Episode 441: Business Secrets Of The Amish

Mar 6, 2013
Originally published on March 5, 2013 5:37 pm

Higher land prices have forced Amish off the farms and into business. There are thousands of Amish run firms out there making everything from plumbing supplies to furniture.

But running an Amish business poses unique challenges. Many Amish don't connect to the electrical grid. They don't drive cars. They prize modesty, meaning traditional advertising slogans like "best," "fastest," and "greatest" are out. An Amish company has to be creative about these things.

And, the Amish have tricks they can teach the rest of the business world. For one, they have perfected the art of marketing to a niche audience.

On today's show, we travel to the The Buckeye Tool Expo in Dalton, Ohio to see how the Amish balance their business interests with their personal beliefs.

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ADAM DAVIDSON, HOST:

Hello, and welcome to PLANET MONEY. I'm Adam Davidson.

ROBERT SMITH, HOST:

And I'm Robert Smith. And we are on a very special episode today because we are in Dalton, Ohio, at the Buckeye Tool Expo. Now, this is the kind of thing you would see anywhere around the country - right? - a bunch of tools, people selling them, you know - table saws and generators and all sorts of things. But there is something slightly unusual about this show. That's why we're here.

DAVIDSON: Yeah. As a matter of fact, we're standing next to 20 or 30 guys right here at the entrance to the show. And any one of them could probably tell us a pretty interesting story about why they're here, but not one of them is allowed to talk into a microphone. It would be a violation of their religious, moral and cultural codes.

SMITH: Because the Buckeye Tool Expo is designed specifically for the Amish community - and not just here in Ohio but from around the country. They travel here in order to buy the tools they need to do their jobs. But of course, because they're Amish, the tools here are very specifically designed for them.

DAVIDSON: So what we found is this is an amazing place to study one of the most important strategic issues facing American business today.

SMITH: You always say that.

DAVIDSON: There is a lot of money in niche markets. And this market is about as niche as it gets.

SMITH: Let's go inside the tool expo, and let's talk about what the Amish community needs.

DAVIDSON: All right, now I should mention, Robert, that I am of course with PLANET MONEY. I also write a column for The New York Times magazine. But Robert, you now know I have another job as well. I write for the Plain Communities Business Exchange. I write a monthly business column for the leading - maybe the only - Amish business newspaper.

SMITH: And the thing that surprised me when you told me about this was that that there is an Amish business community newspaper, that there is an Amish business community - because I didn't know that was a thing. I mean, I have to say I think of them as farmers - you know, they don't drive automobiles. They dress plain. The men wear beards. Like, that's sort of the basic things that you think about.

DAVIDSON: Right. You're thinking about your grandfather's Amish people. And most Amish people still don't drive cars. They still are fairly plain. But look around you. The Amish business community literally is all around us right now. Look at all these people. It's still a bit traditional. I mean, as you'll notice, it's like 90 percent men, maybe 10 percent women, I would guess.

SMITH: Yeah. And they look fairly young.

DAVIDSON: And they look fairly young. And what you see in this hall is the transformation of Amish culture. Up until certainly the 1970s, the vast, vast majority of Amish men were farmers. They lived at home. A typical plot size would have been about 130 acres, which is enough for a family - you know, a dad and a few boys - to farm using horse-powered machinery. But they lived in places like Lancaster County and Holmes County, Ohio, where land prices have gotten bigger and bigger. The Amish have doubled in the last 40 years because they have so many children.

And what has happened is, more and more, kids can't afford to buy farms. And the fathers can only divide the farms so many ways. If you have seven boys, your 130 acres pretty quickly becomes too small to even be worth farming. And then what happens to their boys? So for the first time ever, a majority of Amish men in America are not farming. They're finding other ways to make a living. So in the - right through the 1960s into the 1970s, all of these guys' fathers or grandfathers would have been farmers. And there might have been, in any community, one or two guys who farmed but also did a little carpentry on the side or did a little blacksmithing on the side.

But now you have tens of thousands of Amish businesses, tens of thousands of people who have industry. This convention center right here - in a few months, this is going to be the Amish furniture show. And it's not for the general public. This is not some cute little - oh, let's go down to Amish country and get a nice dresser. This is serious business. Walmart, Sears, J.C. Penney - come here to buy - to place orders with huge Amish factories to get massive shipments.

