Experience counts

by Bernard Shire
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On Nov. 3, 2008, two midsize, family owned and historic meat processing companies in Southeastern Pennsylvania – Alderfer Natural Wood Smoked Meats and Leidy’s Inc. – decided to pull together their strengths and merge into one jointly owned company. The name of the corporation is ALL Holding Co. Inc., but the meat company coming from the merger is still family owned and would still fit the classification of the larger end of small, or midsized. And the company is better known by its two brands – Alderfer and Leidy’s.

Two of the company’s board members are original owners, Tom and Terry Leidy. The Longacre family, the previous owners of Alderfer, owns the other half of the company. The remaining board members are from outside the family, including the president and CEO, Jim Van Stone. The Alderfer brand of meat products has existed for more than 87 years and the brand specializes in naturally wood smoked pork, beef and turkey products. The Leidy’s brand, which was founded more than 115 years ago, is well known for its high quality fresh and smoked pork products.

“Given the long history, expertise and complementary products of Alderfer and Leidy’s, the merger was a natural fit,” says Van Stone. The merged company is now a single source for more than 1,300 products. “Alderfer was always known for its deli meats and hams; a further processing company. Leidy’s reputation was in slaughter, fresh pork and bacon.”

Van Stone, 62, is a seasoned chief executive in the food industry, and he’s led a number of companies during the past 40 years. While he has been chief of Alderfer Meats and Leidy’s for almost two-and-a-half years, he previously was vice president of the global beef group at Keystone Foods, chief operating officer at nearby Hatfield Meats, president/CEO at Venice Maid Foods in Vineland, N.J., then head of Jordan’s Foods Inc. in Portland, Maine back in the 1990s. When Van Stone ran Jordan’s, the company at the time was doing $250 million a year in revenues. “We sold the meat division to CBFA, a privately held meat company, and the foodservice division to Sysco,” Van Stone says. Eventually, CBFA was sold to IBP and then became part of Tyson Foods. Tyson closed the plant in Portland about six years ago.

Prior to his involvement in the meat industry, Van Stone was a senior vice president and corporate officer and sector president at Campbell Soup Co., serving for 14 years in the 1980s and 1990s. He started his career in sales at Kellogg’s, and then moved into the food service industry for Pizza Hut and the former Gino Hamburger restaurants. Van Stone graduated from Temple Univ.’s Fox School of Business and Management, and then received his MBA and an advanced degree in finance from Philadelphia’s St. Joseph Univ.

“I’m not here because of my meat experience. There are plenty of people around with a lot more experience in the meat industry than I. I’m here because of my experience in leading teams to success in the food industry,” Van Stone says. “And that’s what the ownership of Alderfer and Leidy’s needed me to do.” In 2004, Alderfer, based in Harleysville, Pa., bought nearby Knauss Meats, a “small” meat processing company based in nearby Quakertown, and well-known for making dried beef. A few years later, the owners of the now-enlarged Alderfer Meats and Leidy’s, based five miles away in Souderton, Pa., decided they could do better together than separately.

“I was retired at the time, but the owners asked me to come in and help them merge the two companies,” Van Stone recalls. “That was the original discussion – do this and then go back to my retirement. But then, all of a sudden, some talk began (by the new board of directors) about asking me to run the new company. After giving it some thought, the challenge did interest me,” Van Stone says. “I decided to accept the company’s offer and go ahead and take it on.”

Bringing the two firms together made sense to the heads of each. “Both companies have been in business for a long time, and they both did well in their earlier days, in fact, they competed against each other,” Van Stone explains. “But as you know, there’s a lot of consolidation taking place in industry – not just the meat and poultry industry, but in industry in general. It’s harder to compete today. In the case of Alderfer and Leidy’s, one company [Leidy’s] is a slaughterer and a producer of fresh pork. The other [Alderfer] is a further processor. Alderfer products include natural wood smoked hams, bologna, ham steaks, pork roll, smoked turkey bacon, and Knauss authentic creamed chipped beef. Leidy’s products include Andouille sausage, smokehouse grill steaks, antibiotic free cured bacon and spiral carved hams – plus a complete line of fresh pork products.

“It’s much harder to compete today, especially for the small to mid-size firms,” he says. “So the idea of the merger here was to play on the companies’ strengths. One company would have more together than separately, including more impact on the marketplace. While the two companies market into a good part of the country, their greatest strengths, where the two brands are well-known, is in the Northeast US. “You could describe our company as small- to medium-size, probably at the upper end of “small.” Van Stone says the company, which is privately held, does about $100 million in revenue each year, with about 350 full-time employees.

A big part of Van Stone’s role is to drive growth. “Like most smaller companies, we look for niches as well, areas bigger groups or companies don’t pursue. Since the merger, we now have greater capabilities and flexibility. That significantly improves our capacity to fill various niches.”

