Everything But The Gobble
The way Dan Lennon tells the story of Michigan Turkey Producers Cooperative; he leaves you wondering how this company could have wound up with a top line on its P&L of more than $200 million 13 years after its launch.
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Lennon told his audience at the MiFOOD 2012 Michigan Food Processing & Agribusiness Summit that MTPC started without a business plan, without a computer, and without a banker who would even talk to them.
“Banks all asked, ‘who are you guys?’” Lennon said. “We spent more than a year just trying to get a bank to talk to us.” Entrepreneurs are often advised to seek out ‘friends, family and fools’ for financing in their opening days. Lennon struck out with them too. “One potential investor said he could double his money in the stock market and it would safe there. So, he wouldn’t invest with us and we didn’t fit into any of the government programs.”
The outlook was grim. However, they were able to start construction of the MTPC facility in Wyoming in 1999 without financing. The project was finished in eight months, but that high point was followed by some rough years. Lennon said they lost money in 2003, 2004, 2007 and 2008 because of the volatility of corn prices. MTPC couldn’t raise its prices fast enough to compensate.
What a difference a decade can make. When the MTPC-Wyoming plant on Chicago Drive opened, it took workers all day to kill 200 turkeys. Now they can process 200-thousand birds a day. “We processed 4.8 million turkeys last year and we have the ability to double that,” he explained. “But to do that we would have to double the farms we work with and that is not inexpensive.”
Lennon foresees continued growth, however he described it as “slow, but moderate” telling his audience that the improvements being made to the MTPC facilities on Hall Street in Grand Rapids and Chicago Drive in Wyoming would be the company’s last major expansion projects.
The Hall Street, Grand Rapids location is slated to get $2.3 million worth of improvements. The Chicago Drive facility in Wyoming will get a $1.44 million upgrade. The projects will increase MTPC’s capacity by about 5.3 million birds and they are being done for two reasons. The first is to serve a new “large customer” that isn’t onboard yet. The other reason is “that it’s kind of a Star Trek thing. It starts to fulfill our destiny a little bit so the plants will be able to produce about double what we currently produce,” said Lennon.
Like any CEO, Lennon has two sing two songs at the same time. While extolling the virtues of MTPC and expressing optimism for the future; Lennon also told his audience about the challenges that are on the horizon.
One of the most troublesome hurdles that MTPC has to leap over is one that many West Michigan companies involved in heavy metal manufacturing are dealing with, a lack of skilled workers.
Lennon said MTPC is “very lean” at the executive and sales levels of the company. “When you find good people it is tough to get them to re-locate,” he explained.
MTPC is also having trouble getting good people to work on the plant floor. It isn’t a hesitancy to relocate that is causing the problem in this case, according to Lennon. His company just can’t find enough people who want to work.
“Unemployed people are making almost as much sitting home as we would be able to pay them,” he said. “We are struggling to find people who are willing to come in, work hard, and advance to a position where they can make more money.”
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Lennon also addressed a question that was on the minds of everyone at MiFood 2012 who wanted to be a little closer to where he was in 2012, when they all get back together in 2013. How do you get shelf space for your products?
“We have our own sales person who calls on Costco and Meijer,” he explained. “You want to have someone there all the time.”
Lennon also warned his audience that this is a complicated proposition. Costco is broken into regions or divisions. It is very common for a representative to have the Northwest, the Southeast and nothing in between.
“A lot of times they do limited time offers where your product will be out there for a period of time and then it will come off,” he said. “Then they want you to demo it, and the way they do that is very, very expensive. If you have ever been to Costco you know you can’t want 30 feet without seeing a demo. They demo aggressively and that sells a lot of product but they want the packer and the supplier to pay for it.”
MTPC has an “in” at Costco, a private label, the Kirkland Signature roasted turkey product that Lennon’s company produces exclusively for the chain. “There was a mandate from corporate to put that in all of the stores. We sold that as a Golden Legacy product for years, but they said it was a very good product, the president of Costco endorsed it, they put the SKU mandate in all of the stores and “boom, the volumes took off,” said Lennon.
So what is the secret for shelf space at Costco, Meijer and all of the rest?
“We made great product. We deliver it on time. They keep buying the heck out of it. The customers seem to love it. I think this is going to go on for quite a while.”
Describing his company as entering its “teenage years,” he also warned that puberty will not be easy for MTPC if only because a flat consumption market will “complicate the future. We need to make more value-added products with higher price points. We need to do more cooking.”
The main sales target for the immediate future: national chain restaurants that already have turkey on their menus. The way Lennon sees it, turkey cold cuts don’t make it. MTPC’s future will be built on turkey served hot. That is the way turkey tastes best, Lennon explained and he wants to find restaurants that agree with him.
“National chain restaurants love turkey,” he said. “We could probably chase McDonald’s or Burger King or Wendy’s until we are blue in the face and not get anywhere. We are going to go after restaurants that have turkey on the menu. Arby’s does a nice job. We are talking to them, but that may take a few more years.”
Michigan Turkey Producers Cooperative is also working on another new revenue stream in partnership with the people building a bio-digester in Howard City. Lennon said the project is moving along and soon, MTPC will be “able to sell everything but the gobble.”
(c) 2012 Lyons Circle Publishing Inc. All Rights Reserved
More By Rod Kackley
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Right To Work: Outrage in Michigan tells the story of how Big Labor and Michigan Democrats were blindsided by a Michigan Chamber of Commerce drive to make Right To Work the law of the land in Michigan.
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Where Are The Workers? is available wherever ebooks are sold including Amazon, Barnes & Noble, and iTunes.
For more books, essays, and articles by Rod Kackley please to go www.rodkackley.com, or download the free Rod Kackley app through Google Play or the App Store.
And feel free to contact Rod at rod@rodkackley.com
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