Kinze manufacturing: innovation spells success.

Perched on a hillside, between Iowa City and Des Moines along 1-80, is the epitome of agri-marketing success--KINZE Manufacturing, Inc.

As any veteran agri-marketer has observed over the years, the highly visible facility seemingly adds a new building to its location each year.

The company's President and owner, Jon Kinzenbaw, founded the company in 1965 after returning to his home area near Ladora, IA, following a stint in the service. Raised on a 160-acre farm in central Iowa, Kinzenbaw originally founded the company as a welding shop in Ladora where he repaired, and then began inventing, farm equipment.

Armed with a $3,665 loan to purchase a 1,400-square-foot building, parts and tools, the 21-year-old started a venture that has become one of the largest privately held U.S.-based manufacturers and marketers of farm equipment. Today, KINZE Manufacturing is a living testament to the good old-fashioned entrepreneurship, ingenuity, and work ethic for which Americans are known.

"The company manufactures and markets two principle product lines: planters and auger wagons for grain handling," says KINZE COO Brian McKown.

McKown, a graduate of Missouri State University with a B.S. in Industrial Management, joined the company in 2003 in his current position. Previously, he was located in the Kansas City area where he was with Emerson Electric and Grant Thornton, LLP.

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"Our corporate offices and manufacturing facilities now occupy more than 20 acres under roof," reports KINZE VP Susanne Veatch, who is Kinzenbaw's daughter. A graduate of Iowa State University with a B.S. in Management Information Systems, in addition to being a full-time employee of KINZE, she and her husband also farm in the area. She joined the company in 2005 and previously was a Systems Analyst with Caterpillar in Aurora, IL.

"KINZE now has approximately 550 full-time employees," Veatch says. "Our receiving department logs in nearly 35-million pounds of steel each year and handles an average of 5 to 7 truckloads per day. We have more than 13,000 active parts and 8,000 repair part numbers in stock at all times to support equipment in the field."

KINZE owns a fleet of semi-trucks and trailers, she reports, utilizing GPS tracking for up-to-the-minute scheduling. "We haul a high percentage of our outbound products to dealers," Veatch says, "and we backhaul raw steel and components for manufacturing."

All KINZE products are manufactured at the Williamsburg plant. "We ship the basic unit to the dealer and they install any additional features the customer has specified," Veatch says.

MARKET LANDSCAPE

The KINZE heritage begins with its array of innovative products (see timeline).

"Planters represent approximately 90% of the company's revenues with the balance coming from the sale of auger wagons," says McKown. "Geographically, we primarily serve the Corn Belt and eastern Canada. We also export to the former Soviet block countries plus Australia and New Zealand."

Industry experts estimate that KINZE planters have a market share in its geographic region of 40% which is comparable to John Deere's share. The remaining market is served by Case IH, Great Plains and White.

"KINZE currently manufactures 13 planter models," McKown says. "They range in size from 4 to 36 rows. The most popular is 16 rows. A 24-row planter with all the features available has a retail price of around $160,000 and a 36-row $220,000."

The company first entered the planter business in 1975. "That's when Jon invented the Rear Fold planter toolbar," Veatch says. "Planters were getting much larger and needed to be hauled from field to field, often over narrow bridges and gates."

To do so, farmers loaded their planters up on trailers, a time-consuming effort that required nearly 40 minutes. "The Rear Fold allowed them to fold up the planter from their tractor seat and keep moving," Veatch says. "It increased planting performance, speed and capacity."

"The Rear Fold was innovative and I thought it had tremendous market potential," Kinzenbaw says. "So in 1976 I purchased ten acres of land at our current site and started construction of the first building there." The company moved from Ladora to its Williamsburg location and started production of the first-ever horizontally folding tool bar. That same year, it also added a larger 600-bushel auger wagon.

MARKETING SUCCESS

Kinzenbaw prides himself on his ag background and close ties to fanning.