Van Stone points out a few strong and special customer relations have developed since he has been leading the organization. “I can’t get into who they are, but with certain customers, we develop and then process new products for them. We serve as their product development arm,” he says.

Customers might inquire about products, and then we develop and commercialize products for them.” He says in the meat industry, not that much growth takes place, and many smaller companies have fallen by the wayside. “So for bigger companies, especially publicly held ones, acquisition is the easier way to grow. That’s why consolidation takes place. It’s difficult to compete with the larger companies, and because factors like food-safety standards rise every year – the bar keeps rising – it takes more money and qualified people to continue to succeed,” he says.

A good illustration of a critical area Alderfer/Leidy’s as well as other companies their size continue to work on is continuous improvement in the food safety arena. “It’s becoming harder for very small companies to make the changes needed. New equipment and refrigeration is expensive. One of my major responsibilities, as the leader of this company, is to say ahead of the food safety curve while continuing to be economically viable,” he says.

Van Stone is quick to divert any credit for the company’s success to the rest of the team. “I know this is going to sound trite and like a well-worn phrase, but it’s true. It’s the people who work for the company. It’s not me, but our senior management team – half from Alderfer and Leidy’s, the other half from the outside,” he says. “For example, we have Don Countryman, with 30 years experience in the meat industry, including 18 years with Moyer Packing Co., as the quality assurance expert here.

“I try to create effective senior leadership teams, plus work to have an excellent relationship with our hourly employees and an environment fostering initiative and rewarding success. I want to make people feel good about what they’re doing here,” he says. “Believe me, I don’t think it’s me. A lot of good people are leading departments and helping people to achieve their goals.”

Van Stone says he brought in an entirely fresh perspective when he became CEO/president of Alderfer/Leidy’s. “We have a nice blend of meat and non-meat people; smart people who are team players,” he says. “The team has blended well, and the team and company come first.” What has also worked for the company, in Van Stone’s view, is a partnership he’s created with his hourly employees. “Our turnover is very low for the meat industry, and we try to reward them for their service to the company,” he says. Last year, for example, which was a good and prosperous year for the company, every full-time employee received a bonus check.

“Despite the recession, we continue giving raises and providing essentially the same benefits to our employees. We continually work to establish a partnership with our employees.”

Van Stone also has encouraged the development of private-label and co-packing business for the company. He also takes advantage of the two powerful brands, Alderfer and Leidy’s, which have great equity in the company’s primary market in the Northeast.

“You could really say, ‘It’s the products making the company successful.’ They do make a big difference for the company. But it also takes the right kind of people to create and produce the products that will be successful, that will sell.”

Van Stone says he is trying to make the company ‘customer-centric’. He does this by taking steps to ensure Alderfer/Leidy’s is more flexible. “We are more flexible today than we used to be, and one way we do this is by developing custom products. During the past six months, for example, the company commercialized 50 products for one specific customer. That customer knows it would be extremely difficult to find another supplier to provide the combination of creativity, service, flexibility, quality, location and fair cost we can.”

Van Stone has much strength to bring to the meat industry, including his vast amount of experience in the food industry, and ability to solve many problems. “I think my experience and intuition about business problems has helped, so we can deal with them quickly and effectively when they arise.”

After assuming the CEO role, Van Stone quickly established a strategy. “My first goal was to integrate as quickly as possible the two companies, in order to get maximum synergies here,” he says. “As one organization, I wanted to learn where the major strengths and weak-nesses were in the organization. I wanted to provide clear direction to the people, my leadership team, as quickly as I could.”

Since hatching the plan, the results have not disappointed. “Right now, in March of 2011, we are many magnitudes ahead of where the two companies had been immediately before the merger,” he says. “The two boards of directors of Alderfer and Leidy’s were merged, and the guidance, support and encouragement have been gratifying. There is a lot more happiness in the company workforce right now.

“The company has gone through some tough, very difficult times,” he notes. “Knowing the company is doing well now, and has a bright future, makes a big difference.” Van Stone explains: “We went through a very difficult few years. We had the hog markets – the recession. But everyone stuck together,” he explains. “In 2008, the recession hit, oil prices went up, the ethanol release drove corn and hog prices through the roof. At our company, there’s been a reduced ownership in hogs. To a great degree, that’s been turned over to the experts, the hog producers, rather than us. We’ve expanded our value-added meat products, as well as our foodservice, industrial and retail markets.”

Bernard Shire is M&P’s Washington correspondent, contributing editor and feature writer based in Lancaster, Pa. With a background in editing and writing for daily news publications, he also works as a food safety consultant and writer for Shire & Associates LLC.
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