King Kohler

Kingdom dropped by the Old Course Hotel in St. Andrews on the east coast of Scotland last fall to pay its respects to $3 billion. For the next two hours, Paul Trow (words) and Leon Harris (photos) were given an unforgettable glimpse into the colorful world of their gregarious host.

Herbert Vollrath Kohler Jr. is a bearded bear of a man. Known universally as ‘Herb’, he bristles with bonhomie and loves to chew the fat. He also loves the game of golf. What began as a casual fling in his youth with hickory-shafted clubs has blossomed over the years into a passionate affair. Grand, even, but more of that later.

To say Herb is one of America’s most successful citizens is an understatement. He has been president and CEO of the Kohler Company, best-known for its plumbing and household products, for three and a half decades. The company was founded by his grandfather John M. Kohler, who was born in the Austrian Tirol in 1844 and emigrated to the U.S. at the age of 10. The community in Wisconsin where the company is located, some 40 miles north of Milwaukee, bears the family name.

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But Herb has yet another claim to fame—as the creator of what independent travel newsletter Golf Odyssey has dubbed “the best 72 holes of golf in the world”.

Designed by husband-and-wife team Pete and Alice Dye, Blackwolf Run is just south of Kohler by the Sheboygan River while the newer 36-hole complex, Whistling Straits, where the PGA Championship will be staged for the second time in six years this August, is laid out along the western shore of Lake Michigan near the village of Haven, a few miles north of the town of Sheboygan.

Many golfers visiting Kohler stay at the American Club, opened in 1918 as a dormitory for European immigrant factory workers. Herb restored the property and for 25 years it has been the Midwest’s only AAA five-diamond resort hotel.

There is further accommodation at the mid-market Inn on Woodlake while more recently the company refurbished Riverbend, a mansion built in 1923 by Herb’s uncle, Walter J. Kohler, then Governor of Wisconsin. In 2001, it reopened as an exclusive private membership club with 31 rooms and its own spa.

As if that were not enough to keep a golfing romantic fully occupied, Herb also owns one of the game’s most prestigious five-star resorts—the Old Course Hotel beside the Road Hole 17th at St. Andrews—along with the Peter Thomson-designed Duke’s Course in the hills overlooking the Auld Gray Toun. Also, he has recently increased his portfolio at the Home of Golf by acquiring Hamilton Hall, the iconic five-story Victorian red-brick building that opened in 1895 as the Grand Hotel and stands guard behind the 18th green.

Herb aims high in business as well as golf. After all, how else could he have accumulated a net worth estimated by Forbes recently at $3 billion?

Of course, his forebears made a considerable contribution along the way. “My grandfather went to study in Chicago. After graduating he became a salesman, first for groceries and then furniture,” says Herb. “He sold machinery to foundries across the western seaboard. He stopped when his market petered out and moved to Sheboygan to work at cutting and bending metal. He married a young girl [Lillie Vollrath] in 1871 and her father gave them a half interest in his foundry as a wedding present.”

For ten years, John Kohler produced cast iron and steel implements for farmers as well as castings for furniture factories and ornamental iron pieces. Then, in 1883, he applied a baked enamel coating to a cast-iron pig scalder/horse trough and created a bathtub.

“Indoor plumbing was very scarce in the 1890s. My grandfather would sell a product for one cow and 14 chickens. Then he thought ‘what else can we make that works in a bathroom?’ So the idea was born for a washbasin, sink and toilet tank, all with enamel surfaces. To this day we keep refining the technology and this keeps us in the forefront of the industry. Over the years we became the leader in the U.S. in kitchens and bathrooms, subsequently pushing out across the world and employing many thousands of people.

“Planned communities were first introduced to the U.S. in the first decade of the 1900s. The concept was based on the English garden city. My uncle Walter toured this country [Great Britain] and John Ruskin was an enormous influence on him. He always used to quote Ruskin: ‘Life without labor is guilt; labor without art is brutality.’ That is the essence of what Kohler is all about.

“The village of Kohler is very independent from the company. The company does not expect any of its management to run for village government. Also we will not sell lots to more than 40 percent of people who work for the company. We encourage independent ownership and people buy freehold.”

Lillie died in 1883 after giving birth to six children and four years later John Kohler married her sister Minnie, whose only child turned out to be Herb Sr., who ran the company from 1937-68.

“When I was a young man, my father wanted me to work in the business. But I became a rebel and grew a beard. I wanted to be an actor and I married at 21 [Linda, who died in 2005].” Their three children—Laura, Rachel and David—all work for the company, as does his second wife of 25 years, Natalie. “She’s my lawyer and general counsel.”

Somehow it comes as no surprise to learn that Herb as a young man had thespian inclinations. “I finally got myself through Yale with a business degree, but I was distracted for a few years by the university theatre.

