The way Dan Lennon tells the story of Michigan Turkey Producers Cooperative; he leaves you wondering how this company could have wound up with a top line on its financial statement of more than $200 million, thirteen years after its launch.
He and his partners started without a business plan, without a computer, and without a banker who would even talk to them.
“Banks all asked, ‘who are you guys?’” Lennon said. “We spent more than a year just trying to get a bank to talk to us.”
Two dozen turkey growers in in the Grand Rapids, Mich. area who were making a good living supplying birds to the Sara Lee plant in Zeeland, Mich. about 45 minutes south of Grand Rapids, were told in October 1998 there was no longer a market for the birds.
They all lost their contracts.
Ten of the turkey growers went out of business. Fifteen stayed, banded together, and formed a cooperative. They decided if Sara Lee wouldn’t process their birds, they would do it themselves.
But they had to build a processing facility. Without that, they had no hope.
Entrepreneurs are often advised to seek out ‘friends, family and fools’ for financing in the opening days. Lennon struck out with them too. “One potential investor said he could double his money in the stock market and it would safe there. So, he wouldn’t invest with us and we didn’t fit into any of the government programs.”
The outlook was grim. However, they were able to work out a loan package with CoBank to finance the $20 million construction of a turkey processing facility. But when the bank decided it needed 50 percent down instead of thirty, they had to scramble.
Growers who had purchased stock at $1.50 per shackle — the hooks that would be used to hold turkey carcasses in the plant — increased their investments to $2 per shackle to cover the difference, and they were able to start construction of the Michigan Turkey Producers facility in Wyoming, Mich., near Grand Rapids, in 1999.
The project was finished in eight months, and turkeys began being processed in March 2000. But that high point was followed by some rough years. Lennon said they lost money in 2003, 2004, 2007 and 2008 because of the volatility of corn prices. MTPC couldn’t raise its prices fast enough to compensate.
What a difference a decade can make. When the MTPC-Wyoming, Mich. plant opened, it took workers all day to kill 200 turkeys. Now they can process 200-thousand birds a day. “We processed 4.8 million turkeys last year and we have the ability to double that,” he explained to an audience in May 2012.
Like any CEO, Lennon has to sing two songs at the same time. While extolling the virtues of MTPC and expressing optimism for the future; Lennon also spoke about the challenges that are on the horizon.
Lennon said MTPC was “very lean” at the executive and sales levels of the company. “When you find good people it is tough to get them to relocate (to West Michigan),” he explained.
MTPC was also having trouble getting good people to work on the plant floor. It wasn’t a hesitancy to relocate that was causing the problem in that case, according to Lennon. His company just couldn’t find enough people who want to work.
“Unemployed people are making almost as much sitting home as we would be able to pay them,” he said. “We are struggling to find people who are willing to come in, work hard, and advance to a position where they can make more money.”
Describing his company as entering its “teenage years,” he also warned that puberty would not be easy for MTPC if only because a flat consumption market would “complicate the future. We need to make more value-added products with higher price points. We need to do more cooking.”
The main sales target for the immediate future: national chain restaurants that already have turkey on their menus. The way Lennon sees it, turkey cold cuts don’t make it. MTPC’s future will be built on turkey served hot. That is the way turkey tastes best, Lennon explained and he wants to find restaurants that agree with him.
“National chain restaurants love turkey,” he said. “We could probably chase McDonald’s or Burger King or Wendy’s until we are blue in the face and not get anywhere. We are going after restaurants that have turkey on the menu. Arby’s does a nice job. We are talking to them, but that may take a few more years.”
Michigan Turkey Producers Cooperative has discovered another new revenue stream in partnership with the people building the nation’s first biomass gasification system where turkey litter is transformed into 300 kilowatts of electricity. bio-digester in Howard City, Michigan, north of Grand Rapids.
Lennon said that means the Cooperative will be “able to sell everything but the gobble.”
Michigan Could Miss the Next Wave of Automotive Technology by Rod Kackley: The article tells the story of the talent shortage facing the Detroit Three in Michigan. Read More
Grand Rapids Needs Talent by Rod Kackley: This article explores the problems facing the information technology community in Grand Rapids, Mich. as it search for new software and mobile app developers. Read More
Last Chance Mile: The Reinvention of an American Community tells the story of how entrepreneurs, politicians, educators, artists and even zombies, came together to chance the way the world sees Grand Rapids, Mich.
Last Chance Mile is available wherever books are sold online including Abbott Press, as well as on the shelves of Barnes & Noble-Woodland Mall, Schuler Books & Music-28th Street and West Coast Coffee-Monroe Center, Grand Rapids, Mich.
For more books, articles and essays by Rod Kackley, click here.
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