"When I started the business, farmers would tell me what they needed," he says. Kinzenbaw had a knack for coming up with a solution. Word on the street was, if you needed something, see Jon ... he can fix/build anything.

Originally, he took and delivered orders directly from his shop, basically within a small geographic area. However, as word spread about KINZE's innovations, demand grew and by 1978, KINZE had its first dealer--B & B Products, a shortline KINZE dealer located in Flanagan, IL, that remains a dealer today.

Then things really started to heat up. In 1981, KINZE had 21 dealers, in 1982 it had 73, in 1983 it had 109 and by 1990 it reached its current number of 260.

"The majority of our dealers started out as New Holland dealers," McKown says. "Since New Holland didn't offer a planter, we provided them with that option."

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"We have about the number of dealers we want," McKown says. "However, we do have coverage and we would like to upgrade our representation in others."

Lean and mean, the company has seven district sales managers working with its dealer force.

It also hosts several workshops for its dealers throughout the year providing product training, service, selling and other topics. Each year, the company hosts separate family style picnics for its employees and dealers at its headquarters.

Although it doesn't offer floor planning or other financial programs, it currently has a pilot under test.

In addition to having engineering talent, Kinzenbaw also has demonstrated considerable promotional skills. One of his biggest coups was at the 1974 Farm Progress Show. He had just developed a 12 bottom plow. It takes a big tractor to pull a big plow, so he custom-built a 4-wheel-drive tractor featuring two John Deere axle and transmission assemblies and two Detroit Diesel engines.

Painted blue and coined "Big Blue," the tractor drew huge crowds at farm shows for several years.

Kinzenbaw also had the foresight to hire a marketing communications agency to build awareness for his company and its brand.

Lessing Flynn, Des Moines, IA, has handled the KINZE account for more than 25 years. "I personally have a lot of history and many great memories with Jon and KINZE," says Connor Flynn who still handles the account. "It's been a wonderful experience with a lot of great people.

"When I first approached KINZE, I knew they were an innovative company run by a very entrepreneurial founder. And when the opportunity presented itself--their previous agency filed for bankruptcy--I was probably one of the first ones to call on KINZE."

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Addressing KINZE's major marketing communications activities, Flynn says, "No question about it. Print has been the mainstay of the KINZE marketing communications for years. It still is today and it's supported, in part, by the vast majority of KINZE dealers throughout the country.

Looking forward, Flynn says, "We're starting to earmark a larger percentage of the advertising budget towards Internet marketing activities. Percentage-wise, I see this increasing in the years ahead, especially due to the increased access and use of high-speed Internet by larger farm operators.

He says they have also been doing more targeted direct mail campaigns. He cites the consolidation of row crop farming operations into the hands of larger operators, particularly those producers who are planting more and more acres while still trying to accomplish it within a very tight timeframe.

He says the company is also becoming much more pro-active and aggressive in event marketing and public relations activities via customers days, dealer sales meetings, and at a few of the major farm shows.

"KINZE dealers are also eligible to run additional co-op ad programs on their own with a wide spectrum of media," Flynn reports. "We produce all of the ad material content for that program."

LOOKING AHEAD

"This looks to be our best year ever," McKown reports. "Our organization had some challenges with a booming agricultural market and the release of several new products, but all departments worked together to meet the rising demand, especially throughout the late fall and into the first of the year when sales began exceeding expectations."

He says, "It is becoming a lot more challenging to forecast sales. We are seeing buying habits changing with farms becoming larger and larger and run more as a business than a family farm. Purchase decisions are more and more financially driven rather than personal choice. The result of this is a shorter sales cycle with less predictability."

In these uncertain markets, how does one go about scheduling production?

"Our sales force closely monitors dealer inventories and sales activities all the while reviewing our availability, and maintain an open line of communication with our Production Control group," McKown says. "We are working very hard to be able to react to a dynamic demand throughout the year. As we continue to grow, flexibility will be vital to our success."