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(Whitney Light for Report on Business magazine)

If you stood at the corner of Portage and Main and offered a $20 bill to the first person who could tell you a bit about a company called MacDon Industries Ltd., you’d be there for quite a while. Winnipeg newspapers rarely cover the company. One sees scant mention of it in the promotional literature of the provincial government and civic booster groups. The queries I’ve thrown out at social gatherings suggest that most Winnipeggers have never heard of the company.

Yet MacDon is not exactly a top-secret facility. Its landscaped headquarters occupy a major part of a Winnipeg industrial park. At its 800,000-square-foot facility, 1,350 employees bustle around the clock making sleek harvesting machines from scratch, milling and stamping most of the thousand-plus steel components and running them along two kilometres of overhead track through one of the most advanced powder-coat paint systems in North America.

Meanwhile other, bigger firms like International Harvester, White Farm Equipment and Minneapolis-Moline have collapsed or been subsumed in industry consolidation. Some, like Canada’s once-mighty Massey Ferguson, live on, but only as a brand name used by another company. Why aren’t more Canadians familiar with MacDon? In part, it’s because the company does not seek out the limelight. In fact, it shuns it. But—full disclosure—I learned about this mystery company when it commissioned me to write its corporate history in 2012. In my research for that book, and in recent interviews with Report on Business magazine, MacDon has provided a glimpse into how it has not only survived, but managed to become one of the most respected manufacturers of agricultural equipment in the world.

The founder of MacDon was Joe MacDonald (no relation to the writer), a Nova Scotia farm boy who grew up with 15 brothers and sisters. “Big families were standard on the farm in those days,” says Gary Giesbrecht, president and CEO of MacDon. “And MacDon is a family company, in every sense of the word. We all work hard and treat each other like members of a big family. It sounds like a cliché but really, it’s been a key ingredient of MacDon’s success.”

MacDon president and CEO Gary Giesbrecht. (Whitney Light for Report on Business magazine)

Joe MacDonald took his farming work ethic with him when he went out to seek his way in the world. After crewing on a Lancaster during the Second World War, MacDonald got a job as an office clerk for Brantford, Ontario-based Cockshutt Farm Equipment. He worked his way up to become president of White Farm Equipment Canada. His eldest son, Allan, who recently retired and handed the CEO reins to Giesbrecht, says his father would fly from Toronto to Minneapolis on Sunday night, work all day Monday, fly off to Atlanta for a full day of meetings on Tuesday, on to Dallas on Wednesday, Stockton on Thursday, Minneapolis again on Friday, then come home and do it all over again on Sunday. “Nobody called home by long distance in those days unless it was an emergency,” says Allan. “So he’d be gone all week without a word and Mom would smoothly manage the house and four boisterous sons in his absence. They had a great marriage, but it must have been an exhausting routine for both of them.”

Through his travels and visits with suppliers, MacDonald became familiar with a small Winnipeg equipment manufacturer named Killbery Industries Ltd. The Killbery brothers, Tom and Bill, were classic inventors—auto mechanics who liked tinkering with machinery.

One of their inventions had proven popular with farmers. The Killberys’ 18.5-horsepower Grain-Saver Swather was a simple, self-propelled contraption with steering handles that enabled the farmer to turn the 14-foot-wide machine in whatever direction he pleased. (Odd as it seems, pull-type swathers of the day could only turn right.) The swather used wooden paddles and canvas belts to organize cut crop in long rows, or “swaths,” allowing grain to dry in the sun before being picked up and threshed by a combine. Production of the swathers kicked into high gear in 1954 when Massey Ferguson (then called Massey-Harris-Ferguson) ordered 1,300 units, which were painted and marketed as Massey’s own product. The Killbery brothers built office headquarters and a factory near the Winnipeg airport and the company grew rapidly until the late 1960s, when a glut in wheat supply stalled demand for farm gear. Killbery, saddled with fixed costs and a large payroll, was on the verge of closing its doors in 1970 when Joe MacDonald showed up. He was looking for a more stable life, and he liked their company so much he bought it.

