In an increasingly consolidated food industry, one takeover deal follows another. But with each small company that gets swallowed up by a larger multinational, there is the question of what happens to the employees? While some choose to stay on even though their company has become a small cog in a big machine, others decide to cut and run, as Bernice Hurst discovers.
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Where employment issues within the food industry are concerned size matters in all sorts of ways.
Convergence and the purchase of small producers by larger ones frequently force any remaining small producers to sell for lower prices. Reducing their profitability also reduces their ability to employ staff. The question then becomes, where do those staff go? Do they leave the food industry or do they go to work for the bigger companies that have squeezed their former employers out of business?
And when they get there, what jobs will they be doing? The point of “economies of scale” is that production is made more efficient and each individual employee becomes no more than a cog in a wheel. There is little or no room for passion or empowerment. The very nature of the product changes as the company increases in size. Many employees joined the original, small, company because they felt part of a team, not just because they had to earn a living. They felt involved in its success and growth. All that can change in an instant when working for a larger company whose priority is growth.
Elizabeth Weise, writing in USA Today in October 2002, quotes one small producer who sees the positive side of working within the system. Gene Kahn is president and CEO of Small Planet Foods and a vice president of General Mills, which bought Small Planet back in 1999. Unlike the owners of some small businesses who leave within months of being bought out, Kahn has persisted and believes “bigger can be better”. He told Weise, “We’re farming either directly or through contracts about 5000 acres of vegetable crops and those farmers are not using toxic pesticides. We’re changing, acre by acre, the way people farm and that’s something to celebrate.”
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By GlobalDataIn September 2003, Kahn was appointed as vice president of General Mills’ newly formed Sustainability Council with responsibility for focusing on ways in which the company can “further build on its strong heritage of positive environmental stewardship.” Already serving on the boards of the Washington State Sustainability Panel, the Rachel Carson Council and the Centre for Education and Promotion, he was said to be “transitioning out” of his role as president of Small Planet Foods. Moving on, rather than out, perhaps?
Career progression
There are other advantages for higher-level employees. UK-based sandwich and sushi maker Solway Foods has recently been acquired by Northern Foods. In addition to synergies between the companies cited in International Sandwich and Snack News, journalist Simon Ambrose points out that “the parent provides a further opportunity for career progression for Solway executives who could otherwise have been lost, possibly to competitors.”
Not all, initially idealistic, owners feel the same way. Although there were rumours of an acrimonious split soon after the ice cream manufacturer Ben & Jerry’s was sold to Unilever, Chrystie Heimart, current director of public relations at Ben & Jerry’s, brushes aside questions and assures anyone who asks that “Ben Cohen and Jerry Greenfield, company co-founders, are still employees and lend their very substantial support to the brand’s social mission initiatives” while admitting that some years have passed since either of them has played an operational role in the business. Heimart emphasises that “there’s a commitment to social change through business activities and to Ben and Jerry’s legacy that it’s possible to lead with your values and make money, too.”
On a smaller scale, the owners of Leaping Salmon did not remain long after selling their shares to retail chain Threshers. What started as an ambition to provide food lovers with high quality meal kits from which to prepare quick, easy but delicious restaurant-standard dinners with all the preparation done for them turned into an off-licence accessory. Buy your bottle and meal at the same time. Threshers’ good intentions, and the difficulties of making profits while operating on a small scale not withstanding, founding partners Peter Kenyon and James Marshall both departed soon after the sale was complete. Passing your baby on to the big league is sometimes more than a parent can handle.
For love or money?
Everyone has their reasons, however. In the case of Rachel and Gareth Rowlands, the owners had apparently had enough but wanted to see a new, efficient, management team enlisted to keep the business going and growing. Rachel’s Organic was founded in the 1940s by a young, Welsh widow with strong views on traditional organic farming methods. Certified as the first organic dairy farm in the UK, it now has the longest continuous record of organic production. The company remained in family hands for three generations until, in 2000, it was sold to the American-owned Horizon Organic Holding Corporation. Three years later, Horizon was itself bought out by the even larger, American-owned, Dean Foods.
Neil Burchell, recently appointed as managing director of Rachel’s, attributes change at the top of a merged organisation to preferences by the new owners to bring in their own people. Having said that, he explains that Horizon has had real consistency at senior management level. Two other companies, Meadow Farms and Organic Matters, were bought at the same time as Rachel’s and directors of those organisations are still filling the roles of sales director and operations director. Where changes have come, he believes that they are generally due to natural attrition with only a small percentage leaving because they were not happy with what they saw as a corporate lifestyle. For obvious reasons of growth and development, teams have been strengthened but Burchell admits that increasingly sophisticated methodology, the introduction of checks and balances and the need to be more procedural in response to the demands of their larger customers may have been an influence in some cases.
Therein lies the crunch; if you can’t make enough profit by operating on a small scale, isn’t it better for your employees and customers to encourage a more commercial organisation to look after them and ensure the consistency of both products and pay cheques? Perhaps the owners do it for love after all.