“I remember performing in a production of Little Foxes by Lillian Hellman about a degenerate southern family. I wanted the part of a negro butler but the director refused because I wasn’t black. I told him I could put a black face on but he decided he wanted a real negro. He cast a young actor who was then suspended because his grades weren’t good enough, so he had absolutely no choice but to use me.

“It was a wonderful meaty character role—acting opposite a young woman who was a black activist from Little Rock, Arkansas. After the performance one night, the director was talking to some elderly ladies from the audience and we overheard one of them say, ‘you cast such a fine young negro to play the butler, so why did you not cast a negro to play the maid’. Afterwards, the director said to me, ‘you’re playing a stereotype and she’s playing herself. In front of this audience she looks white and you look black’.”

Years later—in 2003—Herb revisited the acting profession in the western Open Range, directed by and starring Kevin Costner, a frequent golf partner. Costner asked if he wanted a part. “I told him: ‘O.K., I’ll do it, but on two conditions: I want to ride a horse and I want to kill someone’.” Costner replied: “Well, I’m not sure about the horse, but I guarantee you can kill someone.” Herb, portraying a character called Cafe Man, shoots a man in a pivotal scene.

Despite his rebellious streak, Herb didn’t totally sever his connections with Kohler Company in his youth. “I used to spend my summers working for the company from the age of 16, mainly picking mustard plant weeds in the farm fields. After Yale I worked for another company as a management trainee. Then my father called and offered me a job—at the time I was rebelling and developing my own identity. We hung up but three days later I called him and said I’d come back on one condition—that he never involved himself in any success or failure of my performance, and never protected me; I wanted to suffer all the consequences of my actions. He agreed, I went back and I worked like hell.”

Herb Sr. died three years later in 1968, aged 76. “Four of us sat round a table and decided how the company would be organised. I became vice-president of operations in 1968 [he moved up to executive vice-president in 1970, CEO in 1972, and president in 1974]. I was like a duck—calm on the surface and paddling like hell underneath just to survive.

“We articulated the company’s mission: to improve the level of gracious living for everyone touched by its products and services. If I sell you a bathtub there has to be something about it that gives you pleasure not only at the time of the transaction. Years later we want you to think this is one of the best buys of your life. The same applies with everything we provide—an engine, generator, toilet, table, hotel room, spa service, golf course, you name it. If you think about it five years later and, inwardly or outwardly, it makes you smile and we can do this consistently then we’re living up to our mission.

“We have three guiding principles: we invest 90 percent of our earnings each year back into the company; we live on the leading edge of design and technology of product and process; and we have a single standard of quality above the norm with everything we do, regardless of price point.

“We have a broad range of price points, from high end to mass market. The materials, functions and details of what we provide might differ, but never our quality; and our annual growth in sales has been 10 percent-plus for the last 35 years. Our biggest market is new residential developments and our fastest growing market is China. The recession has affected us, no question, but we trade today on six continents and in 100-plus countries.”

Among the honors that inevitably came his way were the Legend in Leadership Award from Yale School of Management and induction into the U.S. Business Hall of Fame as a Legend of Business.

Induction into the World Golf Hall of Fame one day should be a shoo-in for Herb as well. By 2020, Whistling Straits will have staged three PGA Championships, a U.S. Senior Open and the Ryder Cup. Meanwhile, Blackwolf Run hosted the 1996 Andersen Consulting World Championship of Golf and the U.S. Women’s Open returns there in 2012—just 14 years after its first visit. “My interest in golf as a young man was nominal. I played occasionally with my father’s wooden-shafted clubs, maybe two or three times a year. I was much more interested in horse riding in those days.”

A more committed approach to golf evolved in the early 1980s following the American Club’s conversion into a hotel. “The wave of immigrants eventually subsided—people started to go to the surrounding states and by the mid-1970s the American Club was not needed. As a young executive I had to make a decision: knock it down or renovate it and turn it into a country inn? I hired three consultants and asked their opinion. Two said create some green space and the other said renovate. I decided to go with a country inn.

“It’s hard to teach people in the factory what they have to do to create five-star service, so I thought that if I created five-star service across the street it would enable them to see and learn. The Board initially turned me down even though I had the majority of the shares. Then they took the attitude, ‘let the kid do it, we can’t lose that much money’—but they thought it would be a disaster.

“So we created 125 hotel rooms and within months of opening in 1981 we were overwhelmed with demand. By 1983 an executive brings about 100 suggestion slips to me from people around the village. They saw I was providing guests with transport to play golf and wanted to know why we didn’t have our own course. Fortunately, my vice-president of business development, Rob Milbourne, was a three-handicap player. He didn’t know about construction but he knew the essence of the game and what we had to do to build a course.