So right in front of us this is Custom Service Hardware - more than just hardware since 1977. Over here this is a diesel engine manufacturer and seller.

SMITH: Yeah, I was over there talking to that salesman you came. And it's amazing because he grew up around here. And so he can give the whole pitch for a diesel engine in Pennsylvania Dutch.

UNIDENTIFIED SALESMAN: (Speaking Pennsylvania Dutch).

DAVIDSON: A lot of Amish businesses, you'll have a diesel engine running it - running the - one giant diesel engine hooked up to a series of belts throughout the factory that powers each and every individual machine. That's because they're not hooked up to the grid. They don't have access to electrical power.

SMITH: And because they don't have electrical power, there are some great workarounds here at the show. There's a booth that I saw that has all these power tools. It looks kind of like you would see at Home Depot - except none of these run on electricity. They've all been retrofitted to run on compressed air - big tanks of compressed air.

(SOUNDBITE OF POWER TOOL WHIRRING)

UNIDENTIFIED MAN #1: Almost unlimited, the tools you can convert to air.

UNIDENTIFIED MAN #2: Drills, impact wrenches...

UNIDENTIFIED MAN #1: Saws - your table saws.

SMITH: So I could take a saw that has an electric motor, and you would just put a different motor on there - like a little windmill?

UNIDENTIFIED MAN #1: That's right. It's an air motor. It's not an easy switch, but it is doable. And we do it all the time.

SMITH: Well, maybe we should go over what the Amish can and can't do. It surprised me that people came from around the country to this expo because the Amish don't drive. They're obviously not going to take a horse and buggy from Colorado or Minnesota. I've met people from there. But they're allowed to have people drive them. They have buses and vans that come here.

DAVIDSON: Yeah. And I think this is the core misunderstanding that people have about the Amish. They don't care about technology in and of itself. They don't look at technology as something awful. When their family members are sick, they're perfectly happy to go to the hospital and use all the modern conveniences - have a car drive them there, use the most cutting edge technology. For the Amish, this is - so up until, say, the 1920s, Amish were just like everyone else when it came to technology. This wasn't a big issue.

But when some new technologies came out - cars and eventually phones and airplanes - the bishops would meet. And they would talk about - does this help us, or does this hurt us in our mission to stay humble before the church, to stay committed to the church? And what many of the bishops decided is - hey, we don't like cars because what seems to happen is when people get - start owning cars, they start driving all over the place. They get away from the church, and they start doing worldly things, sinful things.

SMITH: What about the electrical grid? A lot of them don't connect - they don't have plugs in their homes. They don't connect to electricity. What's the theory behind that?

DAVIDSON: It's the same basic idea - that you should get what you need from your church community - not from the world at large, not from the overall society. That's why Amish people don't participate in Social Security. They do pay local taxes, but they don't pay Social Security taxes generally.

SMITH: But when we see a trade show like this, where there are clearly technological things they might not have in their home - electrically driven motors and tools, even some forms of computers and phones - how are they able to use that in their business but they don't want it in their homes?

DAVIDSON: It's actually a fascinating and - I think - pretty sophisticated solution to a problem, which is when you have an agrarian lifestyle, when you're farmers, then the - you know, you sort of are - you tend to spend most of your time at home on the farm. But as the Amish have been forced to leave the farm, they've been using technology very sophisticatedly so that they can bring income into the house - they don't want to starve - but in ways that reinforce the family and don't weaken the family.

So a diesel engine - that allows your home-based business to be more productive. If you're a carpenter, you can - you know, you can cut more wood. You can be more productive. You can make more money, but you're doing it at home. By allowing that piece of technology into your house, you're strengthening the home.

(SOUNDBITE OF POWER SANDER RUNNING)

DAVIDSON: Here's a guy selling sanding belts and sanding equipment. They generally do very pragmatic businesses that are related to home so carpentry, plumbing - things that are related to homes, which means that the housing bubble was a huge boon for them. They were selling cabinetry and plumbing supplies and doing roofing and making a fortune and expanding and expanding and expanding. And so when all of that demand disappeared, it was devastating for a lot of this community. Although what you and I learned is a lot of these guys started doing something they had never done before - advertising - marketing, going out on sales calls, doing a - and that's also a real danger to Amish culture.

