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2008 Master of the Pork Industry - Gary Machan

2008 Master of the Pork Industry - Gary Machan

While attending the University of Wisconsin-Madison, Gary Machan spent a lot of time in judging workouts for the judging team at the Oscar Mayer plant

While attending the University of Wisconsin-Madison, Gary Machan spent a lot of time in judging workouts for the judging team at the Oscar Mayer plant. “I began to really like the speed and the hustle and bustle of the packinghouse,” he explains.

The fascination took hold, and by the time he left the university with a degree in meat and animal science and a minor in business, Machan was convinced the meat packing and processing profession was “a good fit.”

A new job with Oscar Mayer launched him into a career that has stood the test of time and industry transition. He currently serves as vice president of pork procurement at Tyson Fresh Meats, Inc., in Dakota Dunes, SD.

Solid Foundation

Machan was born and raised on a small farm near Friendship, WI, that he describes as “stereotypical” for that time — 35 milk cows, a dozen sows, some laying hens, two Shetland ponies and two collie dogs.

Machan enjoyed farming and working with his father and younger brother, whom he credits with instilling a strong work ethic and an appreciation for hard work. “It was all pitchforks and shovels and buckets, but when we got done with a job, we could see and feel our accomplishment,” he says.

Being the oldest of five children, he realized that a post-high school education was in his future. He envisioned a technical school, but his high school vocational agricultural teacher nudged him toward higher aspirations, so he enrolled at the university. “If it wasn't for him, I probably wouldn't have gone to the university,” he confesses.

Machan entered college leaning toward the dairy business, but his time in the Oscar Mayer plant, primarily a hog slaughter facility, gave him the early exposure to hog procurement that set him on a course that has now endured over four decades — and he's still counting.

He joined Oscar Mayer in 1966 as a relief buyer in the Madison area. In 1967-68, the company was building a new plant in Beardstown, IL, and they relocated him to serve as a livestock buyer for several buying stations in Pike County, IL.

“My wife, Carlette, and I packed up everything we owned in a little U-haul, behind a Ford Mustang and headed for our new home in Pittsfield. Neither of us had ever been that far from home,” he remembers. Both of the Machan's sons were born there.

In 1971, they moved north to Iowa, where Machan became the evaluation supervisor at the Oscar Mayer plant in Perry. “That put me in charge of the grade-and-yield department. We evaluated every carcass whether they were bought on the rail or not,” he says. He served as a local hog buyer, was supervisor of some area buying stations and eventually became the head hog buyer for the Perry plant.

By the late '70s, Oscar Mayer began shifting its focus from hog slaughter to pork processing and marketing. Machan had been talking with the Wiechman Pig Company about managing a livestock dealership in Fremont, NE. He joined the firm in 1978.

“I learned a lot about buying and selling of livestock — hogs in particular. It was a cull animal business, so we shipped livestock all around the United States,” he explains.

In 1982, Gene Leman began building a pork division for IBP. He called looking for a head hog buyer. “I wasn't particularly interested, because I was doing very well with the Wiechman business,” Machan explains. “But I did miss the camaraderie that I had with the livestock buyers (at Oscar Mayer).”

In the spring of 1982, about the time IBP purchased the pork plant in Storm Lake, IA, Machan conceded and joined the growing pork division. “Gene (Leman) and Bob Peterson, CEO of IBP, were such dynamic personalities and they had such a passion for the business,” he explains. “It was very enticing to be on the front end of the startup of the pork division.” Machan was placed in charge of hog procurement at the Storm Lake plant.

IBP (headquartered in Dakota City, NE) continued to grow, adding plants in Council Bluffs and Waterloo, IA; Madison, NE; and Logansport, IN. Machan moved to the headquarters in the spring of 1986. “IBP slaughtered their first hog in 1982. Then we brought on three plants in 1986 and 1987, so that was a pretty good challenge to source hogs for all of those plants during a fairly short time frame,” Machan remembers.

In 1987, IBP bought half of the Heinold Hog Markets' buying station network (western Corn Belt), then purchased the other half (eastern Corn Belt) in 1994.

“We were extremely fortunate to have a very competent and skilled staff. The buyers were experienced hog buyers, but it was still a transition from the dealer business they were familiar with to the packinghouse side. They had to learn how we operated, understand our systems — and do it overnight. In 1994, our procurement organization was about as big as it has ever been,” he reports.

Machan's stint with Wiechman Pig Company served him well during the Heinold purchase. IBP, now Tyson Fresh Meats, continues to operate eight of the buying stations as a service to suppliers. “We call it the Heinold BOS division (boars, outs and sows). It allows us to buy sows and culls that we can add value to by sorting them specifically for plants that are looking for a specific type of animal,” he notes.

