The Scoular Company

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The Scoular Company

9401 Indian Creek Parkway, Building 40, Suite 850
Overland Park, Kansas 66210
U.S.A.
Telephone: (913) 338-1474
Toll Free: (800) 487-1474
Fax: (913) 338-2999
Web site: http://www.scoular.com

Private Company
Founded: 1892 as George Scoular Grain and Lumber Company
Employees: 340
Sales: $2 billion (2004 est.)
NAIC: 424510 Grain and Field Bean Merchant Wholesalers

With $2 billion in annual sales, The Scoular Company is one of the largest private companies in the United States. Based in Overland Park, Kansas, Scoular is involved in the grain business in a wide variety of ways. It stores and transports grain, and also provides producers with marketing and risk management services. In addition, Scoular serves end-users who process grains in either manufacturing or feeding operations by acting as a procurement broker. Scoular's Flourmill Markets Division supplies cereal grains to flour millers of all sizes. The company's Industrial Markets Division is engaged in the marketing of processed ingredients to the food and feed industries, both in the United States and internationally. The company also offers dairy marketing services and operates subsidiaries in Canada and Mexico.

ORIGINS DATING TO THE 1890S

The Scoular Company was founded in Superior, Nebraska, in 1892 as the George Scoular Grain and Lumber Company by Scottish immigrant George Scoular. Superior, named for the excellent farmland, was platted in 1875 and incorporated in 1879, but was located so far from rail service it had a difficult time growing until one of the town's key boosters, William Loudon, convinced the Burlington Railroad, after much pleading, that it was in the road's best interest to build an east-west connection through Superior in 1880. Over the next 20 years, three other railroads would intersect Superior, making it a significant regional hub for farmers and the largest town in Nebraska's Nuckolls County. In the early years Scoular's business mostly consisted of hauling goods by horse-drawn wagons between railroad depots.

In 1898 Scoular took a partner named Dennis Bishop and the company changed its name to Scoular and Bishop Lumber and Grain. It was Bishop who several years later established grain commission operations in Omaha and Kansas City. As the lumber business lost prominence, the company became known as Scoular-Bishop Grain Company. George Scoular died in 1930, and then in 1954 his widow and her two sons bought out the Bishop family, although the Bishop name was retained. George Scoular's son Bob Scoular, who had been working for the company since the 1920s, took over as chairman.

By 1967, however, Bob Scoular came to the conclusion that the business was sorely lacking in youthful energy and needed to expand in order to survive. It was just a 25-person operation at the time, composed of three elevators in Superior, in Lovewell, Kansas, and in Council Bluffs, Iowa, and merchandising offices in Omaha and Kansas City. Scoular sold the company to a group of grain industry executives led by Marshall E. Faith, who had managerial experience at Pillsbury and Bartlett. Faith headed Scoular and assembled an executive team that would transform the little company into a powerhouse a generation later. Vice-President Jim Clinton was a key lieutenant, as was Neal E. Harlan, whom they recruited to join Scoular in 1969. Harlan had been in the grain business since starting his career with West Central Cooperative in 1956. Harlan became president and chief operating officer in 1983 and played an important role in Scoular's growth.

Soon after putting his team in place, Faith began looking to grow Scoular. The first moves were to acquire Omaha's Butler-Welsh Grain Company as well as the Omaha business of Texas-based Flour Mills of America. Scoular then focused on buying and leasing small local elevators, capable of holding 600,000 to 700,000 bushels of grain. Almost as important as the size of the elevators were the communities in which they were located. Scoular wanted to do business in towns that offered good schools and healthcare facilities. The overall goal was to create a network of locally run grain operations that were supported by the corporate parent. In this way, local identity was married to the power of a larger organization, which could bring to bear economies of scale in terms of merchandising expertise, information technology, and quantity shipping.

