Meat + Poultry - March 2006 - 27

Squeezed

between the two of us, we have to take
care of everything. We're trying to do a
lot of different things here, like steaks
and grinding chuck. There's no one else
to do it." When it comes to distributing
products, the increasing price of fuel
affects the company every mile, espe-

week that big plants do in a day. Our
customers are basically wholesale and
foodservice distributors.
"Plus the trucking industry is tighter
now," he adds. "We used to be able to
call up a company and ask them to take
a load to Chicago tomorrow. Today, I

"The brutal reality is that
insurance is a very costly
part of business for meat
processors, and I mean all
of it-property insurance,
workers compensation and,
of course, health insurance."
cially because their trucks burn diesel
fuel. "Years ago, diesel was cheaper
than (unleaded) gasoline, but now it's
the other way around," he says. At print
time, the national average price for a
gallon of diesel fuel was between $2.50
and $2.60. Johnson notes the region
around Florida's Gulf Coast, where the
company is based, is growing tremendously. The potential for his company to
succeed and grow there is also tremendous. As the growth occurs, so will the
challenges, and they'll have to deal with
them, he says.
Gary Malenke, president of SiouxPreme Pork Products, a 3,600-headper-day, 250-employee processor and
fabricator based in Sioux Center and
Sioux City, Iowa, points out several
business problems company's like his
face. "There is the logistical side of
things. For example, in order to make
timely deliveries smaller guys can't
always ship full loads," says Malenke,
whose company ships products using
a common carrier. "The flexibility of
less-than-full loads is not great, because you're relying on the trucking
company. That often costs us additional money, when we're shipping to
the East and West coasts, because we
process the same amount of pork in a
28

MEAT&POULTRY

March 2006

have to let them know three to five days
in advance." Malenke says he's had
situations where he could not get the
products shipped soon enough, resulting in lost sales. "That doesn't happen
to the big people," he says.
Supplier shortcomings
The shrinking number of very small,
small and medium-size meat plants
has also led to a shortage of equipment geared to their lower-scale needs.
Malenke says many equipment suppliers have shifted their attention to
the large-scale processors. "Packing
equipment is very big, and it's a challenge to the small guy," he notes. "You
have to cost things out, and sometimes
you realize you can't always buy the
equipment you want."
Rick and Jean Shupp, owner-operators of Rick's Garden Spot Meats, concur. The Shupps moved to the small Illinois town from Pennsylvania because
they were looking for a more rural
place to live. Aside from a little parttime help from family members, the
couple runs the business themselves on
a 70-acre farm. When they first began,
they got some help and advice from a
supplier salesman that came by twice
a month. But a large company soon

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bought out the supplier, and the salesman is gone, as is the help and advice.
The Shupps now have to order through
a warehouse dealer.
"They say that's progress, but we had
a personal friendship with that salesman and an allegiance to that company," Jean Shupp says. "Not anymore.
We gradually get seasonings from other companies, and I enjoy dealing with
the other small places we've found, because it is more satisfying."
SiouxPreme Pork's Malenke says insurance has been an increasing and is a
more costly proposition ever since the
terrorist attacks on 9/11. "The brutal
reality is that insurance is a very costly
part of business for meat processors,
and I mean all of it-property insurance, workers compensation and, of
course, health insurance."
Another problem affecting meat
companies the size of SiouxPreme
Pork is in recruiting workers to work
in a meat plant as long as other jobs
are available. "It's harder to find people
in northwestern Iowa, where we're located, who want to work on processing
lines eight or 10 hours a day," he says.
"There's more demand for blue collar
workers here, especially in the large
dairy industry. People would rather
work in the 3,000-, 4,000-cow dairies, so they go there instead of working
on our lines. Back in the early 1980s,
there were no jobs, so they came to us.
But that's been changing." So to stay
competitive, SiouxPreme Pork feels
the pressure to increase pay to attract
workers.
Lone Star Foodservice's Hall points
to packaging as another area where
costs have risen dramatically. "There
have been great increases in the costs
of raw material," he says. "The cost
of film has been rising as our business has grown and as customers want
more items vacuum packed. Many of
our products used to go into a box with
wax paper or poly liners. No more.
Now, the big demand is for vacuum
packaging, because our customers are
very concerned about spoilage and
cross-contamination issues."

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Meat + Poultry - March 2006

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