Failure of Genius

 

The Future Beef founders wanted this and more. Like some of the producer-processor alliances, they wanted to own and control the ranch where an animal was born, the growyard where it grew up, the feedyard that fattened it, and the packinghouse that slaughtered it -- every aspect of beef production, as a Future Beef marketing slogan claimed, "From DNA to dinner." Future Beef also wanted to make use of the entire cow, from its tongue to its tail, in "value-added" products that included pet treats, tanned hides, and variety meats (hearts, brains, and livers, sold mostly in Europe and Asia). And it wanted to outfit its plants with facilities for preparing cooked meats like pastrami, corned beef, and kabobs. Boxed beef -- precut quarters of the animal that are sliced further into steaks by grocers -- would be the company's staple. But the value-added products would make it profitable. And food safety, the founders said, was a consumer right. Darrell Wilkes, who became the company's vice president for supply, says he and the other founders intentionally overbuilt the food-safety side of things.

The founders had big ideas about improving the industry for workers, too. Future Beef was offering workers high wages, and benefits this industry simply hadn't seen, like apartment housing, on-site daycare facilities, and college-credit programs for every worker. Streight, who was in charge of Future Beef's technology, says it was central to the company's vision: "We wanted to create an environment where people didn't feel beaten down every day," he says -- a radical sentiment in an industry where working conditions haven't improved much since the days of The Jungle. In most packing plants the air is oppressive and humid, in part because the water pipes (it takes a huge amount of water to run a packing plant) are usually exposed overhead and are dripping on workers. At Future Beef, all the pipes and wires were beneath the floor, and all the rooms in the plant were well ventilated and airy. Bowling himself was involved in the design and placement of the cabinets and workspaces in the plant -- minimum strain, maximum efficiency -- and saw to it that break rooms and bathrooms were unusually large and commodious. He also placed a full-time chaplain at the plant, available to workers going through problems on their jobs or at home.

The real kicker in the Future Beef business plan was that it would funnel all its products to one exclusive grocery retailer. Bowling had seen it work at Keystone Foods, one of the largest processors in the business and a major supplier to McDonald's. The idea wasn't to build a brand for Future Beef, but to let higher-quality beef in the grocer's meat case bring in customers for other products -- "more peas and pantyhose," says Bowling. Building a system around an exclusive retailer meant the packer had more time to tailor its products to that customer, instead of constantly switching up its product specifications to meet the needs of other customers.

By late 1996, Bowling, Wilkes, Streight, and former National Cattlemen's Association executive vice president John Meetz had sketched out most of these ideas on paper. The group knew it needed piles of cash to make the project work, so the men began making their first cattle calls for capital. In late 1997, after they had rounded up a few initial private investors, they quit their day jobs. They recruited a CEO, H. Russell Cross, former director of the Institute of Food Science and Engineering at Texas A&M, and two financial officers, who in early 2000 helped them seal an exclusive deal with Safeway, the No. 3 grocery retailer in the country.

The Safeway commitment came with an infusion of cash: $15 million, according to company insiders, would be added to the roughly $200 million the company was gathering at that point. The deal was a significant confidence booster, and the founders gave the signal to start work on the first plant. They hoped to build four or five large slaughterhouses in western cities, starting with the futuristic megaplant in Arkansas City, Kansas, built almost entirely from scratch on the site of a packinghouse.

The new $100 million plant would be named Food Engineering magazine's 2002 plant of the year. Its dehairing equipment was the first of its kind. Developed and tested in a government lab 10 years before, the dehairing system removed hair and dirt from beef carcasses by spraying them with depilatory chemicals as they moved through a massive chamber. The system required months of intensive testing, and engineers, experts, and graduate students galore were hauled in to take their turns at mixing and pressurizing the chemicals. When the carcasses finally emerged completely hairless, says Mike Gangel, owner of the company that provided the machinery, the plant workers whooped and hollered.

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