Swift & Company

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Swift & Company

1930 AAF Street
Greeley, Colorado 80631-9663
U.S.A.
Telephone: (970) 506-8000
Toll Free: (800) 555-2588
Fax: (970) 506-8307
Web site: http://www.swiftbrands.com

Private Company
Incorporated: 1875
Employees: 21,400
Sales: $7.73 billion (2002.)
NAIC: 311611 Animal (Except Poultry) Slaughtering; 311612 Meat Processed from Carcasses

With headquarters in Greeley, Colorado, and a 265,000 square-foot flagship processing plant in Worthington, Minnesota, Swift & Company is a leading processor of beef, pork, and lamb in both domestic and foreign markets. Swift also maintains plants and other operations at facilities in other locales, notably in Iowa, Kentucky, California, and Australia. Until its 2002 spin off from its status as a division of ConAgra, Inc., most of its products, largely pork, were marketed under the Armour name, another distinguished brand of a company also owned by ConAgra. Swift also supplies other meat processors and the food-service industry with beef and raw pork for such products as bacon, sausage, and ham; it also offers several state-of-the-art product and information systems. A pioneer in vacuum-packaging, the company has an enviable history of providing high quality, fresh meat products worldwide and claims among its international customers companies in Canada, EU (European Union), Hong Kong, Japan, Korea, Mexico, and Taiwan. Two of its plants have been awarded ISO 9002 certification, the only two pork-processing plants in the United States to operate under that status. Although ConAgra retains a large minority interest in Swift, Hicks, Muse, Tate & Furst, in a partnership with Booth Creek Management Corporation, now hold a majority ownership in the business.

1855–1914: From Cape Cod Butcher to Chicago Meat Packer

Swift & Company traces it origins back to 1855 when, on Cape Cod, Massachusetts, 16-year-old Gustavus Franklin Swift, the ninth in a family of 22 children, encouraged by his father, started in business for himself as a slaughterer, packager, and distributor of beef. Until then, he had been working as a butcher in his brother’s business, but he had bigger plans for himself and had wanted to try them out in New York City. His father, hoping to keep young Gustavus at home, cut a deal with the lad by offering to buy him his own steer if the new entrepreneur would stay on Cape Cod. His father put up $20, and Gustavus was in business. He bought a mature heifer, butchered it, and packaged it for sale to his neighbors.

Swift stayed in the East until 1875, when he moved to Chicago to become both a cattle dealer and butcher. It was there that he first incorporated his business and bought a shed-like structure to serve as his slaughterhouse. On the first day in the new facility, his fledgling company slaughtered 32 head of cattle. However, part of his plan was to ship live beef to the eastern states via the railroad. At the time Swift made his move to Chicago, western trail-head “cow towns” in Kansas and Nebraska were booming. These were the points where large herds of longhorn steers, bred in Texas but fed out on the northern plains, were rounded up and driven for shipment by rail to Chicago’s Union Stockyards. From the Windy City, yet to be butchered, they were shipped to the East.

The Union Stockyards, which were established in 1865 by a group of investors, some of whom were friends of Abraham Lincoln, were processing over two million livestock by the time Swift moved to Chicago. By 1890, the figure had grown to nine million, and the city had been transformed into the largest hog and beef holding pen in the country. Still, the live shipment of cattle from the stockyard was a poor system that was inimical to the cattlemen’s interests. For one thing, the live cattle lost up to 15 percent of their weight in transit. The rail service was also very poor and the cattle were often mistreated, given neither sufficient food or water. Some cattle, because of the primitive condition of railcar braking systems, poor rails and roadbeds, and frequent stops, arrived in poor physical health. The upshot was that the cattle frequently commanded only low prices in the East, where the western beef was slow to gain popularity.