It's a culture that believes in modesty. It believes in never tooting your own horn. And it's really hard for them. You'll notice on the advertisements for the Amish businesses, you don't see like best or the fastest or the greatest. It's very simple. Here's the Deskmate Word Processor. And actually, its big advertisement is what it doesn't have - no Internet, no video, no music. So it is not - and it does have Microsoft Word, Microsoft Excel. So it's saying this is a very plain simple solution.

So Robert, there's a person missing from this taped conversation. and...

SMITH: Yeah, someone who is actually Amish who can explain what it is they want to do, what their dreams are for business, what they need from this kind of expo.

DAVIDSON: And it's a little bit maddening because I have to say, you and I have spent a lot of time - we had dinner with a bunch of Amish people yesterday, we've been hanging out with Amish people all day - and it's been so much fun. They tell jokes. They're human. They're funny - at least some of them are.

SMITH: And they're really reflective about their lives and how it's changing. And they're super smart about business. I would love to play some of those conversations we had for you.

DAVIDSON: But none of them would be willing to talk to us. In fact, there's one guy we've spent most of the time with. He's my best friend among the Amish. He's one of my best friends in the world, and he won't even let us say his name or where he's from because that would be immodest. That would be calling attention to himself.

But he took it upon himself to go around the show and try and find an Amish person who would talk to us. And he got all excited. He came up to me and said, I found you a guy. It's one of the most important businesses here. It's one of the most famous businesses here. It's DayStar. They make these really cool...

SMITH: They're light tubes. They're...

DAVIDSON: Light tubes.

SMITH: ...Tubes that go up through the ceiling and bring sunlight into your factory, which of course, if you don't have electric lights, you don't want to be trying to manufacture sometimes high-tech goods under kerosene lamps.

DAVIDSON: Exactly. And I've been to lots of factories with the DayStar system. And you - I don't want to sound like a salesman, but you would have no idea there wasn't electric lights up there. It's a really cool machinery. So I'm still not quite clear why, but Elva Otto, who's a representative of the DayStar company, he said sure, I'd be happy to talk to you guys on tape.

ELVA OTTO: 'Cause I don't know how to keep my mouth shut (laughter). I like talking. That's why I'm losing my voice. I like talking. You know, that's the difference, you know, is I'm used to talking. I actually I grew up in - we have a tarp shop, canvas shop, is what we actually do. And so for 40 years now, I've been talking with customers, ever since I've been a little child growing up.

SMITH: Well, do Amish have to be more inventive? I mean, do you think there's more innovation and such because they have limited options?

OTTO: Yeah. In all reality, I have had a guy made the remark that it takes more technology to be Amish than it doesn't because most people can take something, plug it into the wall and make it work, where we've got to figure out - OK, well, this doesn't - OK, we can't use electricity for this. But we'd like to make this item work, so then we take - get creative, figure out how to make something work, you know. So there's a lot of - I mean I say technology. It's probably not the right word. But there's a lot of inventions in there, you know, figuring out how to make things work.

DAVIDSON: Exactly. One of my friends said, you think we're simple. But you're simple because you, the English - the non-Amish - you just buy whatever is being sold. You don't think about it at all. We have to think about everything.

SMITH: Yeah. We would have just gone to Home Depot and bought a bunch of lights and plugged it in.

DAVIDSON: Yeah, and plugged lights.

SMITH: How do you market to Amish communities since, you know, you don't have the TV ads, you know...

OTTO: Yeah, yeah, like...

SMITH: ...Or the radio ads. But...

OTTO: Budget, Plain Community Exchange...

SMITH: What are these - newspapers, magazines?

OTTO: Newspapers, yeah. They use newspapers a lot because, you know, the Amish - because they don't have TVs - they read a lot - yo know, a lot more magazine reading and things like that.

SMITH: So the newspaper business still doing OK?

OTTO: Yeah, yeah. I mean, fair - yeah - because, after all, that's how we get our word out.

SMITH: Is this normal? You've handed me your business card here. And you have a phone.

