occur. And what are the cascading sort of occasions that got here because of that since you’re chasing the Farmall? And that partially resulted within the general-purpose tractor from John Deere. So this stuff are all associated.

One other story going again to William Butterworth is there’s a letter that he wrote in 1916 the place he says, “I’m not going to make the following board assembly however no matter occurs, I need you to place a cease to any dialogue about our future manufacturing tractors.” So the interpretation of that is John Deere’s CEO was against the tractor, that’s it.

It simply didn’t make quite a lot of sense to me as a result of Deere’s a pair $100,000 into R&D within the tractor enterprise. They constructed one in 1912, they’d a pair different fashions in 1913, and ’14, they’re three years into growth of what turns into the all-wheel-drive tractor.

So why is the CEO opposed however greenlighting cash? It simply didn’t make sense. Properly, I had to return to 1912, when the board handed a decision that mentioned, “We’re going to research this enterprise.” After which they mentioned, there’s 4 ways in which we might go about it. One in every of them is construct a manufacturing facility and manufacture tractors. There are different alternate options we are able to purchase somebody, we are able to outsource all of the design, we are able to do all of this stuff.

So then you definitely return to William Butterworth and have a look at the letter and he particularly says, “I’m against the manufacture of tractors.” Okay, that is sensible to me. Properly, what’s driving that? What’s driving it’s a month earlier than, Henry Ford exhibits his tractor at a farm present in Fremont, Nebraska for the primary time and Deere seems to be at it and says, “Yeah, we don’t stand an opportunity. We will’t afford it, we are able to’t scale, we’ve obtained to consider our technique.” And he’s saying, all proper, we obtained three choices on the desk.

So once more, you sort of have a look at the lengthy recreation and it’s important to take note of what individuals say and what they write, versus extracting it. And I do know typically once I see that letter reused in a presentation and article, they truncate the letter within the sentence they usually lower out the necessary elements of that sentence which says the manufacture of tractors.

Meb: That’s a really 2022 factor to do. Simply the headline, chop off the remainder of the context and simply provide the click on bait as a result of with the remainder of it, it tells a unique story. So we obtained a bunch of individuals listening to the present from all around the world each single nook, each nation nearly. How does many of the new or totally different info come throughout your desk at this level? Is it Google Alerts? Are you getting letters from South America from any individual who despatched one thing in? Like, what’s the day-to-day course of going ahead at this level? Is it principally inbound? What’s it appear to be?

Neil: It’s principally us going out and discovering one thing. So it was once that we simply had a pipeline of information as a result of somebody would retire or get a brand new job they usually’d say, “I don’t need to take care of these items, I’m going to ship it to the archives.” It was fairly straightforward apart from the amount.

Then unexpectedly, you could have the appearance of the digital age the place there’s simply extra quantity initially, there’s much more drafts of all the things. And you bought to be a bit extra selective and say, okay, nicely, we wish one thing from this supply, or as a result of it’s this product line, or as a result of it’s simply so apparent that we have to doc the historical past of this.

And now you’re entering into issues like archiving web sites, archiving social media, we’re going out and scraping yeah, we’re establishing these alerts. It’s actually a problem since you don’t know that you just obtained it proper, you don’t know what’s necessary essentially.

So I went out a lot of years in the past and interviewed quite a lot of former workers. John Deere fashioned its precision farming group in 1993. That is when Deere mentioned, “We’re entering into the precision agriculture enterprise wholeheartedly,” and created a separate division. It feels prefer it was 100 years in the past however I acknowledge that these workers have been nonetheless with the corporate. So I went out and did interviews.

And it’s all the things from who mentioned sure, what have been your different concepts? What did you go on? Who was within the room? Since you need these particulars. After which it was different issues like, okay, inform me all the things that you just obtained mistaken, inform me what went badly.

And for me as an archivist, it’s not about that secondary model of, nicely, we had an excellent thought, all the things was nice. My job is to extract the tales in order that in 40 years, somebody can put these items collectively. And I believe the toughest half for me is realizing that we missed extra now than ever, but in addition we gather rather a lot much less there’s simply much more of it. So how do you get by way of the amount and really get on the essence of what you’re making an attempt to perform?

Meb: Properly, listeners in case you e mail Neil or ship him a letter, CC me. I need to hear your loopy John Deere story from no matter nook of the world you’re in. I really like the historical past/Sherlock Holmes. Is there something that’s like your white whale, you’re like, you realize what, I’ve been on the lookout for this for 5 years now and may’t discover it, or there’s an space there’s this lacking piece? Is there something that’s on the search that you just’re but to uncover?

Neil: Properly, prime on my checklist is something linked to John Deere the individual as a result of he didn’t go away us an entire lot. We even have a two-piece wool bathing swimsuit owned by John Deere, imagine it or not. We’ve obtained just a few letters. We’ve had issues provided to us that we are able to’t show that it’s the actual deal or had any connection.

Actually, primary on my checklist is a neighborhood legend that there’s an underground tunnel that goes by way of Moline, the place there are some deserted automobiles. And it’s a part of a former limestone quarry that was owned by members of the Deere household 130 years in the past. And there’s been some tales of individuals seeing deserted tractors and cars.

The Quad Cities was an vehicle hub within the early twentieth century and I need to discover it, and I need to get into the tunnel. It terrifies me, nevertheless it actually caters to the Indiana Jones aspect of my persona. So I’ve been poking round right here and there. I’ve heard some tales, none of them matched. So it has nothing to do with archives. I simply need to discover one thing actually cool.

Meb: As we glance out to the horizon 2022 and past, what’s in your mind, what are you scratching your head about? What are you fascinated by? You’re fascinated by placing pen to paper once more, you’re taking a bit sabbatical from the writing? What’s in retailer for Neil?

Neil: What’s in retailer is getting out into the world once more. It’s actually exhausting to launch a e book when you possibly can’t go have e book signings and may’t exit and speak to individuals as a result of a part of this for me is the listening aspect of issues. Like I can inform the story, right here’s what I put collectively, you place your work on the market. How are you going to fill within the gaps.

So I’m simply excited to get out and speak to individuals to grasp what they know. Unusually sufficient, what did I miss as a result of I most likely didn’t get all of it proper. I did from my perspective however what are the opposite views? However I’ll spend the summer season chasing my 12-year-old across the ball fields most likely that’ll be the principle factor after which getting out and speaking concerning the e book round that.

Meb: What’s one of the simplest ways to get in contact with you? Do you could have any kind of public-facing web site or something? How do individuals get in contact with you, they need to ship you their secret John Deere correspondence from a very long time in the past?

Neil: Discover me at neildahlstrom.com. I’m on Twitter, I’m on Fb, I’m on LinkedIn so I’m all over. Share your tales. Should you’ve obtained the primary plow that John Deere built-in 1837, let me know, I’d wish to have it.

Meb: Neil. It’s been a blast. You guys take a look at his new e book, “Tractor Wars” on Amazon, and anyplace good books are discovered. Thanks a lot for becoming a member of us at this time.

Neil: Thanks for having me.

Meb: Podcast listeners, we’ll publish present notes to at this time’s dialog at mebfaber.com/podcast. Should you love the present, in case you hate it, shoot us suggestions at suggestions@themebfabershow.com we like to learn the opinions. Please evaluate us on iTunes and subscribe the present anyplace good podcasts are discovered. Thanks for listening, mates, and good investing.

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