When Tyson Foods purchased IBP in September of 2001, Machan had the responsibility of buying all of the hogs slaughtered by the firm — about 18 million head annually. At one point after the purchase, the manager of Tyson's pork production group (70,000 sows) reported to Machan, but company reorganization shifted those responsibilities to others.

Tyson Foods' annual report indicates the pork division accounted for 12.3% of the company's total revenue in 2007. They currently operate six pork processing facilities that slaughter about 18% of U.S. hogs; pork sales totaled $3 billion in 2007.

Changes and Challenges

Machan has witnessed tremendous change in his 42 years in the business. “Some years back, if we walked by the sales and pricing desk, we would get questions about muscle quality, PSE (pale, soft, exudative) pork and the napole gene. In the last 2-3 years, the questions are about who we do business with, the types of facilities they have, whether sows are in gestation pens, etc.,” he explains.

The biggest near-term challenge that Machan sees is the obvious one: “The ethanol mandate put on the (agricultural) industry as it relates to food for fuel. It is really raising havoc in the livestock industry and it's one that is difficult for producers to work through because we're in the beginning stages where the costs are leading the resulting market,” he says. “With these huge costs at the front end — with $6 corn — the breakeven equivalent is $60-62, live. Somewhere along the line, we're going to have to significantly raise prices for producers to cover these costs.

“The result will probably be some liquidation of the herd, which will likely mean some consolidation of ownership. Certainly, these kinds of costs are difficult for a traditional lender to understand. And, when lenders are being very cautious, it makes it difficult for producers to have the capital necessary to operate. Oftentimes, in these times of adversity, the industry has a tendency to align even further in an effort to pass these costs through the system. It is not something that is just going to go away in the near future,” he says.

“The question that remains, then, is this: ‘Who will own the livestock?’ We could have a gap for a period of time until the market catches up with input costs. I would think that at some point, the government would see that this food-for-fuel mandate is creating a tremendous burden on the consumer, as well as creating a shortage of meat protein, not only in the world, but in the United States as well. This food-for-fuel mandate, with its aggressive subsidies, is going to change animal agriculture tremendously.”

Like Tyson Foods, and IBP before it, Machan is a strong advocate of producer-based organizations and industry programs. He was the first packer representative to be seated on the NPPC board of directors.

“We've always been supportive of the efforts of NPPC and the pork checkoff. If I can bring value to the organizations or committees through my industry perspective, that's the role I'm willing to play. I try to represent the good of the entire industry, not just Tyson's point of view,” he assures.

“I wouldn't be able to do it if we didn't have such a strong team in the hog procurement area. They're very skilled, professional people, so that's allowed me the time to be involved in the pork organizations,” he adds.

Mentors and Mentoring

Acknowledging that his career choice has been a good fit, Machan is quick to add: “I have been very fortunate to work with very strong companies that have given me latitude to manage. Maybe it was also that I was lucky enough to have supervisors who had the same values that I have. That has made it comfortable to manage people and the business the same way that the company did,” he says.

Beyond the work ethic instilled in him by his father, brother and the dynamic leadership of Gene Leman, Machan reflects on his first job with Oscar Mayer, the efforts of Ted Fritz, Paul Gould's guidance in learning the details of the business and the technical side of the early grade-and-yield programs. To this day, Machan encourages young staff members to learn the business thoroughly and to understand their role in that business.

“It's important to understand how your strengths will make the business stronger as a whole,” he relates. Again drawing on Leman's leadership, he says: “Gene got the hog procurement department involved in sales so they truly understood what we are selling and the quality specifications that our products have.

“It's also very important to value and respect the role each person plays,” he continues. “I certainly respect the producers out there who put capital into the facilities and the adversity some of them have faced as they've built their livestock production enterprise. It's a tough business, and it takes good pig and people management skills to be successful.”

He summarizes his current role at Tyson Fresh Meats as “setting up an organization that relates well with producers, an organization that is well respected and provides the tools necessary to remain competitive in the business. Some producers might wonder if they raise enough hogs to ensure they will have a market available. To us, at least, if they have good genetics and good management practices, they should have markets available just like any other producer,” he says.

Machan believes that those involved in pork procurement and packing today are committed to the industry and the business. “Where this used to be an in-and-out business on the production side, we now have capital commitment. The same is true on the packing side, and we have brands committed to the business. The task at hand is being able to have competitive inputs so we can produce quality pork efficiently.”

Machan's 42-year tenure in the procurement side of the U.S. pork business surely stands in testament to his commitment. Retirement is not one of his near-term goals, but he is committed to doing a little more hunting and fishing with his sons, and to teaching his 4-year old twin grandsons to fish this summer.
— Dale Miller, Editor

TAGS: Marketing