CHANGES IN AGRICULTURE IN THE 1970S

At the time the new ownership group took control of Scoular, the company was primarily an elevator and storage operation. "Soon the landscape changed," according to the Omaha World-Herald. Agriculture Secretary Earl Butz, who served from 1971 to 1976, "called on farmers to plant fence row to fence row, and the federal government tightened its control of the supply of grain. 'If you wanted to stay in business,' Faith said, 'you had to build storage, where grain could be locked away for three to five years. We took advantage of that program.'" Scoular already had a headstart and added to its storage capacity by leasing elevators all across Nebraska and other grain-producing states, even building temporary bins to accommodate as much of the government largesse as possible.

By the mid-1980s Scoular maintained 72 grain elevators in eight states employing 550 people. With a total of 110 million bushels of licensed storage capacity, Scoular emerged as the United States' fourth largest grain warehouse company. In 1985 the U.S. Congress passed a new Farm Bill, which brought to an end government-subsidized grain storage programs. "Then the bushel bubble burst," wrote the Omaha World-Herald. "The federal government decided it didn't want to own what amounted to all of the grain in the world. The storage program ended and grain flowed out of bins and warehouses. Suddenly Scoular had more than 100 million bushels of empty space."

Scoular had benefited from government supports and their removal proved to be a blessing in disguise. As a matter of necessity the company was forced to scale back on storage, focus more attention on grain merchandising and distribution, and become more involved in other aspects of grain-based foods and agribusiness, such as livestock services and trading specialty food ingredients for bakers.

Harlan retired in 1989, and in 1990 Duane "Butch" Fischer succeeded him as president and shepherded Scoular through the 1990s and the next stage of the company's development. A business administration graduate of the University of Nebraska-Lincoln in 1971, Fischer started out as a futures trader with Milton G. Waldbaum Company, a Nebraska egg producer. In 1973 he joined Scoular as a grain trader.

COMPANY PERSPECTIVES

A century-old company, Scoular's operations now extend across the North American continent and around the world.

Under Fischer, Scoular emerged as one of the United States' largest merchandisers of corn, wheat, soybeans, and other commodities. About the only thing limiting the company's growth was a lack of experienced personnel. Due to a poor farm economy in the 1980s, few grain traders were needed and trained, and after a decade of neglect the industry was not well prepared for the reinvigorated commodities market. In the mid-1990s, the lack of qualified and experienced traders was so severe that Scoular could not take on as much business as was available. In fact, it was so eager to recruit topnotch traders that it opened offices in places such as Indianola, Iowa; Springfield, Illinois; and Andover, Ohio, simply to accommodate traders who wanted to live in those communities.

Scoular prospered by opening a lot of local offices, providing the kind of customer care larger rivals including Cargill did not offer. "We feel like getting as local to that demand as we can be is what makes us different in the marketplace," Fischer explained to the Omaha-World Herald in 1997. "We know whether it's raining or the sun is shining because we live there, and we have enough size and resources to serve those customers. Location, location, location, it's more important all the time." But being so local resulted in Scoular becoming unknown in some respects, as many customers did not have a full appreciation for what Scoular had to offer. On the East Coast, for example, the company was seen as a feed ingredient company, with its bulk grain operations unknown to many in the market.

"We tend to be a quiet company," Fischer told the Omaha-World Herald. "We're really small when compared to the major companies in our industry. We're a niche player, except we're not in one niche—we're in 30 or 40 of them. We compound that when the only Scoular our customers see is their local office with one or four or seven people. That becomes their picture of the whole company." To combat its image deficiency, in the mid-1990s Scoular began an effort to make itself better known. It hired a public relations firm and launched a web site touting itself. "We're really only coming out of our shell because we felt like it has hurt our business," Fischer explained.

DEVELOPMENTS NORTH AND SOUTH OF THE BORDER IN 1997

Along with self-promotion, Scoular began a major growth spurt. In 1997 Scoular moved beyond the U.S. borders, established Scoular Canada in Calgary, and began trading barley, feed wheat, and oats in the western part of Canada. Also in 1997, Scoular looked to the south and formed Scoular de Mexico. For decades Scoular had shipped a great deal of grain to Mexico but only to the border, where Mexican buyers took possession and transported the grain to their own facilities. With a Mexican subsidiary in place, Scoular was now able to transport grain, feed, and food ingredients in the country, and also trade in grain in Mexico.

