Made to order

by Bryan Salvage
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Prospering in today’s business climate requires possessing major points of difference over the competition. Sioux Center, Iowa-based Sioux-Preme Packing Co. has built its business by providing custom harvesting and processing services for customers demanding specialty products, including antibiotic-free, natural, organic or breed-specific products. Providing these services for more than 10 years, it has become a meaningful portion of the company’s business.

Sioux-Preme’s hog harvesting plant in Sioux Center and pork fabrication plant in Sioux City keep its domestic and international product pipeline filled with a wide range of value-added and custom pork products.

Celebrating 40 years in business, Sioux-Preme posted sales of $135 million in 2008. Helping the company to strategize and achieve business goals is Chicago - based Hilco Equity Partners, which acquired Sioux-Preme in April 2006. Hilco also owns Niman Ranch Corp. and Prairie Grove Farms.

"We have conference calls with the ownership every-other week to discuss business," says Gary Malenke, Sioux-Preme Packing Co.’s president and CEO, a long-term company veteran. "The owner-group has been great and has the same goal we do – to make Sioux-Preme a better business," adds Malenke, who is also the current president of the North American Meat Processors Association.

"They [Hilco] have opened our eyes to thinking ‘outside of the box’... and to look at things in a broader industry context," adds Jim Malek, vice president of sales. "They have also helped us prioritize our growth plans."

Malek, who worked for John Morrell & Co. from 1978 to 1995, joined Sioux-Preme in 1995, selling wholesale cuts. At that time, Sioux-Preme was evolving away from offering carcasses only into its pioneering fabrication program.

Sioux-Preme’s top-management team includes Malenke and Malek, who are both part-owners of the company. Todd Petersen and John Ymker are the plant managers for the Sioux City and Sioux Center plants, respectively. Maintaining a nimble management team is one major point of difference Sioux-Preme enjoys. "The four of us can have a conference call and within 10 minutes we can make a decision and start moving forward," Malenke says.

Sioux-Preme offers a variety of niche programs from organic livestock to antibiotic-free to breed-specific programs, Malenke says. The company specializes in serving niche pork markets and has the flexibility to produce many custom cut pork products. Its Sioux City fab plant processes 2,300 SKUs (stock keeping units). "We really don’t have one flagship item," Malek says. "Our best-seller is our custom harvest-fab service."

Value-added products made at the plant include loins (bone-in, boneless and center cut), tenderloin (backribs, racks, French racks), bellies (square cut, rib in, single rib), butts (bone-in, boneless, CT butt), picnics (bone-in, boneless and cushion meat), and St. Louis style spareribs, among other products. The harvest plant produces split carcasses, barbecue hogs and offal items including hearts, livers, kidneys, cheek meat, pork chitterlings, tongues, bungs, uteri, eyes and more.

Harvest plant highlights

The Sioux Center harvesting complex, which employs about 175 people, acquires most of its hogs within a 200-mile radius of the facility. Sioux-Preme also purchases and markets some lighter-end mix of hogs, compared to the traditional industry average carcass weight of about 200 lbs.

"We have a roaster business where we get carcasses as small as 70 lbs.; we cater to markets that are not typical in the rest of the industry," Malek says.

"We have customers who want smaller cuts for certain export markets and who want us to add value to the smaller cuts," Malenke adds.

Another point of difference Sioux-Preme has offered for years is slaughter checks. This gives a producer an opportunity to send in his own veterinarian to do an assessment of the internal organs of an animal as a preventative measure or to diagnose an existing challenge to improve the health of the herd.

Sioux-Preme’s 2,200 head capacity livestock handling barn, which was built almost seven years ago, allows the company to keep pace with growing customer demand. Many of Dr. Temple Grandin’s ideas were adopted to improve meat quality plus animal and worker safety. Pens are built with gates that form 45-degree angles when open so the hogs don’t encounter 90-degree angles when separated into pens. The floor was built with an anti-slip surface. Both features reduce stress on the hogs, increase meat quality plus help prevent animal and human injuries.

"There is a water and sprinkler system in every pen and a runway for employees between every other pen," Malenke says.

Arriving hogs are unloaded at barn-floor level, which reduces hog stress. "It’s stressful enough for the pigs being in a different environment with pigs they’ve never seen before," Malenke says. "We do everything we can to keep their stress down. Ultimately, that stress affects meat quality when it comes to pH and waterholding capacity."

In January 2007, a new Butina CO2 stunning system was installed in the slaughtering area. Malenke says the system offers advantages over electrical stunning, such as being more humane; inducing less stress on animals before harvest; reducing blood splash, bruising and PSE (pale, soft and exudative pork) while improving overall meat quality. This system’s capacity is 600 head an hour.

Employees trained in humane animal handling gently herd groups of five to six hogs into each one of the six carousels, which descends 25 feet below the floor into a CO2 chamber. The animals enter the carousel and exit the back end in an insensible state and are moved to a conveyor, all within two minutes.

"This system is exceeding our expectations," Malenke says. "The pigs are very comfortable entering the process because they do not have to go single file, which is stressful for them. Two, three and four pigs can walk side by side into each carousel."

