Chelsea Milling Company

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Chelsea Milling Company

201 W. North Street
Chelsea, Michigan 48118
U.S.A.
(734) 475-1361
Fax: (734) 475-7577
Web site: http://www.jiffymix.com

Private Company
Incorporated: 1901
Employees: 350
Sales: $100 million (1998 est.)
NAIC: 311211 Flour Milling

The Chelsea Milling Company is the number four maker of prepackaged baking mixes in the United States. The family-owned and run business has been making the Jiffy line of mixes since 1930, when Mabel Holmes created the country’s first commercially marketed biscuit mix in her kitchen in Chelsea, Michigan. Adhering to its original philosophy of using high quality ingredients, keeping prices low, and spending no money on advertising, the company has held its position as a sales leader in the ensuing decades against competitors such as General Mills and Pillsbury. In the 1990s the company began to hire professional outside management personnel for the first time, successfully boosting operating efficiency and revenues while maintaining traditional values and goals.

Roots in the 19th Century

The Chelsea Milling Company’s beginnings date to a time when nearly every town had a mill that ground the wheat of area farmers for local use. The company was founded in 1887 when E. K. White, whose relatives had been milling flour in Michigan, Indiana, and Kansas as early as 1802, purchased the mill in the small Michigan town of Chelsea. In 1901 the business was incorporated as the Chelsea Milling Company, and in 1908 it was sold to Harmon S. Holmes, White’s daughter Mabel’s father-in-law. Mabel White Holmes’s husband, Howard Holmes, was given the job of managing the mill.

The company continued to grind flour for local consumption, like hundreds of other Michigan mills, until 1930, when Mabel Holmes had an experience which inspired her to create a new product, a premixed blend of flour, baking powder, and other ingredients. Legend has it that one day when her twin sons had brought two friends home from school for lunch, she noticed the hard biscuits the motherless boys’ father had made and decided to formulate a blend of biscuit ingredients that “even a man could prepare.” After a number of attempts, she hit upon a formula that was reliable and could be manufactured at the family mill. The multi-purpose baking mix was given its name soon thereafter when Mabel and her husband were driving to Chelsea from Chicago. Thinking back to her childhood, she remembered the phrase her family’s cook had used when preparing biscuits for dinner, “They’ll be ready in a jiffy!”

Taking the name Jiffy for the new mix, the company began marketing it locally, soon gaining more sales when the C. F. Smith supermarket chain in Detroit decided to stock it. Although General Mills’ Bisquick and a host of others quickly followed Jiffy to market, its quality and low price kept it on store shelves as other brands came and went. From the beginning the company spent no money on advertising, preferring to let sales build by word of mouth. This also cut overhead and allowed Jiffy mixes to be priced significantly lower than most competing brands.

In 1936 tragedy struck when Howard Holmes fell to his death from a malfunctioning grain elevator inside one of the company’s silos. His twin sons Dudley and Howard, Jr., the latter being an engineering student at nearby University of Michigan, immediately decided to help run the company, with Mabel assuming the position of president. In 1940 Howard Jr. took over that job, also utilizing his engineering training to oversee equipment design and maintenance. Dudley became the company’s secretary-treasurer and took responsibility for developing new products, purchasing raw materials, and managing the mill. At this time Chelsea Milling also introduced its second Jiffy mix, for pie crust.

The early 1940s saw significant sales growth as the large number of women entering the workforce during the Second World War created a surge in demand for convenience foods.

By the end of the decade Jiffy mixes were being distributed nationally, though still manufactured at the single plant in Chelsea. The company introduced another new product in 1950, one that would prove to be its most successful, a corn muffin mix. Although Chelsea Milling had continued to grind flour for sale to the public, this was phased out by 1957, with all of the mill’s output henceforth utilized solely in its mixes. Wheat bran, a by-product of the milling process, was sold to the Battle Creek, Michigan-based Kellogg Co.

Plant Expansion in the Wake of Jiffy Mix Success

Over the years the company made a number of additions to its facilities and equipment, starting in the early 1930s when it purchased the adjacent home of an elderly widow. The woman had left her husband’s dilapidated workshop standing, out of respect for his memory, and the Holmes family reached an agreement with her to purchase the land, but let the buildings stand until she died. They also gave her new plumbing and kept her lawn cut as part of the bargain. The image of Chelsea Milling’s large grain silos standing directly behind her weathered house was captured by artist Jonathan Taylor in an etching that achieved some degree of fame at the time. In the 1940s the company purchased and installed its automated packaging equipment, built to Howard Holmes’ specifications. This design was so efficient that the company later bought and put into storage a number of additional machines to use for future expansion and spare parts.

In the mid-1960s Chelsea Milling undertook its most ambitious construction project to date, building a new flour mill that more than doubled production capacity. Milling in the new six-level structure was more efficient and enabled greater quality control than had previously been possible. As it had done since the beginning, the company purchased “soft” wheat from Michigan farmers, cleaned and ground it at the plant, then mixed it with other ingredients to create the 15 different mixes now being sold under the Jiffy banner. These ranged from Mabel’s original biscuit mix to a variety of different muffin, cake, and frosting mixes, plus others for brownies and pie crust. Packaging materials were manufactured at a company-owned facility in Marshall, Michigan, and shipped to Chelsea. Capacity of the new plant was one million packages per day, with production frequently taking place around the clock.

