Vermeer Manufacturing Company

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Vermeer Manufacturing Company

P.O. Box # 200
Pella, Iowa 50219-0200
U.S.A.
(515) 628-3141
Fax: (515) 621-7731

Private Company
Incorporated: 1948
Revenue: $430 million (1996 est.)
Employees: 2,300
SICs: 3523 Farm Machinery and Equipment; 3531 Construction Machinery

An industrial leader in the design and production of specialized machinery for agriculture, construction, and tree care, Vermeer Manufacturing Company (VMC) is one of the world’s most successful privately held equipment companies. From revolutionizing the tree care industry with stump cutters and tree spades to the one-of-a-kind large round hay baler in 1971, Vermeer’s technological advances have always taken the industry by storm. The 1990s were no exception with the debut of its most recent innovation—“trenchless” boring equipment—which helped Vermeer capture the mid- to large-sized trenching market. VMC’s four divisions (agricultural, contract, environmental, and underground) working around the clock six days a week, produced over 100 different kinds of heavy equipment for domestic and international customers and shipped an average of 1,000,000 parts per month.

An Inventor Tries His Hand, the 1940s and 1950s

While the 20th century’s industrial revolution spawned technological wonders like the first turbo-prop engine in 1942 and the “Big Inch” oil pipeline from Texas to Pennsylvania in 1943, few advances were made in the field of agriculture. Then a gentleman farmer named Gary Vermeer, with acres of prime land in Pella, Iowa, began tinkering with farm equipment to help things run smoother in harvesting and storing grain. Though he was more than adept at using the tools of his ancestors, Vermeer sought to increase harvests and make the process more efficient and less strenuous.

With many area farmers fighting in World War II overseas (including Vermeer’s brother Elmer), Vermeer harvested grain for himself and neighbors using early inventions like a corn elevator and manure loader. Yet neither alleviated the back-breaking work of shoveling out wagons, so Vermeer designed a wagon hoist to elevate the grain and let gravity do the rest. When Vermeer built four of his newfangled wagon hoists during the winter, neighbors responded enthusiastically.

By 1948 Vermeer and a cousin had manufactured the popular wagon hoist from a 2,500-square-foot factory on the west side of Pella. Yet this initial taste of entrepreneurial pride was soured a bit with the introduction of hydraulic wagon hoists, which pretty much wiped out the market for mechanical hoists. Undaunted, Vermeer, now 31, continued to seek out ways to make life easier and more profitable for farmers like himself. His next innovation was a right-angled power-take-off (PTO) drive for hammermills (machinery used to mix and grind feed). The PTO drive helped keep the hammermill’s wide tractor belts in place which often loosened and flew off the equipment, sometimes with dire consequences. After placing a small ad in a local circular, Vermeer received over 1,000 responses and began producing 100 PTOs drives a week. Before long, Vermeer and his cousin were joined by 18 new employees to keep up with demand.

By the 1950s President Harry Truman had survived an assassination attempt, price and wage controls were lifted, and Gary turned his designing skills to trenching. Like his father and grandfather before him, Vermeer had acres of bottomland requiring dikes and tiling. Within weeks of setting his mind to the task, Vermeer built a trencher/tiler propelled by a PTO drive much like the hammermills. What began as an agricultural tool in 1951—known as the “Model 12”—soon developed into self-propelled and crawler trenchers, and became the basis for a host of other construction equipment.

When Vermeer began selling products worldwide through New York exporters, the company created Vermeer Holland (in 1955) as a manufacturing and distribution facility for European clients. As a reward for the company’s immense growth, Gary instituted a cash incentive program for employees. In 1956 Vermeer again revolutionized an industry—this time in tree care—with the debut of a stump cutter that chewed up stumps in minutes and was operable by just one person instead of several. A prize to landscapers and builders, VMC’s stump cutter rendered older, hard-to-handle versions obsolete. As the U.S. economy faced tumultuous times with unemployment of nearly 5.2 million in 1958 and a 116-day steelworkers’ strike in 1959, VMC managed to not only keep its work force (now numbering 67) occupied but to continue design of a new breed of industrial equipment.

To Build A Better Mousetrap: The 1960s and 1970s

The dawn of the 1960s brought John F. Kennedy to the presidency and a stunning scientific discovery that later became commonplace in cutting-edge technology—the first laser (light amplification by stimulated emission of radiation) device. This decade also marked more firsts for Vermeer: its 300 or so employees now enjoyed a profit-sharing program; six international locations handled sales and shipping of VMC products; and several new developments in trenching equipment and tree care were on the way. The current trencher line consisted of two PTO-driven machines and three crawler units. Still seeking a better way, the company retooled its track trenchers and developed a rubber-tired machine, both of which could be fitted with attachments such as backfill blades, backhoes, cable plows, concrete cutters, loaders, and even climatized cabs.

