A new leader at Horizon Milling

by Josh Sosland
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Having spent his entire career to date in various grain merchandising and management roles, Dan Dye’s background at Cargill is strongly connected to the grain division, the oldest division within the 144-yearold company. But if his track record in recent years is any indicator, the new president of Horizon Milling L.L.C. is not likely to be a conservative caretaker at the largest flour milling company in the U.S. To the contrary, "change agent" may be a more apt descriptor.

In a transition announced last spring, Dye became president of Horizon Milling on Nov. 1. He succeeded Guy R. Shoemaker, who retired after 13 years at the helm of Cargill’s milling business, the last seven running Horizon Milling.

"There is considerable growth potential at Horizon Milling, a wide variety of opportunities we are looking at," Dye said.

Horizon Milling, a partnership between Cargill and CHS, was established in 2001. With daily milling capacity of 299,000 cwts of flour and 20,000 cwts of durum semolina, Horizon Milling operates 22 mills in the U.S. and Canada.

While new to flour milling, Dye has considerable experience at Cargill. In fact, having started his career there in 1981, Dye actually joined the company a year before Shoemaker, who came to Cargill with the 1982 acquisition of Seaboard Allied Milling Corp.

"My early background here is a pretty traditional one, starting in a grain origination role, learning the business by working with customers and moving grain through domestic and export channels," Dye said.

A pivotal time for Cargill’s grain business was the early 1990s when the company took major steps to adjust to a permanently altered marketplace, Dye said. Changes at the company during that period help explain how it has survived and grown even as many of its prominent competitors from that time and earlier have disappeared or have become greatly diminished.

Recognizing the need to change, Cargill reoriented its grain business to align it more closely with its large processing business, major users of grain.

"The company consciously brought in different people from different parts of Cargill with the idea of one voice in the marketplace," Dye said. "The effort brought some great success, but it did not go as far as it could. It did set the stage for subsequent changes and where we are today. It was an important time for Cargill."

Among the changes that followed was the creation of AgHorizons, which Dye led as president for several years.

"In the mid to late 1990s, we began to look at the farmgate differently, recognizing the farmer as an important partner, not just as a supplier of commodities," Dye said. "In 1999-2000, as part of its strategic vision, Cargill formed AgHorizons 100% focused on the farmer as customer."

The business has grown, with the company offering a widening range of risk management and agronomic services to growers.

By many measures, the effort has been a success, Dye said. It hasn’t been easy. For decades, many growers, almost reflexively, have been suspicious and even critical of large grain companies. As the largest grain company, Cargill certainly has been a target.

"When farmers hear about Cargill, we want them to think ‘That’s the company that helps me succeed,’ rather than, ‘that’s the large company that’s making money at my expense,’" he said. "And we’ve done it. We’ve built bridges with farmers. Not with all of them, yet. But we’re making good progress. It’s a business that’s built one grower at a time."

Shoemaker said Dye played a crucial role in the development of AgHorizons.

"AgHorizons was not a thriving business when Dan started there," Shoemaker said. "With his intelligence and integrity, he brought a radically different business model. He sold the model to management, and most important, he delivered. He truly showed great leadership."

Asked for his first blush reactions to his new industry, flour milling, Dye said he has been struck and impressed by the energy and enthusiasm of his new colleagues as well as by the fundamental change of moving from the front end of the food chain to "way further down the line."

"When I think about Cargill’s mission of nourishing people, being in the flour business, a major food ingredient, is very exciting," he said.

Having attended this year’s annual meeting of the North American Millers’ Association, Dye also had first thoughts about the industry’s trade association.

"It’s a good group of folks," he said. "It’s an important industry… a great industry to be in. The association is pursuing solid strategies."

In the end, the objectives Dye doggedly pursued at AgHorizons may not be so different from his objectives for Horizon Milling.

"We have many customers at Horizon Milling, though not as many as at AgHorizons," he said. "But we will need to find new and different ways to grow their business and further build their trust in Horizon Milling."

Dye said his move along the chain from commodity toward food products mirrors a trend that continues broadly within Cargill.

"We continue to trade and process, but also have a strong focus on partnering with customers to help them build their businesses through innovations that satisfy unmet needs, both for the customer and the end consumer," he said. "We see a real opportunity for growth."

SHOEMAKER REFLECTS ON CAREER

Shoemaker offered high praise to his peers as he reflected on his career, flour milling and the outlook for the U.S. flour milling industry.

Noting that milling for several years has enjoyed both stability and a modicum of prosperity, Shoemaker credited this, in large part, to what he described as an impressive roster of industry leaders capable of running their companies with both a short- and a longterm perspective.

"There are veterans at many of the smaller and mid-sized companies," he said. "And at the larger companies there are newer leaders like Dan Dye, Paul Maass (ConAgra) and Mark Kolkhorst (ADM). We are enjoying a period in which the milling industry has leaders and not managers. That’s a blessing around the horn in the industry, and that has not always been the case."

Shoemaker began his career as a staff accountant at Tabor Milling Co. in 1974. Acknowledging that accounting is not the typical starting point for leadership in milling, he said that the training and discipline left him well prepared to manage when the opportunity arose.