In 1970 Chelsea Milling added a 36,000 square foot warehouse, and by mid-decade it was announcing plans for further expansion of its manufacturing and storage capacity, though this was put off several times and not completed until the mid-1990s. The company’s line of products stood at 19 by 1976, with each ranking first, second, or third in its category against the mixes of such competitors as General Mills, General Foods, and Pillsbury. With the exception of the larger size of Mabel’s original baking mix, these were packaged in six to nine ounce boxes, proportioned such that the average family of four could make enough servings for a single meal. Prices, which had started out at ten cents a box for the larger-size original mix in 1930, were well under 50 cents each for the muffin and cake mixes, one-third to one-half less than the competition. 225 people were employed by the company, an increase of ten percent from a decade earlier. Products were distributed throughout the Midwest by a fleet of Jiffy-owned trucks and to the rest of the country by commercial carriers. Some sales were made to overseas U.S. military bases, but widespread distribution overseas, though experimented with, never took off and was ultimately abandoned.

In 1984 controversy briefly surfaced when two states removed Jiffy corn muffin mix from store shelves after they were found to contain higher amounts of EDB, a grain insecticide, than each state allowed. The amounts found were below federal standards, and the company defended its products’ quality, asserting that the two states were setting limits far below what was necessary for safety. After a brief period of media interest, the EDB scare blew over without permanent damage to Jiffy’s reputation.

Management Changes in the Late 1980s

Throughout the years president and CEO Howard Holmes, Jr., had continued to run the company, while his brother Dudley Holmes had left and returned several times as he pursued different career paths. Jiffy mix creator Mabel White Holmes passed away in 1977, and in 1984 Dudley announced his retirement and sold back his ownership shares. Although Howard Holmes Jr. was now in his 70s, no plan had been made for transferring the company’s presidency to a new leader. Without officially declaring a successor, Howard began in 1987 to cede some authority to his eldest son Howard Holmes III.

Howard III, who was known as “Howdy,” had spent the previous 20 years involved in automobile racing. His successful career had included six Indianapolis 500 races, where he had been named Rookie of the Year and had set a track record for high average finish position. He had also managed a sports marketing firm and written a book and a number of magazine articles. His racing career had given him a great deal of experience in the world of public relations, marketing, and management. When he joined “team Jiffy,” as he came to call it, he brought these diverse experiences to the table, much to the discomfort of some family members who believed that the company should not deviate from tradition. Howdy’s brother Bill, who had been with the company since 1981, was particularly unhappy with the direction he was beginning to take Chelsea Milling.

Company Perspectives:

Our mission is to provide the consumer with the best possible value. “Jiffy” Value is defined as the highest quality ingredients at the best price. We use only the highest quality ingredients for our mixes and formulate our products so that the consumer doesn ’t have to add additional ingredients to bake an excellent product. Our dedication to the consumer in terms of quality and value is the driving force behind our commitment that a satisfied customer is our first concern.

By the late 1980s, the company’s profits were reportedly declining, and it was suffering from a number of inefficiencies that had become institutionalized over time. These included scheduling workers for large amounts of overtime and using a local accounting firm that both kept and audited the books. Mix sales had also begun to stagnate as Americans increasingly favored pre-cooked convenience foods and restaurant meals. Howdy Holmes was convinced that the only way to get back on track was to hire outside, professional management staff to run critical areas of the business such as finance, human resources, and plant operations. However, he was persistently clashing with his brother about these ideas, to the point of having several fistfights with him on company premises.

After a long period of conflict, in 1991 William Holmes decided to leave the company’s day-to-day operations, though he remained on its board of directors, and took up the career of pilot that he had trained for in the Air National Guard. Howdy Holmes soon oversaw the hiring of a team of management professionals drawn from top companies such as Ocean Spray and Unisys. The company began to institute much-needed changes which included replacing its accountant with top firm Deloitte and Touche, restructuring workers’ shifts to eliminate excess overtime, tending to some overlooked environmental problems, and instituting a preventative maintenance program for plant equipment.

Though there had been initial resistance to the changes, the new programs soon proved successful, and many of the hard feelings between family members began to heal as the wisdom of Howdy’s moves became apparent. Howdy Holmes officially became president and CEO in 1995, when his father gave up everything but the position of chairman of the board. Other family members were also involved in the business, including Howdy’s sister Kathryn, who worked in sales on the West Coast, and their cousin Dudley Jr., vice-president of procurement. In 1997 a long-anticipated 125,000 square foot plant expansion was completed, greatly increasing storage capacity and eliminating the need for leased space, which the company had relied on for years. A new $300,000 machine was also purchased that wrapped Jiffy mix boxes into six-packs for distribution to warehouse clubs and other bulk-sales stores.

Although Chelsea Milling still did not advertise, it launched a World Wide Web site, which Holmes considered to be more of a “word-of-mouth” approach than actual advertising. He also implemented small changes to Jiffy mix boxes, adding pictures of other products to the backs. The company retained its conservative approach to introducing new mixes, adding only two new muffin flavors and a buttermilk pancake mix in the mid-1990s. While many competitors believed that the constant introduction of faddish spin-off products helped build a brand, Chelsea Milling preferred to focus on staples which would not go in and out of fashion, a credo which also yielded savings in product development and marketing costs. Commenting on the company’s disinterest in creating low-fat versions of its mixes, CEO Holmes told Milling and Baking News, “It is an interesting fact that some of the fastest-growing foods in our country are hamburgers and French fries.” By the end of the 1990s the company was turning out 1.4 million boxes of Jiffy mixes per day. Annual sales reached an estimated $100 million in 1998, up from approximately $65 million a decade earlier.

With the difficult transition to a new generation of leadership finally over, the Chelsea Milling Company approached the start of its second century with its traditions intact, but having also set in motion the modernization it needed to remain competitive and profitable. Still eschewing advertising, and with packaging designs only slightly changed since the 1930s, the company’s original vision of offering quality baking mixes at a fair price was one which still met with widespread public approval. Jiffy remained among the top three sellers in every category of mix the company made, capturing an astounding 85 percent of corn muffin mix sales nationwide.