In Meat We Trust (26 page)

That didn’t bother Tyson, who thrived on risk, large scale, and success. Tyson Foods began in the early 1930s when Don’s father, John, a Springdale, Arkansas, truck driver, began hauling live chickens from northwest Arkansas to Kansas City, Chicago, St. Louis, and other northern cities. Over the next few years, the elder Tyson followed the same trajectory as Jesse Jewell, building an integrated operation for the raising, processing, and sale of broilers. By the time the World War II poultry boom began, Tyson owned a hatchery, feed mill, and feed dealership. A friend of John’s once described him as “a very ambitious man.
There is a thin line between ambition and greed. I don’t think John ever got over the line, but he was pretty ambitious.”

His son Don, on the other hand, made no distinction between greed and ambition; as far as he was concerned, both were essential components of a businessman’s toolbox. A “gregarious, voluble fellow,” he augmented his ambition with an optimist’s outlook and greeted the world with “an easy, cherubic smile”
(the resemblance to a cherub enhanced by his billiard-ball-shaped head). The angelic facade concealed a brilliant entrepreneurial brain. In the time it took an ordinary soul to notice a possible opportunity, Don Tyson had already calculated its risks and profit potential and devised several possible scenarios in which that potential might play out. He coupled that genius with a ruthless disregard for anything but profit. “If it makes money,
we expand it,” he said late in his career. “If it doesn’t, we cut its throat. . . . The 11th Commandment is that you need to make a profit.” He also believed that one sure route to profit lay in power; friends in high places equaled money in the bank. “The business of politics
consists of a series of unsentimental transactions between those who need votes and those who have money,” he once said, “a world where every quid has its quo.” Those traits propelled his company’s ascent and won him many admirers. “[T]here is,”
said one devotee, “only one Don Tyson. There is no man in the world quite as sharp in the poultry business.” “He’s one of those
that comes along once in a lifetime,” raved a Tyson Foods executive. “I have him on a pedestal. He’s Superman.” Admiration was not universal. “Don Tyson,”
said one company truck driver, “is a lying, thieving S.O.B.,” a view others shared in large part because Tyson hated unions and worked relentlessly to eradicate their presence among his growers and employees. One example makes the case: In the spring of 1962,
a group of Arkansas broiler growers met to organize an association, hoping their combined numbers would give them more clout when negotiating with Tyson and the region’s other integrators. Don Tyson dispatched some of his employees to the scene. Driving company trucks, they lined the road to the courthouse and recorded the license plate numbers of the men and women who showed up for the gathering. Once the meeting began, the driver of one truck, his vehicle conveniently lacking a muffler, raced his engine to drown out the speakers inside the building.

Don joined his father’s company in the early 1950s, a boomtown moment for the broiler industry, thanks to high demand and chronic overproduction. The turbulence taught him a valuable, if obvious, lesson: safety lay in size and market share. He said later that he and his father faced the entrepreneur’s classic dilemma: they had to either “expand or expire.
There was no middle ground. We had to grow or die.” But he also learned that chaos and bad times represented opportunity. When competitors failed, the Tysons snapped up their plants and equipment, a strategy that allowed them to avoid the expense, in both dollars and time, of building new and, more important, to move quickly during upswings. In 1963, Don convinced his father to take the company public. He knew that doing so opened their books to greater scrutiny, and that shareholders might challenge his steamroller approach. But in Don’s mind, the benefits of a Wall Street presence and the opportunities for funding, mergers, and acquisitions outweighed the risks. And Tyson wanted it all. “We’re not committed
to the broiler business as such,” Don explained in 1964. “We’re not overlooking ducks, geese, or anything else that will make us money! . . . We intend to be ‘Mr. Poultry’ in every sense of the word to our customers.” (Turkeys proved the exception. “I’ve had two turkey plants,
and two red-headed women in my lifetime,” he said later, “and never done good with any of them.”) Like Jesse Jewell, Tyson believed that as long as grocery retailers treated broilers as loss leaders, his industry would remain stuck in the “commodity” category, and, like Jewell, he believed that the way to change that—and to mitigate the industry’s manic gyrations—was by transforming the broiler from basic commodity to consumer product.