Then came the TM-700 tree spade in 1965, a machine for moving trees. The TM-700 was an unusual contraption that dug up, moved, and replanted trees—complete with roots. Again Vermeer’s ingenuity produced an industry original—this time one that safely transported and relocated trees bringing instant shade for homeowners and companies alike. Within two years VMC came out with several more tree spades, accommodating both large (up to a 94-inch root ball diameter) and small trees (up to 20-inch diameters). The tree spades were especially popular with landscapers and tree nurseries as a simple and effective way to harvest and replant trees.

In the first part of the 1970s amidst worldwide inflation came Vermeer Manufacturing’s biggest contribution to agriculture, the large round hay baler—the first of its kind and the forefather of all round balers since. When one of Gary’s neighbors talked about leaving the farming business due to the difficulty of providing feed for his cows, it started the former to thinking about alternate ways to put hay. Characteristically, Vermeer decided to design a hay baler by factoring in several key components: it had to be operable by one person; produce hay bales weighing about a ton; and wind the hay tight enough to shed water. Along with one of his engineers, the two drew a model with chalk and had their first prototype up and running in six weeks. Once again VMC was the toast of the town, revitalizing the farming industry.

Unfortunately, the hay baler’s introduction was overshadowed by injuries and deaths when farmers operated the heavy machines improperly, tried to free up clogged intakes, or moved the one-ton-plus hay bales themselves. Vermeer made several adjustments, yet lawsuits temporarily clouded the remarkable machine’s recognition. Conversely, others credited the invention with reducing the overall number of deaths related to hay baling—and round hay balers became a common site on farms worldwide. VMC sold more than 85,000 large round hay balers in the next 25 years and every round baler produced in subsequent decades was based on the company’s design and technology.

By 1972 Vermeer Manufacturing had exclusive dealerships in Denmark, Egypt, England, France, Germany, Holland, Italy, Saudi Arabia, and Switzerland to sell its ever-increasing line of goods. To help Gary Vermeer continue his evolution from small-town inventor to owner of a global conglomerate came the arrival of a second generation of Vermeers. In 1974 Gary’s second son, Robert, was appointed to the board of directors, followed in 1975 by his older brother Stanley. Robert began his VMC career as a vice-president in finance, while Stanley worked in the “experimental” department. A year later in 1976 as VMC’s work force grew to 685, Gary’s youngest child, Mary, joined VMC’s board, while continuing to live and teach in Omaha, Nebraska.

For his efforts on behalf of the community, Gary was awarded the Pella Community Service Award in 1977. Not one to sit on his laurels, Vermeer and his company forged ahead with another discovery—the brush chipper—in 1978. The rugged brush chipper once again endeared VMC to the green industry as the compact machine was able to grind up a variety of materials from large trees (up to a 12-inch diameter) to storm damage brush and the annual disposal of Christmas trees. VMC’s chippers turned unsightly waste into environmentally-friendly wood chips used in landscaping beds and around trees for installation and moisture retention. Vermeer’s original green industry baby, the stump cutter, now came in several different sizes with patented forged-steel teeth, higher torque, and better maneuverability.

Company Perspectives:

Guiding Vermeer through the competitive world of manufacturing is our “4 Ps” philosophy. Imagine a steering wheel superimposed on a “machine” called Vermeer. People, Product, and Profit are the wheel’s essential components, giving the machine direction. At the center of the steering wheel is the fourth P, Principles, biblical principles providing connectedness to the other 3 Ps and about which they revolve.

High-Tech Innovations: 1980s and 1990s

Though antipollution measures began to take shape in the mid-1960s, the early 1980s marked more comprehensive and stringent regulations on waste disposal by the Environmental Protection Agency (EPA). Because Vermeer used a metalworking coolant called TRIM Sol and produced between 220 and 2200 lbs. of waste per month (about 71,500 gallons per year), the company was classified as a “small-quantity generator” (SQG) of hazardous waste. To comply with stricter environ mental codes, VMC adopted an in-plant coolant management system rather than ship its waste to a facility in Alabama. The system not only recycled coolant and reduced waste, but provided the company with many long-term benefits including increased water purity, improved tool efficiency, less maintenance, and a better bottom-line. Within six months of purchasing the new coolant management system, VMC recouped its cost and went on to save $100,000 in waste disposal costs for the year. By the time the EPA instituted the Resource Conservation and Recovery Act (RCRA) in 1986, VMC was saving $150,000 per year in reduced coolant purchases, labor costs, and machine downtime.

