031008 Excel's Evolution: Reinventing the Meat Division

The Wichita Eagle - If you think Cargill Inc., the nation's largest privately held company, is a Minnesota company with little effect on Wichita, you're wrong.

A significant division of Cargill is based in Wichita. And that division is much bigger than most people realize; it's an industry giant with 33,000 employees worldwide and annual revenues of $16 billion -- approximately one-third of Cargill's total employment and annual revenue.

About 4,000 Kansans work for Cargill, either for the Wichita-based meat division or in grain handling, oilseeds and flour milling companies.

Better known to Wichitans as Excel Corp., the world's third-largest beef packer, the Cargill presence here is growing as it evolves into a broader-based division, Cargill Meat Solutions.

Management of Cargill's beef, pork and turkey business units is based at the company's Wichita headquarters at 151 N. Main.

Cargill Meat Solutions president and Cargill corporate vice president Bill Buckner is now based in Minneapolis after spending several years in Wichita.

The relocation of the turkey unit this summer added about 60 jobs to the 700 already in Wichita, with a few more hires still to come, said Cargill Turkey Products president John O'Carroll.

Cargill Pork, headed by Dirk Jones, will grow rapidly if Cargill acquires Farmland Foods.

If the Farmland deal goes through, the approximately 700 Farmland employees at the processing plant on South Sheridan in Wichita would become Cargill employees.

The company that became Cargill's beef division has been in Wichita for about 60 years and became a Cargill company in 1979.

Cargill sees opportunity to improve not only the beef division's sales but its profit margins by working with value-added products for retail and food service.

"Our marching orders from Cargill are to grow in every business division," said executive vice president for beef Bill Rupp. "And we plan to do just that, both internally and by acquisition."

The timeline for changing from the Excel name to Cargill Meat Solutions is mid-November, Rupp said, as legal work and other details are completed.

The change is part of a corporate restructuring that divided Cargill into 13 business "platforms" with 95 business units operating under those platforms. The Wichita-based Meat Solutions platform has nine business units.

A change in culture

With the restructuring comes a new corporate policy of openness to media and a concerted effort to "tell the Cargill story" to the public.

It's a 180-degree turn from the "old Cargill," in which information was as tightly held as the shares of the family-owned corporation.

"Five years ago, this conversation would not be taking place," Rupp told a reporter.

Nor would a candid comment on profit margins-- roughly 1% to 3% depending on species and cycle -- have been made. Market share -- 23% for boxed beef, 9% of pork, 25% to 30% of turkey -- would also have been secret.

"The change has struck me personally," said Steve Kay, publisher of the industry publication, Cattle Buyers Weekly. "Ten years ago, Excel was upset with me for even including their name in a story about narrow profit margins for packers. In a recent story I did on them as the nation's largest supplier of ground beef, I had more detail than I could even print."

Even within the company itself, Rupp said, changes have been extensive.

"The first year I was president of Excel Beef, every page of the strategic plan was stamped 'confidential,' and we didn't talk about it to any other business unit," Rupp said. "Now we are expected to be open, expected to challenge and expected to share information, strategies, successes and failures. It's taken some getting used to."

The new structure also includes changes for the sales staff, which is now the "demand team." Before the realignment, each business unit had its own sales team. Now, all are combined.

"There was a time when you'd call on a customer as the 'beef guy' and if the customer wanted to ask about pork chops, you'd have to say, 'I'll get you that number.' Our new structure gives just one face to the customer. Everybody is trained in all our protein products," Rupp said.

Cargill is everywhere

Part of the reason for the change in attitude, Rupp said, is a new initiative to persuade consumers that Cargill is important in their daily lives -- in food products, in providing jobs and in community support.

As a pacesetter company for United Way, Cargill has contributed more than $400,000 to the 2003 Wichita campaign.

In Wichita, the meat on the menu at more than 20 restaurants comes from Cargill Meat Solutions.

In supermarkets, Cargill not only markets its brands such as Sterling Silver Premium Meats, Angus Pride, Sandy Brook, Emmber, Tender Choice and Honeysuckle White but also supplies raw materials for other brands, Oscar Mayer and Sara Lee notable among them.

At its Wichita research and development plant on 29th Street North, Cargill develops new products, hones processes for food safety and tests ways to season and cook products.

"We work with customers when they have a specific need," said Scott Eilert, director of the meat technology development center. "Maybe they've been cooking a product themselves and now they want a fully cooked product. Or maybe they want to change providers for an existing menu item."

The research and development center also works on new branded beef and pork products.

"We go all the way back to the selection of breeding stock, working closely with the genetic researchers," Eilert said.

Vertical partnership

Those who worry that Cargill growth moves the beef industry toward vertical integration like that in the poultry industry worry for naught, Rupp said.

"We have no desire to own enough ranchland to raise all the cattle we process," he said. "Believe me: We don't. And we have no desire to raise those cattle ourselves. Our strategy is toward partnerships that bring added value to every segment of the beef chain, the producer, the feedlot, the packer and the retailer."

While Cargill does have ownership in beef and pork providers, it is not sizable, officials say.

Cargill owns Caprock Feeders. Caprock has four feedlots in Texas and western Kansas and feeds about 650,000 head of cattle annually, a number that represents about 10% of the 6.7 million harvested in U.S. Excel plants.

The total harvest in the United States is 28.9 million head.

On the pork side, Cargill owns about 117,000 sows and markets about 2.5 million hogs annually, about 2% of the annual U.S. slaughter.

For turkey, Cargill combines corporate ownership of birds with outside ownership of land and buildings.

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