OTTO: We actually - we don't - yeah. We got an answering service. And we have a phone outside. We don't have a phone in our shop, but we actually have, like, a phone in a building - a phone booth outside. And then...

SMITH: And so if you call this, what happens?

OTTO: You get an answering machine then is what. You get an answering machine. And then...

SMITH: That's in a building...

OTTO: In a building outside. Then we check messages. About every couple hours or so, we check messages. Then we'll call people back and give them satisfaction then.

SMITH: And that's just because you don't want it in your home. Or is there...

OTTO: In our community - there's a difference in the different Amish communities. Some Amish communities...

SMITH: What's your community called?

OTTO: Arthur, Ill., is where we're from.

SMITH: OK.

OTTO: And so we would actually - don't have phones in our shops. Now, some communities would, but our community doesn't. So that's how our community does that is have phones in outside building (unintelligible).

SMITH: So you use it as a tool but not as something that's constantly in your face, in your life?

OTTO: Yeah, not constantly in our face. You know, yeah.

SMITH: It doesn't run your life.

OTTO: It doesn't run our life, you know. So it's - that's our (unintelligible).

DAVIDSON: Great to meet you.

Here's a reason I found the Amish business world so fascinating. You know, one of the big themes of PLANET MONEY, one of the major themes of anyone covering the economy right now is the huge requirement to - for knowledge, for skill because more and more people without not only a high school degree - we don't really think of a high school degree these days as just the bare minimum. You really need high school-plus. You need a college degree or at least several years of technical training. None of these guys here went past the eighth grade. That's part of the Amish way. In fact, they had to win a Supreme Court case to get permission to not follow any state's schooling requirements.

So all of these guys go through the eighth grade. And it's Amish eighth grade, generally. Most of them one to one-room schoolhouses, which are wonderful places. But they teach very basic things - math, reading, not complicated scientific ideas. So what amazes me is this group of people who, on paper, should be completely out of this economy, should be floundering impossibly - what I've learned is a lot of these guys are really, really successful.

And my sense is there are two major reasons. One is they are a community. In an Amish church, when you do a business, you know that you represent your church district and the Amish generally. And so you're going to just take on a little extra pressure to do your job well. And then also - if you mess up, if you go bankrupt, if you get in trouble, you are going to have the community help you. They might not be all that nice about it. They might make you sell your house and live in a smaller house. They might do - you know, really downgrade your lifestyle so that you can afford to pay the people you owe money to, but they're not going to abandon you. You're never going to be homeless. You're never going to be truly destitute.

SMITH: It's a social safety net.

DAVIDSON: It's a true social safety net, which they - which is why they're allowed - one of the few groups that are allowed to completely have nothing to do with the Social Security system.

But then the other thing is - I think all of the restrictions on the Amish force them to create these real niche businesses, where they really find some very specific niche in the market that nobody else is fitting. So for example, there's a guy who makes spindles, like wooden - you know, for a bannister. And he makes them in a very old-fashioned way. But he doesn't make them for, you know, custom, you know, high-end carpenters or something. He makes them for Home Depot and for Walmart because it turns out that the old-fashioned way of making spindles, for that particular product, just is efficient and quick and reliable in a way that it's very hard for other businesses to compete with. So he's found tremendous success.

So that is something the Amish have. They're sort of forced to focus on these little weird corners of the marketplace that are very easily overlooked by much bigger players. So that part of it is really, really a good recipe for business.

SMITH: The Amish way.

DAVIDSON: The Amish way. That being said, I'm pretty sure it would be a disaster for any non-Amish person to...

SMITH: To try - to try and pull this off.

DAVIDSON: Yeah.

SMITH: It takes generations to do this.

DAVIDSON: Exactly, exactly.

SMITH: As always, we love to hear what you think of the program. You can shoot us an email - planetmoney@npr.org.

DAVIDSON: Or send us a letter if you're Amish and you happen to be hearing this.

SMITH: Give the address. We never do that.

DAVIDSON: PLANET MONEY, NPR, 11 West 42nd Street, 19th floor, New York, N.Y., 10036 - we'd love to hear from you.

SMITH: I'm Robert Smith.

DAVIDSON: And I'm Adam Davidson. Thank you for listening. Transcript provided by NPR, Copyright NPR.