MacDonald renamed the company MacDon Industries Ltd., kept most of the original staff on board (including members of the Killbery clan) and went out to seek new contracts with large North American implement manufacturers, most of whom he already knew as friends from his days on the road.

MacDonald’s third son, John, says that his mother (who likewise grew up on a Nova Scotia farm) was his father’s best asset. “Mom had at least as many friends in the agriculture industry as Dad did. When executives from major firms came to town, they wouldn’t leave until they’d paid a visit to Mom. She was a vivacious, friendly woman who loved to entertain and I’d hear them down in the living room at 2 o’clock in the morning, laughing and telling stories long after Dad had worn out and gone to bed.”

Tom Fox, who is now retired, was director of engineering at MacDon. He says Joe MacDonald’s forte was building a team. “I was always surprised how little he understood about the inner workings of our products. He knew our machines were made of steel and rubber and not much more than that. But that didn’t matter. He could hire engineers like me to think about the machinery. His skill was dealing with people, and he was a master at that. He would go in to these big companies and make deals on a handshake. People who knew Joe understood that his word was his bond, and they trusted him.”

In those days, Neil Fehr, who’s now in his late 60s, was a young welder at MacDon. He says the new boss quickly won everyone over. “He would never drive past an employee at the bus stop, and he’d sometimes pick up the janitor at his home and drive him to work. That sort of gentlemanly treatment created a strong feeling of loyalty among the employees.”

Charles Kankam grew up in Ghana, trained as an auto mechanic, immigrated to Canada and started working at MacDon about 40 years ago. “The first time I met Joe MacDonald I was at Sears with my son and he came up and talked to us for half an hour. I was very impressed by that. Then my little girl was killed by a school bus. She was 6, and they had a government inquiry. You know those big mirrors on the front of the buses now? That’s because of her.

“Joe MacDonald came up to me in the factory, shook my hand and said, ‘Please go home and be with your family. You’re on full pay, and don’t feel that you have to come back until you’re ready.’ I would never work for another company, even if they offered more money.”

MacDon’s self-propelled windrower is seen at work at the James Valley Hutterite colony at Elie, west of Winnipeg. (Whitney Light for Report on Business magazine)

Joe MacDonald died in 1991, and his sons Allan, Gary and Scott took over ownership and management of MacDon. (The other brother, John, maintained an interest but carried on with his law career.) Scott says, “We never actually sat down and asked each other, ‘What would Dad do?’ But we didn’t have to, because he did such a good job raising us that we automatically absorbed his values. Dad treated everyone with kindness and respect, and when my older brother Allan took over as CEO, that’s how he managed the company.”

Like his father, Allan made a point of walking regularly through the factory, shaking hands with the welders and assemblers. Depending on production schedules, the factory usually has from 150 to 200 welders working around the clock. One of them is Dave Turman, a 37-year veteran. “This company is all about reputation,” he says. “We can’t afford to have a single farmer out there suffering a work stoppage because of a sloppy weld. Our attitude is, ‘Good enough isn’t good enough.’ Everything has to be perfect. I’m always coaching the young guys, urging them to be proud of their work, to be proud of the machines that roll out of this shop, and I have that attitude largely because of Joe MacDonald, and his sons, and the example they set. Their attitude is, ‘Let’s work together.’ So we work hard, and we play hard, and it will be a sad day when I have to retire.”

Turman and other employees say that it’s not easy getting a job at MacDon because there is so little turnover. Samuel Tackie emigrated from Ghana and has worked in the factory for 40 years, earning $25.49 per hour as an assembly mechanic. He says MacDon provides the best employee benefits package in the province. “Because of this company, and with God’s grace, my wife and I have put four children through university and bought our five-bedroom dream home. It’s been a wonderful place to work. There are dragon boat teams, baseball games, family picnics, and every year we get a bonus cheque, a Christmas turkey and a thank-you from the boss.”

