July 1, 2014
Mention the phrase “vertical integration” and what first springs to mind is usually the poultry industry, with its feed mills, breeders, hatcheries, growers and processors more often part of very large companies. The pork industry has also been moving in that direction, but the beef industry? Not so much. However, more beef firms have recently become vertically integrated – or at least they are moving in that direction.
One good example of that is Agri Beef Co., based in Boise, Idaho, with its ranch and multiple feed lots stretching beyond state lines into Washington and skirting the Canadian border. But the company’s processing division, AB Foods, is based in Toppenish, Wash., and is headed by Brad McDowell, who’s been with the firm for nearly 11 years.
|Brad McDowell heads Agri Beef Co.'s processing division, AB Foods. He has been with the company for nearly 11 years.
McDowell is a 32-year veteran of the meat industry. Before joining Agri Beef Co. in 2004, he held several management positions within the Excel Division of Cargill Foods for more than 21 years in six different company locations. He was trained in animal science, with a degree in that field from New Mexico State Univ. He’s been very active with the North American Meat Association, chairing the group’s Beef Committee.
In addition to being involved with the beef industry at the national level, McDowell stays involved at a local level, too. He’s the past chair for the Yakima County Economic Development Association; a board member of the local community food bank; frequently speaks to high-school classes about the beef and agriculture industries; and is also on the advisory committee for the Toppenish High School Science, Technology, Engineering & Mathematics (STEM) program.
Agri Beef Co. is a privately held company started in 1968 by Robert Rebholtz Sr. Agri Beef started out as a ranching and cattle-feeding operation. “The company is now involved in every step of beef production, including ranching, cattle feeding, animal nutrition, beef processing, marketing and sales,” McDowell says. While not extremely common in the beef segment yet, there is a slow migration toward the vertical integration business model in the industry, he says.
“With vertical integration, we’re still more the exception than the rule in the beef industry,” McDowell admits. “But it works very well for us. Because of the way we’re structured, there’s a lot of communication. I think you’ll continue to see more of this in the beef industry, starting out with high-quality animals coming into processing, and that way we can deliver a very high-quality product.”
McDowell’s part of the Agri Beef operation, AB Foods, the processing division, has 906 employees in Toppenish and annual sales of just under $900 million.
In the past 10 years, McDowell has made his mark at AB Foods in many ways. The most recent one began a year-and-a-half ago with the addition of an in-house, ground-beef operation that is also tied to retail packaging.
Another area of major interest at the company is the enhancing of food safety. “I constantly am thinking about three things: food safety, employee safety and making sustainable products,” he says.
|McDowell (center) consults line workers at the Toppenish, Wash. beef processing plant.
He realizes this mindset is shared throughout the industry. “The meat industry has evolved to the position where industry leads the food-safety effort, not the government,” he says. “Over the past 10 or 15 years, we’ve gotten away from where the government is kicking us in the rear. Food safety seems tops.
“We can do a lot of things in food safety, but what are the tangible results?” McDowell asks. “For one thing, we do multi-hurdle interventions. That’s to advance food safety up and down the supply chain. We’re very vocal about making sure the product is safe for our downstream customers, and they’re very vocal about what they want from us. Upstream, we prevent pathogens and organisms from getting into our plant.
“We do validation studies and trials,” he continues. “Export requirements are very tough.”
In talking about the importance of food safety to both consumers and the meat and poultry industry in the United States, McDowell describes the change industry made in how it deals with food safety as a paradigm shift. “It started with Jack in the Box and the US Dept. of Agriculture set zero-tolerance requirements,” he says. “Industry at first said that’s impossible. But we also realized we couldn’t assume everyone [consumers] was going to handle food safely. So, we knocked on the regulatory door, saying we also have new technology we can use.
“And that continues now – technology breeds more technology,” he adds. “Great things are going on as we continue making food safer. We’re still advancing. We work with industry leaders in food-safety equipment and applications that reduce microbes, sanitation and dressing procedures. We check all food-contact surfaces, and we target pathogens. That’s what I mean by a multi-hurdle approach.”