Swift and a few others helped change the system by slaughtering beef and hogs and packing their meat in Chicago before shipping it to points East. However, through most of the rest of the century, meat processing was pretty much limited to the cold winter months. Not only did the industry lack an adequate distribution system to ship fresh meat to widespread markets, it had no means to prevent the meat from spoiling. Frustrated by this seasonal restriction, Swift tried to get the railroads to build refrigerator cars for transporting meat and dairy products, but the railroads resisted. After all, they had a lot at stake in shipping cattle live, including a great number of stock cars and excellent revenue obtained from their use.

Although he faced rigorous opposition from railroad officials, Swift finally got permission for use of cars on a railroad that permitted them on a roundabout route. Swift bought ten cars and started shipping packaged beef to eastern markets. Soon he started building his own refrigerator cars and secured patents on them, the start of a fleet of cars owned by his company.

1915–81: Swift & Company Grows into Industry Giant

Meanwhile, Swift saw his company grow into one of the nation’s main meatpacking companies, with a reach throughout the United States. By 1900, it had also reached beyond national boundaries, opening shops in London, England. At home, the efforts of Swift and others helped transform Chicago into what poet Carl Sandburg styled “Hog-butcher to the World,” that is, the world’s largest slaughterhouse and meat-processing center.

Modernization was one key to the company’s success. For example, in 1915 Swift implemented a “safety first” campaign, reducing plant-level industrial accidents by 50 percent. By that time, the company had also developed thriving side-line businesses, and though by 1920, under a consent decree, it was forced to dispose of some of them, it still offered various meat and byproduct items at company-owned outlets across the country. Swift had also diversified, branching out from beef to other meats, notably pork. According to its own 1915 company yearbook, Swift was offering a wide variety of products, including hams, sausage, bacon, chickens, eggs, butter, lard, shortening, oleomargarine, bouillon cubes, and various soaps (including scented toilet soaps). Despite being legally required to divest some of its sidelines, in 1920 the company still had sales exceeding $1.1 billion, and by 1922 its branch houses were still selling fresh, cured, and smoked meats, meat specialties, poultry, eggs, butter, cheese, oleomargarine, lard, shortening, cooking and salad oils, and soaps.

By 1921, the Union Stockyards in Chicago employed 40,000 workers and occupied more than a square mile of Chicago’s South Side; by 1926, Swift’s rail carriers had grown into a fleet of over 5,000 refrigerator cars. That was at the virtual height of the industry’s development in Chicago, which, during the Great Depression, started into a decline, albeit a slow one. In the worst of the Depression, in 1931, Swift was selling fresh meats under its Select, Premium, and other Swift labels to increasingly brand-conscious consumers.

The Union Stockyards remained one of the nation’s great success stories. From 1893 to 1933, there was no year in which less than 15 million head of livestock were unloaded and processed there, and in two years in the 1920s over 18 million head were processed. The industry also garnered infamy during this time, however, for deplorable working conditions, as portrayed in the Upton Sinclair novel The Jungle.

Through the period of the Union Stockyards’ growth and decline, Swift & Company built plants in several other locales, including, for example, in the Stockyards District of Fort Worth, Texas. The company opened a meat packing plant there in 1902, next to an Armour & Co. plant that opened in that same year. Situated on 14 acres, the Swift & Company plant was adjacent to tracks of the Fort Worth Western Railroad, which carried the plant’s products to the East. In their heyday, when they were in full operation, the Swift and Armour plants between them processed up to five million head of cattle per year. In 1971, Swift closed down its operation there, just as, over time, it elsewhere closed many of its plants, partly because for a while it got out of the beef business and partly because the meat industry no longer had to depend on railroads for shipping its products. By that time, however, it had opened large plants in other locations, including, for example, a major operation in Grand Island, Nebraska, in 1965.

In the middle of the century, Swift was a huge operation, much larger than its descendant would be as a subsidiary of ConAgra at the end of the century. In 2002, while still a subsidiary of ConAgra Foods, Swift employed 4,500 workers, a significant figure to be sure, but nothing on the scale it reached when the meat packing industry was in full swing. By 1944, for example, approaching the end of World War II, the company could boast that 20,300 men and women of the Swift organization were in the military and auxiliary services. Despite the fact that many employees went into the military during the conflict, Swift’s plants continued to operate at full capacity thanks to war-time demands. In 1943, the company’s sales volume reached $1.4 billion.

