When you enter Matt Hanson’s office on the sprawling campus of Hanson Silo Company near tiny Lake Lillian, you notice two things: several impressive deer mounts and a huge TV screen with images from all of the production lines at the company. The lines are spread across five buildings on 40 acres where four generations of Hansons have been making and selling products to farmers since 1916.
That the company exists still makes Hanson Silo a rarity. Fewer than 5% of family-owned companies survive to the fourth generation — and fewer still are thriving. Founded by Matt Hanson’s great-grandfather on his farm, the company has evolved, grown, and changed along with its agricultural clients.
President of the company Matt Hanson and his brother, co-owner and director of business development Mike Hanson, are determined the firm will make it to the fifth generation and beyond. To do that, the company has diversified and expanded its businesses and more than doubled its sales over the past 15 years through a combination of disciplined decision making, a deep understanding of its customers, and a willingness to try new products, processes, and businesses.
“They read the tea leaves well,” says Steve Haarstad, an Enterprise Minnesota business consultant who has worked with the company on strategy for several years.
“Matt knows his market,” says Bob Kill, president and CEO of Enterprise Minnesota. “He’s really got a sense of what’s going to happen. He’s a try-it-fast, fail, learn from it, and move on kind of guy.”
While the company’s main business is still precast concrete — products not too different from the one great-grandpa Emil Hanson invented using sand from Lake Kandiyohi to build his first silo staves — it hasn’t built a silo since 2018. Over the years, it has expanded into contract manufacturing, powder coating, laser cutting and bending, design and installation of feeding and manure handling systems for cattle and hogs, sales of farm equipment, as well as precast concrete walls for everything from municipal sand and salt storage to car dealerships.
“They’ve done a good job of asking, ‘What are our current capabilities and how can we apply what we do now to these other opportunities?’” says Abbey Hellickson, an Enterprise Minnesota business growth consultant who has worked with Matt and his father before him.
“The mix keeps changing,” Matt Hanson says of the company’s product strategy, “but our core business is in the Midwest. We try to go after a lot of base hits instead of home runs.”
Growing up in the business
Matt credits his father, Greg, for adapting Hanson Silo’s products and services to changes in agriculture as well as creating a clear plan for passing the business on to the next generation. He also introduced young Matt to working at the company.
“When we were kids, my father worked six days a week as a rule,” Hanson recalls. “For me to see dad, like on a Saturday, I would have to come with him. So, he would bring me out here and it was like a 40-acre playground.”
Matt was driving forklifts before he was 12 and behind the wheel of a semi-truck (on property only!) by 14. “It was a fun place to grow up,” Hanson says. In high school, Hanson sold sporting goods for minimum wage plus commission, which he describes as “a good lesson in sales compensation.” By 18, he had worked summers in different departments at Hanson Silo. But after graduating from the University of St. Thomas in St. Paul, Hanson joined 3M as an international supply chain analyst, helping ship abrasives from Brazil to California. He had a chance to stay with 3M, but after a year, he decided to join the family business full time. “It was enough to get a taste of what else was out there,” he says.
He started in 1998 and was named president of the company in 2007 at age 31, focusing on operations while brother Mike, who joined the company in 2008, handled sales. His father continued to work with the firm in different capacities for more than a decade, but soon handed off most responsibility to his sons. “Once I got the backpack fully on, it was heavier than I expected,” Hanson says of leading the company.
From its earliest days, Hanson Silo has been willing to do it all for their clients. While its silo business started with staves (interlocking concrete blocks), the company soon made and painted the metal roofs for the silos as well as equipment to load, unload, and chop the silage, and provided crews to put them up. “We were extremely vertically integrated,” Hanson says. “A pivotal moment was in 2004 when we made a deal with one of our competitors to sell our silo unloaders and feeding equipment line and distribution channel. That opened up opportunities to get more into the precast concrete business as well as contract manufacturing and powder coating.”
Growing and letting go
The precast business involved selling to a wide range of markets besides farmers, including municipalities and commercial applications. The company even makes extremely sturdy picnic tables out of precast for use in public parks. “We knew the silo business was waning and we knew the bunker silos were going to be the replacement,” Hanson says. “But the precast bunker walls have many uses, everything from food grade to waste treatment plants.”
As a young company leader, Hanson joined the Enterprise Minnesota Peer Council in Monticello in 2006, a move he recommends other business leaders take. “You need to find a mentor or a group of people who you can be open with,” Hanson says. “Not someone running a $100 million company, but someone who understands your business.”
For years, Matt ran all the operations of the company, at one point overseeing 15 direct reports. About three years ago, he realized that for the company to continue its growth, it needed help.
“We have really good people, but we brought them all up from the inside. They knew what they had learned here. The tribal knowledge was amazing, but we had to get some additional professional management,” he says. He hired Steve Haley, an operations leader with more than 25 years of experience, to run the day-to-day, while Hanson focuses more on new products and markets as well as tightening up the company’s finances and “being deliberate about making good decisions.”
It took about a year for Haley to learn the complexities of the company and Hanson to start to let go of the day-to-day reins. “It was a little bit of a struggle for Matt to fully let go,” Haley says.
“With Steve really able to pull the levers and control the flow of work, people have finally gotten used to not coming to me to get the answer,” Hanson says. “It feels a little different not knowing everything that is going on. At the same time, I feel so much more confident that all of our folks are in a good place.”
Checking the boxes
A big part of Hanson’s role now is to figure out where agriculture is headed, and how Hanson Silo can manage the ups and downs of a volatile industry.
“So many people start their business because they have what they think is a great idea and that they can make it. That is not the secret sauce,” Hanson says. “It’s selling it. Selling it and marketing it and distributing it is 10 times harder than making it.”
