Over a 50 year career in the farm machinery world, John Buhler has developed his own way of looking at business, which he calls Buhler logic.
Speaking at Manitoba Ag Days, the chair and chief executive officer of Buhler Industries, the largest Canadian owned manufacturer of farm equipment, offered up amusing anecdotes for the audience.
“I’m a dreamer. I’ve always been called a dreamer,” said Buhler, recalling how as a child he would ride his bicycle down to the John Deere shop, which was owned by his friend’s father.
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“I would sit on that tractor and dream about one day building a tractor,” he said. “I was only 14 or 15 years old, and of course everybody laughed at me.”
He recalled reading about a study when he was a young man that found millionaires tended to be people who had not just written down their goals, but visualized them as well.
“I said, heck, who needs an education? All I need is a goal and something to visualize. So I bought a tractor, and I visualized that tractor for over 50 years.”
Buhler said that from dreams come ideas, which provide targets for goals. Living without goals is like driving without a map.
“Yogi Berra says, ‘if you don’t know where you’re going, you could end up someplace else.’ “
He started out knowing his limitations, that he was not a scholar, and therefore would have to rely on common sense. From this came Buhler logic, a long list of simple rules that have since become entrenched in the company’s culture.
“No. 1, keep an updated, written set of visualized goals. No. 2, borrow as much money as possible. Invest in state-of-the-art equipment. Never lease anything. Always negotiate. Remember that banks do not want their debts repaid,” he said.
“Never hire a consultant. I’ll get in trouble with that one, but I live by it.”
In 1956, at 22 years of age, he borrowed the money to start his first business and embarked on a career marked by purchases of troubled companies, which he refinanced and restructured. In 1969, Buhler purchased the Standard Gas Engine Works, renaming it Farm King Ltd.
“We went on a path of borrowing money, watching debt-to-equity ratios that the banks laid out,” he said.
“But we got too generous with borrowing money, and one day my accountant called up and said, ‘Johnny, you’re going to be a millionaire someday. This is how you’re going to do it: You’re going to have $11 million in assets and $10 million in debts. That leaves you $1 million and makes you a millionaire. But you should be careful, because if you sell your assets at a 10 percent discount, you’ll be broke.’ “
In 1981, he bought the Winnipeg factory of Allied Farm Equipment of Chicago.
With a model tractor on his desk for 30 years, he never gave up the dream of someday building tractors.
In 1987, when the Versatile factory came up for sale, he put in a bid after recruiting some wealthy Mennonite friends as additional financial backing and started out on a long battle to gain control of the company. Legal problems in the United States stood in the way of closing the deal.
“The politicians were very supportive. They did exactly what politicians are elected to do: nothing,” he said, to laughter and applause.
After appealing for support from dealerships across the United States and Canada to pressure their political representatives, Washington finally allowed the deal to go through.
“I’d like to tell you what it feels like to have two lawyers sitting in a room at $475 an hour, just trying to see if they can drag that meeting out as long as possible,” he said.
Next on Buhler’s rules is “have as much debt as possible. I like debt. The one thing about debt is that you don’t have to worry about it. Somebody else does that for you, usually the banker.
“Later on I found that the bigger your debt, the more skilled senior vice-presidents of the bank you have to worry on your behalf. That’s why I like debt, and lots of it.
“I discovered that it is easier to borrow $10 million than $10,000. And it’s even easier to borrow $100 million than it is to borrow $10 million. I know, because I’ve done both,” he said.
In 1994, he amalgamated all his companies under Buhler Industries and listed the company on the stock exchange.
In 2000, Buhler bought the last remaining tractor factory in Canada, renaming it Buhler Versatile.
To loud applause, Buhler recounted his struggles with unions, his approach to resurrecting the fortunes of failing companies and the pitfalls of hiring consultants, a practice he claims is a sure recipe for failure.
“If you’re planning a bankruptcy, hire a consultant. Otherwise, just get your managers to do what they are hired to do.
“We have on occasion hired consultants,” he admitted, “but then I just call them something else.”
When an audience member asked if he planned to farm this year, he replied “nothing would be better. The best year I ever had was the year when I farmed with that 1976 Versatile tractor. But I just couldn’t make any money at it.”