McDowell notes the company’s been very successful in its food-safety endeavors that are based on the latest science. “Our interventions are validated, a minimum one-log reduction in micro counts and they must be at least that,” he says.
But on the food-safety front, McDowell also has great concerns centering on how the media covers food-safety issues. “The media has propagated a theory that industry is not being responsible, and that is the farthest thing from the truth,” he laments. “We do have the responsibility. We can’t stay in business if we don’t do a good job. There is a responsibility for plants and meat inspectors to be monitors.”
McDowell ties Agri Beef’s shift toward vertical integration, in part, to food safety.
Massive changes in the management model have resulted in changes and improvements in how the company operates. “We did a 180-degree turn in the sense of ownership, we changed the culture,” McDowell says. “On our management team, each manager is responsible for a particular area of company operations.
“If you ask them [managers], they’d say I give them a great deal of latitude in terms of what they can do,” he adds. “But I do elevate the standards and expectations – I’m never satisfied. So, our belief system and core values are never negotiable.”
|The AB Foods complex has a driving range and three-hole chipping course. "Sometimes I have to drag people out of [the office] and tell them to take a break," McDowell says.
McDowell says he’s not a micro-manager – “I’m long-term, strategic – we have score cards. Everyone here is challenged, including me,” he says. But his approach isn’t all work and no play.
“Beyond all the serious work and running the company, we still have a good time here once in a while – and that’s important in people’s work lives,” he explains.
He points to a small driving range and a three-hole chipping course at AB Foods. “We use it for 10-minute breaks,” he says. “We hit some balls and maybe talk about a problem without the stress of the problem itself.
“It’s kind of funny, in a way. Sometimes I have to drag people out of here and tell them to take a break,” he adds.
Secret to success
As for his recipe for success, it’s having faith in his team. “My formula is that I believe in my people – and I’m never satisfied, and neither are they. We drive toward success as much and as hard as we can,” he says. “We try to always work smarter.”
He doesn’t believe in compromise, but believes in consensus. “I’m a big fan of debate,” he adds. “Often, there’s more than one solution to a problem.”
|The vertically-integrated structure of AB Foods enables a lot of communication between workers on the plant floor and management.
McDowell also thinks there are a number of important issues that must be solved in order for the meat-processing industry to continue thriving. One is immigration reform. “Agriculture needs more people who are willing to work in the industry, and the truth is, a lot of Americans don’t want to do that,” he says. “I know many of our employees personally. They’re providing for their families, just as I provide for my family. So, there’s got to be a way to solve this problem, making it possible for people to work in agriculture if they want to.”
The Country-of-Origin Labeling law is an unfortunate solution to a problem that doesn’t really exist, in McDowell’s view. “As a plant here in the Northwest, we’re dependent on Canadian livestock at certain times of the year, and they are high-quality cattle,” he says. “This law gives unfair competitive advantages to Midwest processing plants that are not reliant on livestock from outside the country like the border state plants. Consumers want the best-tasting, highest-quality products, not something based on a label showing where the animal was born, raised or slaughtered. We’re not talking about Third-World countries here, but Canada and Mexico. If it’s a competitive advantage, I am all for letting each company market it to their advantage. It is costly to us and all other plants to make it mandatory. We have to carry multiple inventories of the same item dependent on the permutation of its specific origin.”
McDowell likes leading a company like AB Foods: “It’s big enough to make a difference, and it’s small enough to make a difference,” he says.
“We’ve taken many of our hourly employees off the line and sent them to our retail partners, to see what happens. Now, that employee understands the value of what he or she does. I know many of these employees by name – and I continue to point out opportunities to them. That’s one of the values, the advantage, of a medium-sized company,” he concludes.
Bernard Shire is a contributing editor based in Lancaster, Pa. He also works as a food safety consultant with Shire and Associates.