Domestically, Scoular grew on a number of fronts as it closed out the century. In 1998 it teamed up with Ontario, California-based Coast Grain Co. and began construction of a 100-car train receiver facility in Ontario, California. The new 960,000 bushel capacity facility became operational in 1999. Scoular was also active on the acquisitions front. In June 1998 it acquired the trading businesses of International Proteins Corporation. Then, in May 1999, Scoular acquired Foxley Grain Company, adding grain elevators in Fremont and Grainton, Nebraska, and Woodbine, Iowa. In addition, Scoular gained permits to operate five elevators in Nebraska, five in South Dakota, and one in Iowa. Scoular also received Foxley Freight Services, a livestock freight brokerage. All told, Scoular added 12.8 million bushels in capacity. Other developments for Scoular during 1998 and 1999 included the launch of a truck brokering division; the opening of offices in Scottsdale, Arizona, and Jerome, Idaho; an expansion of its Minneapolis office, adding a spring and durum wheat merchandising program; the opening of a warehouse in Thailand; and the opening of fish byproduct plants in Arkansas and Massachusetts.

Furthermore, in 1999, there was a significant change in management. Randal L. Linville was named chief executive officer while Fischer stayed on as president. Linville was well seasoned for the job. After earning bachelor's and master's degrees in agricultural economics from Kansas State University, Linville started his career in Tennessee in 1977 working for Central Soya Co., and then became a corn and oats merchandiser in Fort Wayne, Indiana, before becoming a feed grain merchant for Pillsbury in 1980. He joined Scoular in 1984 as a merchandising manager and four years later relocated to Overland Park, Kansas, to serve as southern region manager. In 1992 he became vice-president of the new grain marketing division, and then in 1997 was named president of the division. Although Scoular continued to maintain its Omaha headquarters, CEO Linville opted to remain in Overland Park.

KEY DATES

1892:: The company is founded by George Scoular in Superior, Nebraska.
1930:: George Scoular dies.
1967:: An investor group headed by Marshall Faith buys the company from the Scoular family.
1990:: Duane Fischer is named president.
1997:: Subsidiaries are formed in Canada and Mexico.
2000:: The Industrial Markets Division is formed.
2005:: Scoular opens an ethanol plant in Sterling, Colorado, and in November, begins development of an ethanol production facility in Plainview, Texas, scheduled to open in 2007.

Expansion continued for Scoular under its new CEO as it entered the new century. In 2000 Scoular opened a new Industrial Markets Division, combining the Commodity Marketing Division and the assets picked up from International Protein. The new division marketed processed ingredients to the food and feed industries, both in the United States and throughout the world. Around the same time, Scoular sold off its businesses involved in livestock marketing and truck freight brokerage. Ground was broken on a 100-car grain shipping facility in Kingfisher, Oklahoma, which would permit local wheat farmers to ship grain directly to millers in Mexico and to the Gulf of Mexico for export. Also in 2000 Scoular opened an office in Portland, Oregon.

Business at the Ontario, California facility was hindered by the bankruptcy of Coast Grain, leading to the facility's purchase in 2003. Scoular also picked up a feed manufacturing facility previously operated by Coast, which it then leased to Tulare, California-based J.D. Heiskell & Company. During this time, Scoular also expanded its grain facility in Venango, Nebraska; assumed the operations of the grain facilities owned by Farmers Grain Cooperative of Idaho; purchased a grain handling facility in Downs, Kansas; and upgraded its grain-loading facility in Alpena, South Dakota. Then, in 2004, Scoular added a new shuttle-train loading facility to Alpena as well as Fremont, Nebraska.

In 2005, Scoular acquired a bulk grain-handling terminal in Helena, Arkansas, a Mississippi River facility that transferred grain directly from trucks to two barge loading locations. In addition to its ongoing commitment to its core grain merchandising business, Scoular took steps to build up one of its newer businesses: renewable fuels. It opened a 42-million-gallon-per-year ethanol plant in Sterling, Colorado, and in November 2005, Scoular began development of a 100-million-gallon ethanol production facility in Plainview, Texas, scheduled to open in 2007.