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Friday, July 24, 2009

JBS Swift Sinks Greeley's Goodship Lollipop

JBS Swift is doing the public thing, according to the Drovers Article below, in order to raise the capital to expand their holdings. So bye, bye, Mom and Pop's, and anything in between small and mega multi-nationals. And they aren't being the least shy about it.

Economics 101 Greeley. Bad. Really bad for the consumer. JBS Swift also tells the public they are going direct to the consumer with their packaged products. Bye, bye, distributors and retailers. Your profit just went from Titantic to a small boogie-board size. Mass factory produced, factory slaughtered, fresh food at your nearest grocer. What's wrong with that tag line?

JBS Swift is all over the world and still expanding. Brazil apparently has a whole lot of land doing nothing and JBS Swift wants to take advantage of it at the expense of their competition and eventually, I'd argue, the consumers. Originally a much smaller company than their acquisition (Swift) the new and questionably improved JBS Swift has yet to prove, from my interpretation of the material cited below, that they can manage this expansion responsibly.

That might not be so risky were they in textiles. But they are not in the business of textiles. They are in the business of putting meat on your family's table every night. And they apparently would like to limit the opportunity of other businesses to do the same.

Bigger is not necessarily better in the fresh and frozen food system. One example of a drawback for the consumer; the farther away you get from the means of production the more the consumer pays for the fuel to transport this company all over the world. A hub and spoke model works for Southwest Airlines. It is a question on how long it will continue to work for JBS Swift as factory food production becomes more inclined to create a questionable product.

Couple this ambition with Charlie Chaplin's satire on production line mentality in Modern Times and suddenly it isn't so humorous any longer. Every country has a different set of regulations for businesses to cope with and different social and political restraints on bribery, corruption, and monopolies. This is a Brazilian owned firm and the list of questionable practices of JBS Swift doesn't seem to have produced any progressive restructuring or reorganization on what they are willing to do in the name of profit and/or the erosion of ethical practices by general American public standards.

Currently, facing the expansion, overcapacity issues and cutbacks in consumption due to the economy, JBS Swift also has every incentive to push ranchers harder on prices and increase imports from that rosy land in Brazil. Once the market consolidates even more the ranchers aren't going to have much bargaining room. So why is this bad for consumers in the long run? Remember competition is a good thing for consumers and a healthy democracy. It looks to me like the strategy is to consolidate the industry so they become price setters rather than price takers. Good for the willing investors bad for the rest of the consuming nation.

Meanwhile Greeley and Weld politicos hold out open arms to this company? Jobs! Jobs! It is all about jobs!

No, it is all about quality of life and building a health community. Cutting the nose off your community's future to spite its face. Taking the short term green flag waved in front of your face, rather than the long term economic good, is naive at best. Warped local planning policy at the worst. Greeley should think these issues through more carefully and vet those corporations coming in or expanding with a more prudent process.

I'd like to imagine there are responsible investors out there who can dictate changes in JBS Swift but then the Goodship Lollipop doesn't look like it has its plank down to the dock on this one. Most investors just want their broker to perform at this point. They too often don't do the serious homework.

Let's review:
JBS Swift has been identified in the Brazilian bribery scandal.
JBS Swift and the ICE raids made news in the United States.
JBS Swift has recently suffered a major recall of beef products due to operational equipment problems.
JBS Swift now is facing at least one lawsuit brought by a teen for the kidney damage alleged over their products.

And this may be a short list of grievances.

Take notes JBS Swift. Consumers are not as happy being duped these days and they take their food supply much more seriously. Consumers are beginning to look closely at the environment and the people responsible for their food system. It's called going green and it has little tolerance for the practices of factory farming.

Somehow, consumer "trust" in a company with Swift's history, brings up a comparative for me between being led by the Piper down to the sewers or taking your own personal walk up to the rose garden. It's still an individual choice. For me I see good corporations, not-so-good corporations, and then snail-snot companies. Snail-snotters barely hold to the bottom legal line and have few ethics, if any, in place that require something more than that which the law requires. They spend a lot of time in court and tend to treat their general labor workers like dime-store widgets. Of course their marketing mouthpieces are all about ethics and contributing to the local communities as well as publicizing those good works. But when you take away the public relations value these types of companies are pretty soulless at the core.

Yet when a snail-snotter is a world wide megalithic entity the probability of hands being in many political pockets and having dirty hands in their own pockets is ripe to say the least. The only way for a community to establish accountability and checks and balances is to vote with their purchases. Investors can also vote with their purchases--the most powerful of any vote.

JBS Swift is locating more jobs to Greeley. Greeley just made Forbes list of cheap places to live (number 13). Connect the dots. This company isn't likely to be thinking that they will have to pay their workers more in wages. They also aren't likely to stick around in the long run if quality of life values increase in Greeley and wages also rise. Is this the type of vision we, the voters, have for Greeley in the long term?

Fresh local foods. Sustainable communities and critical systems (food, water, and health). Get on board the future Greeley and avoid the rush.

