Tyson's decision to close the time-honored cattle kill in Denison, Iowa, saddens me on several levels, ranging from the negative impact on feedlot leverage to the demise of small town economics to the bittersweet sweep of nostalgia. While the first two concerns are far more immediate than the last, I can't stop thinking about how much history is about to be buried, about how the cattle and beef world has changed over the last half century.
Failing to at least momentarily salute the passing significance of Denison would be tantamount to bulldozing the Garden of Eden with not so much as a bowed head.
When Currier Holmes and Andy Anderson launched Iowa Beef Packers in 1961 it was like going to war against the status quo of meat production. Their radical visions of change constituted a formidable armada with the Denison plant as its flagship.
Prior to the establishment of the Denison business model, meat packing was an urban-based industry, one far from the strategic location of ranches and feedlots. Furthermore, most of the river market plants employed relatively expensive unionized workers. Finally, the old system was geared to produce and sell carcasses only, shipping large chunks of beef to individual jobbers and butchers who would assume the critical chores of practical fabrication and merchandising.
In one fell swoop, the opening of Denison's kill floor strategically placed the new cutting edge of beef processing smack dab in the middle of feedlot country and far away from the traditional union bastions in Chicago and New York.
But the groundbreaking innovation of Denison went beyond mere geography. While the great slaughter emporiums of old school packers were typically three-storied monstrosities that killed multiple species, the shiny new facility at Denison was designed to operate on a single, cattle-only level. Such simplicity and focus went far in eliminating the need for highly skilled labor, eventually breaking the backs of union.
Finally, unlike older facilities that cooled carcasses only at the end of the slaughter process, the Denison plant was engineered to be completely refrigerated. By refrigerating from the beginning, the fledgling "Green Machine" was able to prevent shrinkage due to dehydration.
If Denison represented IBP's opening salvo in recreating the world of meat production, it somehow failed to secure a leading role in the company's most significant stroke of creativity. In 1967, IBP unveiled its new state of the art facility at Dakota City, introducing boxed beef to the food chain. Fabricating, packaging, and marketing at the plant level allowed packers to reap a rich harvest of new profit centers. Nothing has ever been the same.
Over the next five decades, corporate plans never bothered to upgrade Denison from a kill-only plant, apparently content to transport Iowa cattle carcasses to other facilities for fabrication. While Tyson officials blamed the closing on tight cattle numbers, anyone who's been reading market mail in recent years (i.e., both in terms of required efficiencies and the turning of the cattle cycle towards expansion) could tell the press release was more than a little disingenuous.
But I suppose all of that is spilled beef broth. Best efforts to keep the cattle kill at Denison from sliding into the history book have come and gone. All knives eventually get rusty; all blades in time lose their edge.
Yet I think there is some enduring benefit from keeping old stories of innovation and change sharpened by our memory's whetstone. Denison is just such a story, one that should always remind us how great things can emerge from humble beginnings.
It's not tough to imagine how the bigwigs at Swift, Armour, and Wilson must have initially scoffed and chortled at the news that some underfinanced upstart in northwest Iowa was daring to rock the boat in untried ways.
Boy, do they look stupid.
For more from John see www.feelofthemarket.com
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