"There are so many numbers flying around a milling business that a background in accounting offers great opportunity to understand what is going on," Shoemaker said. "With my background in finance, I started my career with a strong sense of fiscal responsibility, which was crucial."

Shoemaker’s elevation from staff accountant of Tabor to chief executive officer of a much larger milling company, indeed the industry’s largest, represents an impressive achievement. Still, the size of Horizon Milling was not in and of itself a particular source of pride as Shoemaker reflected on his career.

"Scale is easy," he said. "If you have good people and good processes, you can do many amazing things."

Looking back over his career, Shoemaker said the 2001 creation of Horizon Milling as a partnership between Cargill and CHS Inc. stood out as particularly important.

Looking at the negotiations leading to the partnership, he credited the work at CHS at the time of Mark Palmquist, now executive vice-president and chief operating officer of Ag Business; and John Johnson, president and chief executive officer, and the Cargill work of John E. Geisler, corporate vicepresident, and David Reisbeck, vicechairman.

Shoemaker, who had been a top Cargill Milling executive since 1996, was named president of Horizon Milling in 2002.

"I’m very proud of what has happened with Horizon Milling," Shoemaker said. "Many joint ventures do not work out, but this one appears sustainable. It’s never easy when you need to negotiate, and the work leading up to the establishment of Horizon Milling was difficult. But after the Atkins diet difficulties, Horizon Milling has very much achieved the vision for the combined company."

Asked to explain the marriage of such seemingly different businesses — one a huge privately held company and the second a major farmer-owned cooperative — Shoemaker emphasized what he described as the "similar values set" of the two companies.

"Each of us brought a different strength to this venture," he said. "We were operationally strong. They were great at origination and building new mills."

In addition to his work on Horizon Milling, Shoemaker said he takes "inward" pride at "all the great things flour milling executives at Cargill have gone on to do over the years within Cargill or the industry."

"At senior management meetings, I never miss an opportunity to point out the large number of Cargill leaders who have spent time in milling," he said.

Shoemaker was the fourth chairman of the North American Millers’ Association, serving from 2004-06. Several years later, Shoemaker spoke highly of NAMA and the role it plays.

"The association is a great value and a great partner," he said. "We collaborate as an industry well on issues of common interest, and then we can go out and compete aggressively against each other.

"NAMA has a difficult job coming up. There are a lot of rules affecting the industry, and NAMA represents us in finding the best path forward to achieve everyone’s goals and ensuring we can provide flour to customers cost-effectively so consumers get the best value."

During his tenure as chairman, Shoemaker took what he called "the bold step of declaring that the downward trend in flour consumption is over."

He made the statement in November 2005, with per capita flour consumption at 134 pounds, in what turned out to be the bottom following an eight-year decline from the peak of 147 pounds in 1997.

Four years later, Shoemaker credited the Grain Foods Foundation as "having a lot to do with the turnaround" and said he remains optimistic about the future.

"I think the turnaround is sustainable so long as our industry is able to answer its critics," he said. "With the Grain Foods Foundation and its scientific advisory board, we have the ability and the confidence to stand up and be bold again. They allow us to answer our critics with sound science."

Shoemaker bemoaned what has been a downturn in spending by certain companies in support of the foundation, calling it "short sighted."

"We’re in an economic downturn, and I find that many companies cut what they need the most when times get tough, whether that’s research and development or investments like the Grain Foods Foundation," he said.

Cargill has been affected by the recession, Shoemaker said, prompting an intensified look at costs. This scrutiny has extended to Horizon Milling, where the company has taken a number of steps to maximize cost efficiencies.

In addition to experiences that fill him with pride, Shoemaker said his career has had its share of disappointments.

"Things don’t always go the way you want in life," he said. "My worst experience, though, was the year the milling business lost money. That had never happened in the history of Cargill Flour Milling. It was right after we established Horizon Milling, and I felt as though we had let down our partner."

Shoemaker didn’t take much solace when it was noted that the period in question, earlier in the decade, was a difficult one for the entire industry.

"It was a real psychological blow for the milling team," he said.

Another disappointment of recent years for milling has been the depressed level of export flour sales.

"I feel bad about that in different ways," he said. "It isn’t just a matter of the better run time that comes from exports. There are a lot of starving people out there who could benefit from our products being shipped to them. That's wheat flour and corn-soy blends. We make good stuff for them."

Asked whether the industry may be better off without the demand swings associated with export business, Shoemaker said the industry is fully capable of dealing with those swings.

"Domestic volume has grown to domestic capacity," he said. "We’ve grown into our clothes, and I don’t think exports would have changed that. It took a lot of time, beginning in the early 1970s when per capita flour consumption finally turned upward after decades of decline."

Having benefited from guidance of many valued mentors over the course of his career, Shoemaker suggested basic advice for younger milling executives should not be complex.

"We make great product, and we need to be proud of what we do," he said. "Flour milling isn’t rocket science. It is a narrow-margin business, so you need to be mindful of costs and embrace opportunities to innovate that benefit customers in a cost-efficient manner. In the milling industry, we make pennies and bleed dollars."

Josh Sosland is editor of World Grain’s sister publication, Milling & Baking News. He may be contacted at jsosland@sosland.com.

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