Company Perspectives:

For over 150 years, Swift & Company has been providing quality beef and pork products under superior brand names to consumers nationwide. The Swift & Company tradition began with Mr. Gustavus Swift when he purchased a calf for $20.00 and sold the meat to his neighbors. Mr. Swift’s innovative thinking was only the beginning. Today, Swift & Company is an industry leader in fresh ideas, products and technology. From our headquarters in Greeley, Colorado, we are proud to offer you high quality products under the Swift Premium and Swift brands. Our commitment to your needs continues as we constantly strive to develop and provide convenient, great tasting fresh beef and pork products.

1982–95: Changes in Ownership

In 1982, Swift underwent another permutation in structure and name, becoming Swift Independent Packing Company (SIPCO). It held its status as one of the nation’s biggest beef and pork packagers. The next year, the company bought what would eventually become its principal plant, an Armour and Company facility in Worthington, Minnesota, that it purchased from Armour’s parent, the Greyhound Corporation, At the time, it was a two-story, 95,000 square-foot facility, but eventually it would almost triple in size as Swift’s operations there expanded.

By 1984, operating four beef and nine pork meat processing plants, SIPCO had become the second largest producer of fresh meats in the country. By then it was experimenting with case ready beef and was producing vacuum-packed and boneless pork. At its new plant in Worthington, it also introduced its Swift Brands, Swift Tender Lean, and Swift Premium products.

In 1987, ConAgra Foods Inc. acquired a 50 percent interest in SIPCO. Two years later, it bought the remaining shares, adding Swift to a swelling list of subsidiaries that included Monfort, Inc., a Colorado beef packer, which ConAgra had also purchased in 1987, at a cost of $365.5 million. Monfort had its beginnings back in 1930, when it opened a feedlot with 30 head of cattle. It gradually expanded, and in 1960 opened a major meatpacking plant north of Greeley, Colorado. In 1966, Monfort reported annual sales of $85 million with a payroll of $4 million. By 1968, its feedlot in North Greeley grew to process 100,000 cattle, the first single feedlot in the nation to reach that figure. Three years later the company went public. Once acquired by ConAgra, Swift was merged with Monfort into the Monfort Pork Division, which, in 1995, was renamed Swift & Company.

ConAgra, the parent company, traced its own history back to 1919, when, in Grand Island, Nebraska, it started out as Nebraska Consolidated Mills. It came into existence when four, independent flour mills merged and incorporated. The company became ConAgra (from Latin roots meaning “with” and “land”) in 1971, selecting the name to reflect its focus on agricultural products. Over the next several years ConAgra grew into a diversified food producing and marketing giant with an array of products sold under several familiar-brand names: Healthy Choice, Butterball, Banquet, Hunt’s, Orville Redenbacher’s, Reddi-Whip, Slim Jim, and Armour.

Through the first half of the 1990s, ConAgra’s Monfort Pork Division fared well, in part because of a widely disseminated ad campaign suggesting that as “the other white meat” pork was a healthy substitute for beef, and in part because a glutted market drove the cost of hogs down, most notably in 1995, when ConAgra’s pork division, by then operating as Swift, enjoyed a very profitable year.

1996 and Beyond: Expansion and Another Ownership Shift

Swift’s profits encouraged ConAgra to invest more in its subsidiary’s growth. It approved expansion plans that led to both facility improvements and acquisitions. Swift, meanwhile, concentrated on adding value to its products and improving its operational efficiency. Among other things, in 1996 it expanded distribution of its line of Armour Premium branded, case-ready pork products. It also acquired a pork slaughterhouse in Indiana, slated to operate as a value-added processing plant, and improved the capacity of its coolers at its two largest plants. In the following year, 1997, it began building a new up-to-date pork processing plant to replace its outmoded facility in Lexington, Kentucky. The new plant was equipped to produce case-ready products.