The 1970s offered fertile terrain for his vision. The broiler business flourished in the wake of the famine. Foreign countries compensated for protein shortages by snapping up American chicken products, which were less expensive than beef or pork and, thanks to new freezing technologies, easy to ship. In 1976, the Soviet Union ordered 2,500 tons, and the Iraqis 35,000, of frozen chicken from U.S. manufacturers. Tyson parlayed his long-standing presence in the HRI industry into profit as beef-centric restaurants struggled. High-end restaurateurs added chicken
cordon bleu
and chicken Kiev to their menus, and fast-food chains, from Long John Silver’s to Burger King, supplemented burgers and fried fish with chicken sandwiches.

Tyson seized the moment to diversify into hog farming. Hogs appealed to his calculator brain because they would complement his broiler operations: he could use the company’s feed mills to manufacture hog rations. By doing so, he would increase the volume of his raw materials purchases, which would lower their cost. Because hogs took longer than chickens to reach market weight, he could use their birth-to-market cycle to balance the volatility of broiler production. Tyson had taken small steps toward hog production in the late 1960s, but he’d backed off once he realized that hogs weren’t like chickens. It’s not “easy to grow pigs
in confinement like broilers because of the disease problems,” he explained to a reporter. “It takes tremendous capital and management knowhow [
sic
], as we know it in the broiler business, is not as available.” By the mid-1970s, however, he was confident those obstacles could be overcome, and he announced plans to enter hog production “on an integrated basis.”
What better time to do so than when the world demanded more food and Americans were complaining about high prices?

He built one hog facility in Arkansas not far from company headquarters, but in 1977 he forayed into North Carolina. The facility he bought there had been built by another investor hoping to cash in on the famine, Malcolm McLean, a multimillionaire and North Carolina native who’d made a fortune from his trucking business. In 1974, McLean shelled out $60 million for 375,000 acres of land in eastern North Carolina where he planned to grow corn and feed a million hogs a year. “It’s a question
of supply and demand,” explained one of McLean’s employees. “People are starving. It’s just like the energy crisis except that people are going to find it difficult to wait in line for food.” McLean’s First Colony Farm (named for its proximity to the settlement established by Sir Walter Raleigh nearly four centuries earlier) bore “the same relation
to a farm that a computer does to an abacus,” observed a newspaper reporter. This being the early 1970s, environmentalists pounced, and rightly so. First Colony occupied a large chunk of North Carolina’s Dismal Swamp, an environmentally complex area that lay between the Pamlico and Albemarle sounds. But no one in state government was inclined to stop the project, because, explained an official with the state’s Department of Natural and Economic Resources, “the food crisis
is up and coming, and I guess the feeling is that it’s just not good to stop and do an environmental study when it will take so long and cost so much.” McLean proceeded with his project, but when Tyson came along with an offer, he sold the hog facility and ten thousand acres to the Arkansas broiler king.

Satisfied that hogs would pay off, Tyson expanded his porcine empire. By 1980, he was also operating a breeding facility in Nebraska, selling the piglets born there to another corporate hog farmer, National Farms, Inc. NF was owned by
the Bass family of Texas, whose immense fortune was dispersed among global corporations, huge chunks of Fort Worth, horse ranches, apartments and hotels, and oil wells, to name just a few. During the 1970s, NF owned and farmed (or leased to other farmers) forty thousand acres scattered across Texas, Nebraska, and Kansas, raising grain and processing alfalfa-based feeds for its cattle operations, all of it fueled, explained NF’s president, Bill Haw, by the belief that food producers and farmers had “a God-given mission
to feed the world.” As part of that “mission,” Haw built a couple of small experimental hog farms to assess the profit potential of converting part of National’s corn crop to pork. Satisfied with the results, he announced that NF would join the “leading edge”
of modern hog farming. By 1984, employees at National’s Nebraska facility were feeding 350,000 hogs a year—purchasing the pigs from Tyson—an output then worth about $40 million.

Tyson and National Farms weren’t the only big companies hunting for gold buried in the turmoil of meatpacking and livestock production. “We think the basic
food industry is a hell of a place to be,” Mike Harper told a reporter in 1981. Harper, an imposing hulk of a man (between his height—six-six—and his “booming voice,”
noted one observer, he “looks like a truck coming at you”), had recently embarked on a buying spree, his goal being to transform ConAgra, the company over which he presided, into a farm-to-table powerhouse. ConAgra had begun life in 1919 as Nebraska Consolidated Mills Co., a collection of formerly independent grain mills that joined forces to go public. Over the years, Nebraska’s managers tried, with little success, to move into other food-related businesses, most notably with Duncan Hines cake mixes (which it sold to Procter & Gamble in the 1950s). By the early 1970s, ConAgra, as it was then named, teetered on the verge of bankruptcy. Harper was hired to salvage what he described as an “awful, awful disaster.”

