There are no guarantees of success in business, but an agri-food consultant believes the managers of a beef processing plant in Winnipeg are making all the right moves.
Jerry Bouma of Toma and Bouma Management Consultants in Edmonton said the leaders of the Keystone Processors beef plant are avoiding mistakes that killed many startup beef plants in North America.
“They’re following an approach that gives them a much greater chance of success,” said Bouma, who spoke at the Manitoba Cattle Enhancement Council producer forum in Brandon this month.
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The Manitoba government, through MCEC, has invested more than $10 million to buy and retrofit a hog plant in Winnipeg into a federally inspected, 250 head per day, beef processing plant. The federal government has also provided a $10 million loan for the plant renovations, which are expected to begin this spring.
“They’re drawing up the blueprints for final tenders,” said Kate Butler, MCEC executive director.
The decommissioning of the hog plant, which includes things like removing freezers, must be completed over the winter before construction can begin, Butler said.
When construction is complete and the building is ready to go, Bouma said Keystone Processors has a good shot to become a player in the value-based beef business, because it is following a logical and sound template for success.
That template involves four key components: identifying the market and establishing the brand, hiring skilled management, hiring a skilled plant manager and building a business model that involves cattle producers.
“You have to have a very clear focus in terms of who your customer base is going to be …. A very specific marketing strategy that doesn’t go head to head with mainline beef suppliers,” he said. “You (also) have to have a business structure that shares the benefits and risks, between the processing plant and the producers… so producers are committed to supplying (beef).”
Bouma said MCEC and Keystone Processors have a solid management team.
Earlier this year, MCEC announced that it hired a group of executives with credentials and credibility in the global beef industry to manage the Winnipeg plant.
“They have a whole resume of things they’ve been involved in, both collectively and separately,” Butler said.
The leader of the group is Doug Cooper, formerly the president of Global Protein Group and a Virginia Tech graduate. Cooper will manage Keystone Processors from Winnipeg, not from an office in the U.S.
“Doug Cooper, the president, was checking out space when he was here a couple of days ago…. (It won’t be) remotely managed,” said Butler, who noted that Cooper and his team will hire about 110 employees who will work at Keystone Processors
Once constructed, the Winnipeg plant will primarily target the kosher beef market and sell the remaining parts of the carcass to other markets.
“It’s really a focus on a niche opportunity…. It (kosher) is something the commodity players don’t want to bother with,” Butler said. “Forty percent of the animal is suitable for kosher and the balance is what’s available for other niche (markets).”
Beef industry observers and cattle producers may think a kosher beef plant in Winnipeg is doomed for failure. But with skill, experience, resolve and resources, Bouma said it could prosper.
“The status quo opinion is that it can’t be done and it won’t be done…. The market operates like a commodity market and anybody who is going to stray from that is going to fail. But that’s very unimaginative thinking.”