JBS Swift & Co. - Harvard Business Publishing
JBS Swift & Co.

by David E. Bell, Catherine Ross

21 pages. Publication date: Dec 12, 2008. Prod. #: 509021-PDF-ENG

Brazilian meat packer JBS surprised many in the U.S. beef industry when it acquired Swift & Co.--a company more than five times its size--in 2007, then moved to acquire the U.S.'s fourth and fifth largest beef producers in 2008. The new JBS Swift slashed costs and restructured, turning around a quarterly loss of $99 million to a gain of $140 million within 6 months. JBS aimed to position itself to supply beef markets around the world, but it faced a perfect storm of rising feed and fuel prices,
Nalivka: JBS focused on long-term, global strategy | Drovers.com - Industry News
Nalivka: JBS focused on long-term, global strategy
John Maday | Thursday, July 23, 2009
AddThis

JBS Swift, and its parent company JBS S.A., are positioning themselves to build future market share in the United States and internationally. Economist John Nalivka, with Sterling Marketing, Inc., Vale, Oregon, says the company’s announcement of a planned $2 billion public stock offering is consistent with its long-term growth strategy.

The U.S. packing industry is not in good shape, Nalivka notes. Packer margins have been in the red most of this year, and last week packers lost just under $70 on every animal they slaughtered, according to our exclusive Sterling Beef Profit Tracker. Much of the problem, he says, is overcapacity in the packing sector. Packers continue to fight over shrinking supplies of cattle, and while producers might disagree, pay too much for them during a time of weak demand and flat wholesale beef prices.

JBS, Nalivka says, is not the kind of company that sits back and waits for things to improve. Since the Brazilian company JBS S.A. acquired Swift & Company two years ago, they have aggressively pursued acquisitions and expansion opportunities in the United States and abroad. Current efforts to raise capital likely are a step toward further acquisitions in the United States intended to better manage slaughter capacity while building new markets.

FT.com / Companies / Industrials - Brazil’s Marfrig in $680m asset expansion
It said the assets included three companies in Brazil including Braslo, a supplier for fastfood chains. It would also buy assets in the UK, France and the Netherlands, including Moy Park and Kitchen Range Foods in the UK, and Dutch group Albert van Zoonen.

It said the deal had been valued initially at $680m, comprising $400m in cash and $280m in Marfrig shares to be issued at the conclusion of the acquisition, expected during the second half of 2008. The agreement would give OSI a seat on Marfrig’s board of directors.

Marfrig said the deal “reinforces its strategy of gaining direct access to international markets, diversifying its activities in various animal proteins while accelerating its growth in processed and value added products”.

Green Marketing Really Has Gone Mainstream - Leading Green - HarvardBusiness.org
Green Marketing Really Has Gone Mainstream

1:56 PM Tuesday July 21, 2009
by Jacquelyn Ottman

Tags:Branding, Green business, Marketing

110-jacquelyn-ottman.jpgAt the Sustainable Brands '09 conference in Monterey earlier this month, I couldn't help noticing how far green marketing has come since I started my consulting business in 1989. Back then, we didn't call what we did "sustainable branding" — we practiced "environmental" or simply "green" marketing. And we didn't have a conference to go to in Monterey!

The shift reflects the fact that the target demographic for green marketing is not the "educated women, 30-49, with children" of yesteryear, but one of many possible segments of a dynamic consumer base that now embraces 66% of all U.S. adults. Twenty years ago, many green ads featured daisies, babies, or images of the Earth from space. Thankfully, those have all but vanished today. Take the cleaning category as an example; Method pitches its soap to hip twentysomethings. With a combination of artsy package design, contemporary scents, and green certifications, they attempt to convince skeptical consumers that their dishwashing liquid is not their mother's Palmolive.
How to Recognize Your Green Business Deficits and Solve Them - Leading Green - HarvardBusiness.org
How to Recognize Your Green Business Deficits and Solve Them

5:36 PM Wednesday June 10, 2009
by Bob Lurie

Tags:Change management, Green business

lurie-110.jpgSustainability is here to stay as a central business issue, yet many corporations do not have the right resources or organization to comply with the new demands efficiently or, more importantly, to turn them to business advantage. I have found that companies not ready for this challenge typically show one or more of these five traits:

* Responsibility for sustainability issues is fragmented. Many organizations scatter responsibility for sustainability so thoroughly — in operations, legal, compliance, government affairs, corporate communications — that it only comes together at the CEO level (or, worse, in an ad hoc group set up by the CEO).
* No one at the top understands the potential for competitive advantage in sustainability. The company's leaders view sustainability as a set of technical compliance issues (for energy systems or smokestack scrubbers, for example) and delegate them to lower levels to execute.
* There is no sustainability tab in the business plan binder. There are no explicit processes making sustainability a business issue, leaving no one responsible for pursuing such a strategy. Sustainability, if it makes the business plan at all, is an add-on issue.

FT.com / Companies / Industrials - Brazil’s Marfrig in $680m asset expansion
It said the deal had been valued initially at $680m, comprising $400m in cash and $280m in Marfrig shares to be issued at the conclusion of the acquisition, expected during the second half of 2008. The agreement would give OSI a seat on Marfrig’s board of directors.

Marfrig said the deal “reinforces its strategy of gaining direct access to international markets, diversifying its activities in various animal proteins while accelerating its growth in processed and value added products”.





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