As farms have become larger and more complicated, getting access to decision makers is more difficult, Mike Hanson says. The company relies on a robust customer relationship management system and many partnerships and collaborations built on deep industry knowledge. “We call it a hunter sales model,” Mike Hanson says. “Once someone has their concrete, they often don’t need more, but working with us is like hitting the easy button. We have industry knowledge that other companies don’t have.”
The company has also been willing to mix up its product line. “We had a lean manufacturing philosophy before we knew it was lean, which is fail fast, fail cheap, learn lots,” Matt Hanson says. His goal is to keep the company as diverse as possible while remaining mostly focused on agriculture.
“If I had advice for somebody just starting out, I’d say don’t put your last name in your company name and don’t list what you do,” Hanson says, laughing. “We love the history of our name but it’s not where we are headed. Markets change and new opportunities always present themselves. The challenge is to see them coming.”
When Hanson Silo adds a new product or service, it has to check all the boxes that make it a good fit for the company, Hanson says, diversifying sales and helping to balance the natural ups and downs of agriculture, preferably in a way that enhances capabilities the company already has.
Consider the 12-gun GEMA Switzerland paint booth the company purchased in 2020. Hanson already had a batch powder coat line and was experienced at painting items up to 30 feet long. “As we got more opportunities,” Hanson says, “we decided to grow it. It was almost organic growth.” The GEMA booth offers expanded capabilities. It senses when parts come into it for powder coating, says Haley, and recovers 90% of the paint that leaves the gun.
About one-third of the company’s 85 employees work in fabrication, welding, and painting, Haley says. The rest primarily work in the core precast concrete business. The company’s contract manufacturing jobs are varied and offer stability. “We’ve made a lot of cool stuff through partnerships with OEMs,” Hanson says. For example, one of its customers is the premier maker of digital displays, such as those used in commercial signage and sports arenas. Hanson Silo fabricated and painted part of the display that now counts the goals and gets fans cheering at TD Garden, formerly known as Boston Garden. Hanson Silo recently powder coated a large manlift cage to go up the side of a dam for the U.S. Army Corps of Engineers.
At the same time, Hanson’s deep knowledge of agriculture has helped him spot opportunities that align with the company’s existing products. Recently, the company developed a partnership with an Irish company that produces a deep pit manure aeration system known informally as “the bubbler.” The product pushes air into the manure pits that sit under modern cattle barns. It keeps the manure aerobic instead of anaerobic as it breaks down, creating a healthier environment for the cattle and the people who work with them. “It’s like putting a hot tub in the manure pit,” Hanson says. “We resell that, but we’ve become the go-to people in the Midwest for design and installing it. We have enjoyed working with some third-generation Hanson customers on this technology.”
Hanson Silo manufactures the concrete slats for the floor of the cattle barns as well as sells the rubber mats on top of the slats to prevent slipping. It also can make the columns and beams that hold up the floor and the precast around the pump-out area for the pit. Its crews have become skilled at installing the piping and electronics to run the bubbler. At many farms, Hanson Silo also provided the bunker storage for feed and all the robotic equipment to feed a herd of cattle with the tap of a button on an iPhone. “We’re now working with customers to design around the automated system,” he says.
The company is doing more work with hog farmers, too, but it’s cognizant of competitors in the industry who may also be customers. “We’re really careful about trying not to step on people’s toes,” Hanson says. “We would rather get a shot at selling them the slats on the next job rather than taking work away from them.
“The fun part is that we know a lot of people in our respective markets,” he continues. “It gets back to the values and culture that we have. It’s always been that you treat people fairly, be honest, if something goes wrong, fix it.”
As he’s focused more on new opportunities for the company, Hanson has also reconsidered its heavy vertical integration. Doing it all isn’t always the financially sound choice. At one point the company owned a fleet of semi-trucks, but most of those have been sold off in favor of hiring independent drivers. “We’re not making money on trucks sitting here,” he says. “Drivers are hard to get so we’re subbing it out to brokers. We hire some local guys, too, but they are 1099s, not employees.”
They’ve also worked to sell or retire legacy equipment, and Hanson applies the same thinking to buying pricey new equipment. “It’s easy to invest in something that becomes a constraint,” he says. “All of a sudden you have a robot that flows into a road block.” To avoid that, the company is currently leasing a robotic welder to do a repetitive project. The robot helps free up company welders for more complicated work, Haley says, but the company can retire the robot when the job is done and its services aren’t needed.
Another struggle for the company is the seasonality of its business. Like farmers, most of the company’s work comes in the warmer months. By adding contract manufacturing, powder coating, and laser cutting, Hason Silo has worked to stretch its busy season out by several months. But when you work with farmers, even the weather can throw the schedule off. The extreme rains in June and July this year, for example, pushed so many projects back that the company ended up billing 11% of its expected annual income in a single week. “It was crazy,” Hanson says.
To manage erratic schedules and so many business lines, Hanson Silo uses the Traction Enterprise Operating System and meets quarterly with Haarstad to discuss strategy and set priorities and with Hellickson to discuss leadership issues. “It holds us accountable,” Hanson says of the Traction model, “which is something that can be tough with a family business.”
And, making sure the family business remains healthy, financially and culturally, is a big goal for Hanson. Divided responsibilities have helped, says Mike Hanson. He and Matt each have their areas of expertise and stick to them. “It’s not that difficult to get along well. We still hunt together and hang out at the lake,” he says.
The future looks good with a potential fifth generation in sight. Matt Hanson’s son, Sam, is a 19-year-old entrepreneurship major at South Dakota State University.
Return to the Winter 2024 issue of Enterprise Minnesota® magazine.