Most of MacDon’s hourly employees are represented by an employees’ association. Randy Chaikowski spent 30 years on the executive of the association, meeting with Allan MacDonald and other executives weekly to resolve workplace issues and grievances. “In my opinion, Allan is a tough businessman who manages to be fair at the same time,” says Chaikowski. “I remember the time in the ’80s we negotiated this wage agreement and later, after it was done, Allan called me into his office for a meeting. It was during vacation, a very unusual time to get called in, and all the way to the office I was real nervous, thinking, what’s going on? It’s not like Allan to back out of a deal once he’s agreed to it, but he’s a tough negotiator and I couldn’t figure out any other reason he would call me in for a meeting. The economy was in bad shape and I was worried that he wanted to renegotiate our agreement.”

Chaikowksi’s fears deepened when he got to the office, and Allan MacDonald started talking about how the lagging economy was adversely affecting the company’s prospects. “Inflation was rising to unheard-of levels,” says Chaikowski. “Interest rates were in the 20% range and people were losing their houses. Businesses all over the city were cutting costs and laying people off and there was no end to the bad news in the air. So we talked along these lines for a few minutes. Then Allan said, ‘Anyway, Randy, with all the difficulty in the economy, I don’t think the recent wage package we negotiated is fair to the employees. Would you be upset if we offered them another 2%?’”

Chaikowski adds that MacDonald was willing to let the employees’ association take the credit for the raise. “That’s the way it’s always been with this company. We might have differences of opinion but on the big issues we’re on the same team. We all have the same goals and values.”



Dave Turman, welder at MacDon. (Whitney Light for Report on Business magazine)

So the owners may be nice guys, and the employees may be happy, but does that explain the company’s success in the Darwinian world of equipment manufacturing? “Treating people like family is important because it creates buy-in,” says engineering R&D shop supervisor Daren Cormack. “If you give people ownership of their jobs, they don’t need to be supervised. I can leave my shop and know my people are working just as diligently when I’m not there.”

Cormack is an imposing figure, a woolly-haired blonde with the thick neck and bullish physique of a bodybuilder. Which he is. Like Randy Chaikowski, he once ran the employees’ association. Despite his pugilistic leanings (he is a former boxer), he spent months studying mediation, coaching and other “soft” negotiation skills. “Being aggressive and issuing orders is easy,” he says. “Winning hearts and minds is harder. You have to listen to people and earn their trust. But once people buy in, they perform at a much higher level. When my mechanics are on a roll, they will sometimes work from 8 in the morning until 8:30 at night. None of us is watching the clock. They’ll get excited about a project and come with their own ideas for making it better.”

That inclusiveness seeded the creation of MacDon’s FlexDraper, which has changed the way that crops are harvested all around the world. It owes its creation too to the apparent inability of North America’s major farm implement manufacturers to build a harvesting “header” that fully met the needs of farmers. Traditionally, straight-cut harvesting is done by two machines hooked together, a combine and a header. The header is a wide, low-slung implement that sits on the front of the combine like the T-shaped snout of a hammerhead shark. A cutter bar on the header scythes the crop and feeds it back into the combine, where the grain is separated from the chaff.

In the early decades of the 20th century, headers had conveyor belts made of canvas that fed the crop sideways to the centre of the header and then back into the combine. But the belts deteriorated with exposure to weather, and manufacturers eventually switched to rigid horizontal augers. The augers themselves were durable and trouble-free, but the rigid structure made it impossible for the header to flex with the contours of uneven land. That became more of a problem as profit margins tightened, fuel costs rose, farms grew larger and farmers needed wider, more efficient headers to stay competitive. Bruce Nelson, a farmer from Clark, South Dakota, says, “I just absolutely detested those auger headers. We had a big combine with a 30-foot auger head, but we just couldn’t utilize our capacity. You hated to go out in the field in the morning because it was just another day of doing a job you weren’t proud of.”

