Failure of Genius

 

In April, York fired Bowling, the company's first founder. ("I'm still not over that yet," says Bowling.) Morale at the plant started to slide. By June, York had fired many of the founders, many of whom had lost a great deal of personal wealth in the game. Streight says each founder contributed at least $100,000 -- "which is a lot for some of us," he says. "I've got my house up for sale because of it, but now I'm employed again and I'll make it. The people who were really hurt were the employees in the plant."

On August 7, plant manager Randal Garrett laid off the remaining 700 plant workers; more than half of them, he estimates, were Mexican immigrants or hailed from other states. Gabe Briseño left a job at a beef processing plant in Amarillo, Texas, to come to Future Beef because his wages there, as a fabrication manager, would be about $6,000 a year higher. Until August 2002, Briseño lived with his wife and two toddlers in the 120-unit MeadowWalk Apartments complex Future Beef built for its workers. When he got laid off, he moved back to Amarillo. When he heard a few months later that Future Beef's new owner, Creekstone Farms, was hiring, he hightailed it back to Arkansas City and MeadowWalk, where his children have a swimming pool and several jungle gyms to choose from.

Future Beef didn't use many locals for construction work, but it did hire Mell Kuhn, who runs a plumbing and heating business out of a sheet-metal building. Kuhn, an outspoken man who keeps two hunting rifles leaned up against one wall of his office, says he secured several contracts totaling approximately $350,000 to help Future Beef build its state-of-the-art water-treatment lagoon. When the company went under, Kuhn says, he was left with unpaid bills totaling $140,000.

"I accepted the risk," he says. "I'm a big boy. But we're just people working for a living. We'll never see a nickel of that money."

Future Beef's jewel of a plant didn't sit empty long. In January of this year, Kentucky-based Creekstone Farms formed a joint venture with the Bank of Nova Scotia, a $183 million investor in Future Beef, and the two bought the plant and all its equipment off the auction block for $42.7 million. Creekstone planned to hire back around half of Future Beef's workers, but it would process only 1,000 head of cattle a day instead of the 1,600 the plant was built for. All its cattle would be premium black angus, to be sold mainly as a niche-market product to high-end retailers across the country.

At the plant this spring, the new Creekstone crew, including general manager Kevin Pentz and COO Bill Fielding, a former president of commodity beef giant Excel, were still scratching their heads over some of Future Beef's business strategies.

"They were trying to do too many things that hadn't been proven," Fielding said. "It's fine to test new systems, and we will do that, but step by step so that we don't risk the whole operation."

Fielding says Creekstone had no intention of signing up a single retail partner and no plans to use any of Future Beef's extras, like the Supachill and dehairing equipment. It will not make blue-chromed hides or pet treats. "Boxed beef," said Pentz, pointing to the plant's fabrication room, where Creekstone workers in sock caps and bloody smocks sorted through piles of what would soon be flank steak. "This is the bread and butter, not pet treats and toenails."

At the plant, rooms full of expensive equipment, including a $140,000 tenderness-testing machine and several $160,000 roll-stock vacuum-packaging units, sat idle, remnants of the reign of Future Beef. The company left behind a warehouse of unused Future Beef boxes and bags, and for a time Creekstone used them to wrap and ship some products, mostly tails and honeycomb tripe. But on this day, in an airy backroom at the plant, four Creekstone workers, armed with cloths and rubbing alcohol, sat around a long table and smeared the "FB" from every bag Creekstone planned to place its high-dollar beef in.

Since the company's collapse last summer, many people have been willing to second-guess Future Beef, including some who were inside the company.

"There was a lot of knowledge, I would call it, but not a lot of business experience," says Ronnie Green, who, though he is himself a Ph.D., echoes the sentiments of people inside and outside the industry who say the company suffered a classic case of Ph.D.-itis. (One investor says the joke in the industry was, "Don't worry -- if Future Beef goes under, we can always start a university.")

It was true that many of the founders and top managers had Ph.D.s from meat-industry meccas like Texas A&M and Colorado State University, and it was also true, says Rod Bowling, that there was an "R&D mentality," which meant people weren't punished when certain projects failed. "In R&D, you're mining not for the small things but for the grand-slam home runs," he says.

Green gave up a tenured professorship in the animal science department at CSU to join Future Beef. He says he saw it as the chance to finally put all his academic theories into place. "The concept of vertical coordination, supply chain management, data to improve genetics -- this was what I had been teaching my students about all along," he says now. "And here comes this group with very good thinkers in it, who I thought had crossed their T's and dotted their I's a little better."

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