“So we brought in six architects, interviewed them and selected a pair who had designed two courses on the PGA Tour together. But they had this strange philosophy that from the tee of any par-3 or the landing area of any par-4 you should always be able to look down on the green—their idea being to quicken play. The land was in and out of a glacial river basin and was fine for a resort course, but if you wanted championship play you were going to have long green-to-tee walks. That was unacceptable.

“So we interviewed a second group of architects, including Pete Dye who at the time was driving the pros crazy on purpose with his designs. We wanted a course on the leading edge so it would attract major championships. What he created was Blackwolf Run, the best new public course of 1988 according to Golf Digest. It was a parkland layout with two nines running through adjoining valleys.

“No sooner had it opened than we were overwhelmed with demand and it took three months to get a tee time. Soon it became clear we needed more capacity. I had to create a third nine without changing the land at all which was impossible. So we decided to split up the first course and build another nine in each valley. These became the River Course and the Meadow Valleys Course.

“Thus Pete and Alice Dye and Herb Kohler committed the greatest crime in golf. We had taken the first course at Blackwolf Run, an absolute gem, and broken it up. You can’t imagine the hoo-hah this caused in the golf press. So when it was finished we said ‘come and look at it’. They came back and said they couldn’t believe you could create two courses out of one so both would be better than the original.

“But we were still overwhelmed with demand, so we thought ‘where should we build another course?’ Then we decided we wanted a links. Pete and I often came over to Scotland and Ireland to travel and play. We absolutely love links golf—you’re so much a part of the elements and influenced by them.

“We wanted our courses to be as natural as possible—no home developments. Then we found a two-mile stretch of land on the shores of Lake Michigan that was owned by a power company alongside a disused military airfield. I had to buy an adjacent farm as well, but we still had to persuade the state of Wisconsin to permit construction on wetland.”

Eventually that difficulty was resolved and the Straits Course at Whistling Straits opened in 1998. Six years later, stretching 7,536 yards from the tips, it hosted the PGA Championship. Purists argue it’s not a traditional seaside links, especially as 800,000 cubic yards of dirt and sand had to be imported to the site. But it certainly has many links features—vast rolling greens, deep pot bunkers, grass-topped dunes, off-shore winds, stone bridges, elevation changes (up to 80ft) and a flock of Scottish Blackface sheep.

“The Straits course looks tremendous in August when you get a striking contrast of the fescues against the background of Lake Michigan. Pete then built the Irish Course at Whistling Straits [an inland grass-and-dune layout that opened in 2000]. He’s designed all our four courses—they’re only 10 miles apart and there are no houses around any of them.”

Houses are in abundance in St. Andrews; indeed the Old Course is the epicenter of the town. But clearly this was not a deterrent when the chance of a trophy purchase arose.

“In 2004, five days after the PGA Championship, I had an email from a fellow living in Paris saying the Old Course Hotel was for sale. By chance it fitted our profile for the clientele of the American Club—we had all the systems and capabilities. If you want us to be involved we have to manage it ourselves. It took 40 days from receiving that email to complete the deal. We own it almost outright, though the R&A have two percent.

“St Andrews is a wonderful place and I don’t give a damn about the weather. I’ve played regularly in the Alfred Dunhill Links Championship, but I couldn’t this year [2009]. I used to play 90 times a year, but I’m down to about 20 now. But I love the game and will always play. I play everywhere I’m invited.”

So the invitation to rescue Hamilton Hall and restore it to its former glory was similarly irresistible?

“The previous owner [Wasserman Real Estate Capital, LLC] couldn’t pay its bills and it was repossessed by the Bank of Scotland early in 2009. I don’t think you could make it economically viable as a hotel. Also you have to make it much more accessible than the previous owner planned [it was to be divided up into 23 luxury apartments, each sold in five fractions]. He was trying to sell multiple ownerships to the super-rich but they prefer not to share. It’s gutted inside and hasn’t been cleaned up.”

Founder Thomas Hamilton built it immediately after his application for membership had been rejected by the R&A in an attempt, many believe, to belittle
the clubhouse. During World War II, it was requisitioned by the armed forces and never reopened as the Grand Hotel. From 1949, the building was a University of St Andrews hall of residence before being bought by Wasserman for around $32 million in 2005.

“Our priority is to complete the preservation of Hamilton Hall and return it to a viable and prominent position in St. Andrews for generations to come,” Herb promised when the deal was announced in early December.

“We are excited about the development opportunities, and appreciate both the support and enthusiasm the local community has for the property. We look forward to gathering input from the townspeople and Fife Council as to what the name of the building should be along with its future use.”

When we spoke in October, his thoughts went along these lines… “Maybe the way to go is to develop it as a mid-market time share on 99-year leases: vacation ownerships like Gleneagles did next to their hotel, serviced apartments with access to golf—something like a St Andrews golf ticket. Something good has got to happen there and quick.”

And within two months of our ‘Grand’ chat something good, and quick, did indeed happen.

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