In 1998, ConAgra purchased Chicago-based Zoll Foods, a privately held processor and marketer of custom-cut pork ribs and other pork products produced for the food service industry, and made it part of Swift & Co. At the time, Zoll was logging annual sales of about $100 million. Swift’s president, David Heggestad, noted that Zoll provided a good fit with Swift’s plans to increase its food service presence and grow its value-added line of products. Steven Zoll, president of Zoll Foods, stayed on to manage Zoll Foods, providing the formerly independent company with a high degree of autonomy.

By the decade’s end, a significantly part of Swift & Co.’s growth involved its increasing export of pork and pork products. In 1999, the year in which Dennis Henley was named Swift’s president and chief operating officer (COO), the company’s Worthington, Minnesota, plant became its second pork producing plant to earn ISO 9002 certification—the only ones with that certification in the United States. In order to achieve the very demanding EU certification, the company established a full-service science lab in Minnesota. There, using microbiological and chemical testing, Swift’s products were analyzed to safeguard against contaminants.

Key Dates:

1855:: At 16, and with $20, Gustavus Franklin (G.F.) Swift begins his own meat-market business.
1875:: Swift first incorporates his business.
1900:: Company opens shops in London, England.
1915:: “Safety First” campaign is implemented by the company, reducing plant accidents by 50%.
1920:: Company gross sales exceed $1.1 billion; Swift disposes of side line businesses under terms of consent decree.
1931:: Swift markets fresh meats under its Select, Premium, and other Swift labels.
1943:: Despite Word War II, Swift plants continue to operate at full capacity; G.F. Swift dies.
1953:: Swift’s Brown ‘N Serve sausage products enter the marketplace.
1965:: Construction of Swift beef plant in Grand Island, Nebraska, is finished.
1970:: Swift’s ProTen tender beef becomes the largest dollar sales, branded food item in the world.
1982:: Swift is restyled the Swift Independent Packing Company (SIPCO).
1989:: ConAgra acquires Swift and merges it with Monfort Inc. to form the Monfort Pork Division in Greeley, Colorado.
1994:: ConAgra’s Monfort Pork Division is renamed Swift & Company.
2002:: ConAgra Food’s beef, port, lamb, and Australia Meat Holdings (AMF) are spun off as Swift & Company.

At the beginning of the new century, Swift & Co. continued to enjoy a reputation for producing high quality products and for its innovations. At its 265,000 square-foot flagship plant in Minnesota, it was slaughtering up to 16,000 hogs a day, and in the process put food safety at the top of its stringent requirements for preparing its pork for the marketplace. The company’s position in the ConAgra family certainly seemed secure.

However, in SEC filings made in 2002, that parent announced that an agreement, signed on May 21, would legally transfer a majority interest its fresh beef and pork processing businesses to a new venture. The transaction, valued at about $1.4 billion, took place in August, when a 54 percent ownership of Swift passed to an investor group led by Hicks, Muse, Tate & Fürst, Inc. (HMTF), with ConAgra retaining a 46 percent interest. According to a ConAgra news release, its minority stake in its meat processing business would reduce its equity in that segment of its business from over $1 billion to $150 million.

The impact of the deal on Swift was not immediately clear. HMTF and its venture partners, Booth Creek Management Corporation of Vail, Colorado, and George Gillet, took over the managerial reins, however. Also, ConAgra’s premier, Pacific-Rim beef processing business headquartered in Brisbane, Australia, also fell under the managerial control of Swift & Company in Greeley and its staff, headed by John Simons, president and COO of the enterprise. In a press release issued when the deal was singed in May 2002, John R. Muse of HMTF stated that the arrangement would “further optimize the performance and build the value of” the operations of Swift & Company. Efforts to focus on the Swift Premium product line, in the form of a $10 million advertising campaign, began in 2003.