Stability through international growth

International growth and the development of new markets are an essential part of the objectives of the HORSCH company. Cornelia Horsch and Christoph von Starck, head of sales, tell us which strategies they pursue and why there still is so much more potential.

During the past six to eight years, HORSCH has developed from a manufacturer that mainly was active in the EU to a global company that is present on six continents and holds a relevant market share. “We took this step because we agreed that we have to reach a critical sales figure to remain independent in the long run, because we need an enormous financial power to continue to play a leading role with regard to technology and because we want to safeguard ourselves against local market fluctuations. We have built up sales and service structures in all these continents so that we really can work these markets to the full extent”, Christoph von Starck explains.

HORSCH triangle: directly at eye level with customers and sales partners

The triangle concept HORSCH-sales partner-customer came into being in the mid-1990s. In the mid-1980s until the mid1990s, HORSCH machines rather were niche products and less interesting for the trade. “At this time, we relied on direct marketing. Thus, we were able to not only sell our machines but also our agronomic concept to the customers”, Cornelia Horsch remembers. “In the middle of the 1990s, we started to establish a sales partner structure but kept up the direct contact to our customers. We come from agriculture and talk to the customers at eye level to develop agronomic concepts and machines. This is our passion.” Since that time, the professional trade has been supporting HORSCH with regard to sales, service and market development. The training concept was expanded constantly to meet the technical requirements and the demands of internationalisation. This is why HORSCH attaches major importance to intensive, regular trainings for the sales partners. At the same time, HORSCH established professional sales partners in countries that so far had not been worked very intensively and even in some regions of Germany. Our own sales, service and marketing team were also extended.

Establish a home

Today, HORSCH pushes the localisation of production in the large markets to show the customers and the sales partners that the objective is a long-term commitment in the countries.
To assure the customers and also the employees of a stable and reliable business relationship, HORSCH started to create its own branches in the main international markets. “This definitely is a very cost-intensive step. But we decided to take it as we consider it fair and necessary to establish a home in the countries where we sell our machines“, Cornelia Horsch emphasises. The foundation of a company for example in Canada considerably helped with regard to gaining ground in the country. “We notice that it is important to the customers and that customers and employees actively ask for a presence on site.” Thus, it is an essential element for further growth. It simply is attractive for employees to be employed at a company that is based in their own country. “With regard to the current shortage of skilled labour we have to face everywhere, it is an important argument to attract employees. Moreover, it also is a sign for the government that we do not only want to make a profit in the country, but that we also want to pay taxes and support the supply industry.”
Regarding the growth in the different countries, HORSCH has to face various challenges. Among them the adaption of the product range to the agronomic requirements of the individual countries. With the help of the sales team the optimum machine portfolio for the specific requirements has to be found always taking the trends of the individual markets and continents into account. “This high speed of adaptation that is typical for HORSCH helps us enormously to quickly gain market share in new markets. Thus, when entering the market in Brazil or China for example we were able to develop completely new market-ready machines within less than 24 months”, Cornelia Horsch explains.

Global growth

To understand one of the reasons for HORSCH’s growth, you have to look at the large arable regions of the world. In the US for example, until two years ago only machines from the HORSCH production in Fargo, North Dakota, were sold. After Lucas Horsch took over the responsibility for this market, he continuously pushes the sales of machines that are produced in Germany and wins new customer which are attracted by machines “Made in Germany”.
“The Brazilian market turned out to be an ideal market“, Cornelia Horsch comments. “With regard to the size and the agronomic methods it is perfectly in line with our machines.” This is why at the moment, HORSCH is investing considerably in this market to tap the potential. This includes a machine portfolio that has specifically been developed for Brazil and has been adapted to the local requirements as well as the establishment of a local production for tillage machines, seed drills, single grain seed drills and crop care sprayers.
In Australia, HORSCH also developed an individual machine portfolio for sowing technology and crop care together with the local importer Muddy River. At first, only the south-eastern part of Australia was covered, but now the sales network will be expanded along the whole Australian coastal regions. As time and again droughts occur in Australia which sometimes are limited to a certain regions, this strategy helps to separate the growth a little bit from extreme weather events.

A more conservative sales strategy was chosen in China. “Although China is one of the world’s biggest producers of wheat and one of the large maize producers, we did not want to take too many risks“, von Starck explains. He had already gathered some experiences in China before he started working for HORSCH. “On the one hand we realised that the market was not yet ready for our technology and that on the other there was a high competitive pressure from Western competitors who partly have been in the country for decades. If you keep in mind that China is a very cyclical market, it can quickly turn into a financial adventure if you invest too much money and then hope for a positive future. This is the reason why we started small and financed the growth only with the money we generated by the sales in China.”
In the future, the markets on the African continent are to be developed further. While business is developing well for HORSCH in South Africa with the importer TERRATILL and the portfolio will be expanded, the next objective is to work up its way north from South Africa as arable farming is developing there and there is potential for high-quality technology.   

Price stability

Among the challenges HORSCH had to face in the past three years were the exorbitant price increases of the suppliers combined with instable delivery chains which led to high efficiency losses in production. As a consequence, prices had to be increased again and again and delivery dates had to be postponed. “This, of course, is murder for the trade and – rightly - the farmers‘ resentment”, von Starck admits. As the expectation of further price increases led to machines being ordered by the sales partners to secure a price level, the quantities, however, did not really meet the requirements of the market, HORSCH now wants to do everything to achieve stable prices. “This is why we do not want to simply pass on the current price increases and the problems with the instable delivery chains to the farmers. We will try to compensate for them by an increase in efficiency in the factories. Therefore, we built up a parts stock and established cost reduction projects. We are confident that we will already see the first result this year and that we will be able to keep the prices at a mainly stable level until end of 2024. We hope that thus eventually the overheating of the markets will slowly decrease.”