He dumped assets and streamlined management, but he calculated that global grain shortages, rising energy prices, and inflation would crush ConAgra unless the company reduced costs through integration and diversification. Harper decided that the company’s survival depended on control of assets, whether cattle, corn, or chicken Kiev (frozen and ready to eat, of course). Harper bought river barges and terminals as well as grain elevators (the better to move raw materials from farm to factory to overseas port) and a grain-processing outfit (the better to keep prices low on the feed needed for the livestock in his portfolio). Harper also loaded his shopping cart with food manufacturers, including Chun King and Patio Mexican, often buying at rock-bottom prices because their owners didn’t know what to do with them. “The guy buys things
you wouldn’t get a wooden nickel for and gets change back,” one observer marveled. Consider one of his first major acquisitions: Banquet Foods, Inc., then the country’s largest purveyor of frozen processed foods and owned by RCA, which specialized in electronics and media equipment and content. RCA’s leaders had no idea what to do with food, frozen or otherwise. (“They were thinking of Skylab
when Banquet was talking chicken pot pies,” said one amused onlooker.) At the time, financial analysts predicted that rising energy costs spelled the end of the frozen-food market; grocery chains would balk at spending money keeping the cases cold. Harper believed otherwise: consumer demand for convenience would keep the lights on and the temperature low.

Harper was less interested in Banquet’s packaged foods than in its integrated poultry divisions, which supplied the protein for many of the company’s frozen-food products (processed, of course, in Banquet-owned factories). Harper had cut his corporate teeth on broilers—he’d headed Pillsbury’s broiler operations before moving to ConAgra—but he also believed that even beef and pork could return a profit as long as he sliced production costs to the bone and turned basic carcasses into convenience foods. So he set out to conquer meatpacking. In 1978, he went after MBPXL, a beef-packing behemoth born of the merger of two Monfort/IBP-style clones. He shook hands on the deal, which would have given him a company whose sales outnumbered ConAgra’s by two to one. But Cargill, a privately held, fabulously rich dealer in, among other things, global grains (it had made millions on the Russian grain deal), swooped in, snatching it from Harper’s grasp and renaming it Excel. The acquisition transformed Cargill into the nation’s second-largest meatpacker. (Cargill’s maneuver was not as out-of-the-blue as it appeared: it already owned Caprock Industries, a giant cattle-feeding operation that existed primarily to sell livestock to what had been MBPXL.)

Mike Harper wasted no time bemoaning his failure. There were plenty more packers to choose from; the upheaval of the 1970s had pushed dozens of small ones into bankruptcy and Armour, Swift, and Wilson to the edge of collapse. A Swift executive conceded that management had stumbled—or, more accurately, slumbered: “We should have moved
quickly to match” Monfort, IBP, and other new packers, he conceded. “Instead, we sat back and read the 1913 annual report and didn’t change anything.” Executives at the three ailing giants embraced the same survival strategy. They shut down their hog-slaughtering operations and dumped their dwindling capital into processed convenience foods. But that move put each of them in direct competition with Oscar Mayer and Hormel, both of which were financially stable and boasted decades-long track records selling processed pork products. To no one’s surprise, the tactic failed to save any of the three, in part because their corporate owners had no idea how to make food.

Their failure opened the door for Harper, who went after Armour. Since 1969, it had been owned by Greyhound Corporation, a company more accustomed to operating buses than packing plants, and whose managers floundered in the turbulent world of food making and especially meatpacking. Greyhound’s chairman groused that he never had a chance with Armour because Monfort and IBP, with their highly efficient plants and nonunion employees, were “like a bunch of piranhas
cutting away at [Armour’s] base.” Once Armour’s managers realized that they could not compete in processed foods, they pivoted back to basic slaughter—only to find that their former customers were swimming with the piranhas. “Armour’s dead
in the water,” said an onlooker. Harper swooped in with an offer. The purchase provided ConAgra with two slaughtering plants, one each for pork and beef, and, more important, nineteen facilities primarily devoted to the manufacture of value-added foods like hot dogs and frozen entrées. A few weeks later, ConAgra reopened what had been Armour’s doors with a nonunion workforce.