After exiting the CO2 system, shackling and sticking occurs, followed by a unique knocking system that massages the neck to release more blood from each carcass. About 70 people work a single shift, five days per week in the main harvest room where they remove spinal cords trim for carcass defects, hair, and fecal material. Split saws slit the carcass down the middle. Boning-room employees then remove the head and products like cheekmeat, head meat, snouts, ears, brains and pituitary glands. Other offal items are removed and sent downstairs to be cleaned, processed and trimmed, cut, packed, weighed and conveyed into a blast freezer upstairs. Pork chitterlings, the company’s only retail branded item, is one of its most popular offal products.

Before carcasses go to the holding cooler and eventually shipped to the fab plant, each gets a final wash, is weighed on a hot scale and a tattoo identifying each carcass is entered into a computer. Carcasses are chilled overnight before being shipped to the fab plant.

Sioux-Preme’s newest carcass storage cooler is equipped with software that controls temperature and water spray. This helps reduce carcass shrink by keeping the carcass moist while preserving meat quality.

"We added carcass cooler space in 2000 and 2004," Malenke says. "We saw the average weight of the carcass continue to increase as the industry was producing larger animals. Customers were also expecting meat to be colder. It was going to take more chilling time and chilling space to handle our product."

The harvest plant’s four carcass coolers can store 4,000 carcasses. The newest cooler can hold 2,000 head that are automatically spaced to allow airflow between each carcass, which optimizes chilling. "It is totally automated," Malenke says. "An automatic hydraulic rail system brings carcasses in one at a time. The refrigeration system is located off to the side, which prevents potential cross-contamination that could occur from refrigeration units being located above the carcasses."

Fab plant highlights

Sioux-Preme’s 34,000 sq.-ft. Sioux City fabrication plant is located 50 miles south of Sioux Center in space leased from Cloverleaf Cold Storage. The facility has a 4,000 carcass-aday capacity. It currently receives 16 truckloads of carcasses daily from Sioux Center. During unloading, the carcasses are segregated.

"Our carcass cooler is the assembly area for maintaining segregation – that’s our final check for segregation related to antibiotic-free, natural, organic or breed-specific products before it goes to the cut floor," Malek says.

Once the carcasses hit the cutting floor, work begins at the main break, which dissects the main primals of ham, shoulder, loin, bellies and spare rib. Each product is then placed on perpendicular lines for further fabricating of hams, shoulders, bellies and ribs. Sixty-five people work in this area.

"Next, the loins are assembled and moved to the loin-boning area that allows us to further fab and manicure pork-loin products," Malek says.

In the summer of 2006, the plant expanded its fabrication area by 8,000 sq. ft., and added 35 workers. "We expanded for two reasons," Malek says. "We recognized the need for more fabrication and the customers’ growing expectations of restaurant-ready loin product. The expansion also [helped prevent slowdowns] on the main floor."

Sioux-Preme has been performing meat-quality evaluations since 2002. "We offer the service of pH recording and Minolta recording for customers who need those attributes for their program," Malek says.

"The biggest asset we have is the ability to change fast to support a customer’s needs. Not being a cookiecutter [production operation] is one of our specialties," he adds.

Sioux-Preme can modify customer orders, cutting instructions or makesheets up until the day it is scheduled to provide the service.

The company is seeing requests for specialty, boutique products increase. "Trader Joe’s and Whole Foods Markets are two of the more well-known customers in this area," Malek explains. Sioux-Preme supplies specialty loin, rib, spare rib and St. Louis rib products, as well as netted picnics, Crown roasts, 10-rib loin racks and Frenched loin racks to these customers.

Each fab-plant cutter works on a variety of products every day, including Frenched racks and specialty boneless products. "Fortunately, we hire many experienced knife people because of the concentration of the industry in our geographic area," Malek says. "We often get butchers who have had training in different species and styles of products."

"We might have more demands for boneless loins one week, bone-in center cuts the next week and Frenched racks the next week," Malenke says. "We match up what we produce to what our customers can sell. It may not always be the most operationally efficient way to go, but we get each job done as efficiently as possible."

The fab plant doesn’t cook or add ingredients," Malek says. "Fortunately, we have several companies [Webster City Custom Meats Inc. and Mary Ann’s Specialty Foods Inc. in Webster City, Iowa] that provide such processing services," he adds. "We are able to offer those services to our specialty programs."

Sioux-Preme is also involved in exports. "We export about 5 percent of our products to Japan. Exports to Mexico vary from year to year, but can range anywhere from 10-20 percent," Malek says. "In both countries, our customers do next-level processing – smoking, cooking or some other level of processing – prior to the consumer-ready stage."

While one challenge facing Sioux-Preme is finding new business growth, one opportunity is to streamline operations under one roof, Malek says.

"This is something we’ve thought about for a few years," Malenke adds.

When asked if the company would shift away from commodity-type products to producing more valueadded products, Malenke replies, "It’s possible. It’s really going to boil down to what our key customers want. If a customer in the antibiotic-free world wants marinade or wants to do injecting, we’d strongly consider it. But just to go out and do it in a commodity setting and try to duke it out with the other guys...we want to avoid that."

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