On the family front, Stanley, who began work in the Industrial Engineering department in 1979 was promoted to president of the company in 1982, the same year Mary came to VMC full-time in market research and human relations. Robert was named executive vice-president and secretary-treasurer in 1984, the same year Gary was honored as Iowa Inventor of the Year. Gary was honored again in 1986 with induction to the Iowa Business Hall of Fame, while son Stanley left the company to concentrate on charity work. When Stanley departed, Robert took the reins of the 786-employee strong company as CEO and chairman. Three years later, in 1989, Mary was appointed COO and president.

Before the end of the decade, VMC still dominated the hay baling industry and had added a silage baler to its product line, as well as improvements like automatic twine-tying and weaving systems and bale ejectors and monitors. In 1991 VMC introduced the company’s biggest breakthrough since the original round hay baler in 1971. The cutting-edge technology that had produced the first PTO-driven trenchers soon turned them into indispensable tools for utility companies across the nation with the advent of “trenchless” drilling and boring equipment. Having perfected traditional trenching equipment, VMC took its innovation a step further to design and build machines to dig without damaging or destroying topsoil. This was achieved through a line of directional boring equipment called Hammerhead Moles (handheld pneumatic piercing tools) and Navigators (heavy underground construction equipment).

The Hammerhead Moles and Navigators were capable of digging below-surface tunnels and holes through which a wide range of products (pipelines for gas and water; fiber optic cables for television, telephones, and computers) were be connected—without damage in heavily trafficked areas by roadways, commercial buildings and suburban areas—even beneath rivers and lakes. At the same time trenchless technology caught fire, VMC created Vermeer University in 1991, an in-house schooling program. Vermeer University provided a myriad of classes for employees and dealers including technical (mastering computers, equipment operation and service, industrial safety) and professional (sales, career enhancement, personal growth and development). Within three years Vermeer University had over 600 people enrolled in 25 different classes.

As sales for trenchless equipment continued to boom, so did Vermeer’s expansion. Just two years after the new technology’s introduction, VMC added two more plants and over 900 new employees. Estimated sales for 1993 reached over $270 million, a remarkable achievement for a family-owned and -operated company regarded as a “niche” manufacturer. The next year, 1994, sales were around $320 million according to Off-Highway Research, no doubt helped by another environmentally-friendly piece of equipment—the Brawny TG-400—a large tub grinder. Designed to eliminate heavy organic waste, the Brawny TG-400 was a hit with landfills, construction companies, and contractors as the EPA tightened regulations on dumping and burning.

In 1995 the company reorganized into four separate divisions to help maintain what Robert called the “family team atmosphere.” The new quads consisted of Agricultural (hay balers, hydraulic rakes, mowing equipment); Contract (specialized machinery like tractor weldments, jay tools, graders, scrapers, and log skidders for Caterpillar, John Deere, Fiat-Hitachi and more); Environmental (green industry tree spades, log splitters, brush chippers, tub and stump grinders); and the largest, Underground (traditional rubber-tired trenchers, trench compactors, and the Navigator and Hammerhead lines). Each division was housed in one of VMC’s seven Pella facilities and employed over 2,000 nonunion workers (averaging 12-plus years with the company) drawn from Pella and five neighboring counties—even extending into Missouri. The facilities covered in excess of 1.4 million square feet or 33 acres on Highway 102, just outside the city limits. A major advantage to having its facilities close together was the ability to shift workers from one division to another during in cyclical slowdowns to prevent layoffs and rehirings. In its continuing quest “to find a better way,” Vermeer’s four divisions combined the best of human and mechanical innovation with state-of-the-art equipment to design, cut, shape, and mold over 200 tons of steel or 70 miles of welding wire per day (over 20,000 miles of welding wire annually).

With industrial products distributed through 75 domestic and 66 international dealers and agricultural dealers numbering more than 442 in the U.S. and Canada, VMC’s name and reputation were known worldwide for its superior parts and service. Sales for 1995 topped $350 million and part of VMC’s secret for success was a very simple yet effective business strategy: carry no long-term debt. When analysts projected flat sales for industrial and agricultural machinery in 1996, the Vermeers proved them wrong with their best year ever—taking in sales of well over $400 million.

As VMC approached the 21st century, Chairman Emeritus Gary Vermeer was semi-retired and spent an increasing amount of time managing his nearby 2,000-plus acre farm. “He started as a farmer and he was always a farmer at heart,” Robert told the Des Moines Register in February 1996, “it’s just that the factory grew faster than the farm.” A month later, Gary was given national tribute when he was inducted into the Construction Equipment Hall of Fame along with steam shovel inventor William Smith Otis, Link-Belt founder William Dana Ewart and others. With Robert and Mary at VMC’s helm and a third generation of Vermeers coming of age, the sky was the limit to find bigger and better solutions to agricultural, environmental and industrial needs.