The auger headers were particularly unpopular with soybean producers. Soybean stalks are delicate, so auger headers tend to jostle the crop and scatter many of the beans on the ground. Big-name implement manufacturers tried to correct the problem by building a flexible knife that followed the humps and hollows of the terrain, but the auger itself still had to be rigid, so many of the soybeans were still lost in the gap between the knife and the auger. Gary MacDonald says that, by the 1980s, most of the big manufacturers had given up trying to solve the conundrum, and industry insiders had warned MacDon not to tackle it. “People said, ‘It can’t be done, so don’t go up against the majors or they will kick your butt.’ That was exactly the sort of challenge MacDon enjoyed.”

MacDon engineers started from scratch, reconsidering options like using a belt rather than an auger to feed the crop. The development team eventually came up with an ingenious hinged, three-section header that floated over the terrain at an even height, dramatically reducing lost crop. They dubbed it the FlexDraper. “I’ve always been impressed with MacDon engineers and how clever these guys are,” says Bruce Nelson. “My FlexDraper transformed my harvesting job to one I really enjoy. The fields look beautiful and I’m not exhausted from sitting on the edge of my seat all day.”

MacDon Industries’ innovative harvester, the FlexDraper, goes down the assembly line at the company’s Winnipeg factory. (Whitney Light for Report on Business magazine)

An efficient header can net a farmer an extra $15 or $20 per acre—a significant edge in productivity. Indeed, as farms get larger and margins get narrower, some farmers shave costs by hiring custom harvesters like Jim and Tracy Zeorian, who are based in Manley, Nebraska. They follow the harvest north from Texas to Canada, cutting thousands of acres of cropland. They switched to MacDon equipment five years ago. “Downtime is a big concern in this business and our MacDon headers have functioned beautifully,” says Jim Zeorian. “I would guess that about two-thirds of the custom harvesters in the American Midwest use them.” The FlexDraper’s price tag is not something MacDon will disclose, but used 2012 models are priced between $77,568 and $85,000 on an agribusiness e-commerce site.

MacDon has developed such a reputation that larger manufacturers have occasionally decided to team up with them rather than compete, just like Massey Ferguson back in 1954. In 2012, John Deere announced MacDon would manufacture a line of self-propelled windrowers, headers and pull-type mowers, finished off in John Deere green and its universally recognized leaping-deer logo. The deal was regarded as a win-win, as both companies are known for their high-quality equipment. As Jim Zeorian says of his torture-tested MacDon header, “The darn thing just works.”

MacDon now has 1,200 dealers and distributors around the world to spread that message. Still, the global market for agricultural equipment is as unpredictable as the weather. And lately, manufacturers have been struggling with adverse conditions. John Schmeiser, the CEO of the Western Equipment Dealers Association, says, “We’ve had six excellent crop years in a row, and that has flattened or depressed prices for a variety of crops like soybeans, wheat and canola. So farmers are a little more cautious, and when you combine that with significant price increases for equipment, it’s no surprise that we’re seeing a slowdown in equipment sales across the continent.”

Leah Olson, the president of the Agricultural Manufacturers of Canada (a group that represents more than 300 manufacturers across the country), says orders for new equipment are down for the second year in a row. “Manufacturers have been coping with the downturn by reducing their costs,” she says. “Most of the mainline companies have announced significant layoffs.”

Canada’s largest manufacturer of agricultural equipment, the Saskatoon plant of CNH Industrial Canada Ltd. (the result of mergers involving Case, New Holland and Fiat), recently laid off more than 400 workers. And in the United States, major firms like John Deere and AGCO have also trimmed their work forces. Unconfirmed reports suggest that MacDon, too, laid off workers at the start of this year (the company, characteristically, will not comment), but other reports (likewise unconfirmed by the company) suggest that it’s not a hint of things to come. There’s no doubt that its corporate rivals would like some inside information on the MacDon magic, so executives maintain a poker-faced silence about the company’s day-to-day operations. As Scott MacDonald puts it, “We let our products do the talking.”