Generation to generation
Sept. 20, 2011
by Arvin Donley
As a fourth-generation member of one of the most prominent flour milling families in the United States, Donald L. Mennel has been around the milling industry virtually his entire life. But not all of it was spent in the comfort of an executive’s chair.
“When I turned 18, I worked in the mill, and they gave me the worst jobs there,” recalled Don Mennel, who has been president and chief executive officer (CEO) of The Mennel Milling Company for nearly 30 years. “I had to clean out the bad grain in bins, I had to weed around the bins — all of the grunt chores. I did a summer in packing and loading, carrying 100-pound bags.”
A few years later, he felt a different sort of weight on his shoulders as he took over as CEO of the company when his father, Donald M. Mennel, retired.
During a recent interview with World Grain at the Mennel headquarters in Fostoria, Ohio, U.S., Don Mennel said he still remembers his first “the-buck-stops-here” moment in managing the family flour milling business. It was in the early 1980s, shortly after he had taken over for his father.
“A problem arose in the company, and my dad was enrolled in law school. I called him and said, ‘I need your help; I need to sit down and discuss something with you.’ He said, ‘You’re going to have to do it on your own. I’m in the middle of exams and don’t have time to talk to you,’” remembered Don Mennel with a laugh as he recalled his father’s blunt words.
Now, nearly three decades later, Don Mennel is preparing to “pass the buck” to his son, Ford Mennel, who in July moved into the administrative office in Fostoria to become an understudy to his father with plans eventually to take over as president. Ford Mennel had been manager of the company’s mill in Roanoke, Virginia, U.S. Coincidentally, this was the same position Don Mennel held before moving back to Fostoria to work with his father before taking over as president and chief executive officer in 1983.
“My father has laid out a calculated transition plan that I have been aware of for at least five years, which should provide for a smooth transition not unlike the one from my grandfather to my father,” Ford Mennel said. “I also cherish the opportunity that I will have in the interim sharing an office and exchanging thoughts and ideas with my father on a daily basis. There is no better way to learn something than immersing oneself into the subject matter or role. Although I know it’s a double-edged sword because I have large shoes to fill, I also have an outstanding mentor to learn from. I will be spending the years ahead delving into the administrative end of the business including: human resources, finance, grain accounting and sales, which will certainly be a change of pace after spending the last six years in operations.”
Don Mennel said his son will likely take over as president “within the next five years.”
“Ford has a passion for the business,” he said. “He really loves it and is doing a great job. Hopefully I’ll be able to retire in the not too distant future and let him take over.”
When that day comes, it will mark the fifth generation of the family to lead the company, which operates five wheat flour mills with an overall daily milling capacity of 40,700 cwts. It ranks seventh in capacity in the U.S., according to Sosland Publishing’s 2011 Grain & Milling Annual.
Mennel Milling is in its 125th year in business — a remarkable accomplishment in an industry that has seen much consolidation in recent years. But the company has decided to mark the milestone without much fanfare.
“We’re doing it quietly,” Don Mennel said. “We’ve been around to all the locations to do quiet celebrations, giving small gifts to employees and saying thank you.” How it began
The company was founded in 1886 by a banking family, the Harters, from Mansfield, Ohio, U.S. and a Hungarian flour milling family, the Browns, from Canton, Ohio, U.S., and became known as Harter Milling Company. The families chose to build a flour mill in Fostoria because it was served by five major railroads and appeared to have large deposits of natural gas. An economic development package from the city allowed the mill to receive free natural gas in exchange for generating the power to run the city’s street lamps.
At the time of its construction, the Fostoria mill, with a daily capacity of 1,500 barrels, was the largest flour mill in the U.S. not located on water.
Shortly after the company was formed, Alphonse Mennel, an Alsatian émigré, was hired as the general superintendent. He became mill president in 1896 and soon thereafter faced a major crisis as the mill burned to the ground on Dec. 24, 1897 and had to be rebuilt.
In 1917, Alphonse and his sons, Louis and Mark, purchased control of the company and renamed it The Mennel Milling Company.
The offices of the company were in Toledo, Ohio, U.S. from 1893 through 1958, when Donald M. Mennel, son of Louis, became president and decided to move the offices to Fostoria.
Don Mennel describes his father’s ascension to the leadership role as a “turning point” in the company’s history. He took over after the sudden death of his older brother in an automobile accident and after a brief period in which Mennel Milling had been run by a non-family member.
“We were very fortunate that my dad was willing to take control, otherwise it could have gone in a totally different direction,” he said.
One of Donald M. Mennel’s most important decisions, which occurred shortly after he become president, was to exit the hard wheat milling business and to focus on producing soft wheat flour and specialty flours. The company returned to milling hard wheat in 1996, but the vast majority of its production today (about 75%) is made from soft wheat.
“Because of our size, we can’t compete with the big boys on price, so we really focus more on niche products and specialty flours and stay away from the generic cookie/cracker flour and generic bread flour,” Don Mennel said. “It’s been the model since my father took over and it’s served us very well.”
During Donald M. Mennel’s 25 years as president (1958 to 1983), the company also expanded its milling and grain elevator operations, acquiring mills and elevators throughout the Midwest. During this period, Mennel acquired flour mills in Dowagiac, Michigan; and Roanoke, Virginia.
The acquisition of the Dowagiac mill in 1973 brought Don Mennel back into the flour milling business after he spent two years as a high school English teacher and several more working for a motor home manufacturer, Travco, in Brown City, Michigan.
“Dad bought the Roanoke and Dowagiac facilities both in a period of about three months and didn’t have a management team to manage them, so he convinced me to come back to the company and manage the Dowagiac plant,” Don Mennel said. “I did that for four years, then I went to Roanoke for two years before coming back here as an understudy for my father and then becoming president.” Inheriting challenges
Seeing history repeat itself, with Ford Mennel coming from Roanoke to work under his father in Fostoria with plans to become president, is a source of pride for Don Mennel. But he also knows his son will face a very challenging business environment once he takes over.
During his time as company president and CEO, Don Mennel has seen the increased threat of vomitoxin in the soft wheat supply, wheat acres in the U.S. declining dramatically in favor of corn and soybeans, and the regulatory environment becoming so rigid that it practically suffocates the industry.
He calls wheat “a threatened crop” because of the disease issues that are especially prevalent in the soft wheat growing regions of the U.S. and the shrinking acreage that may only be remedied by commercialization of genetically modified wheat, which, in a best-case scenario, is probably 5 to 10 years from fruition.
In a way, the two threats to wheat are tied together. Wheat has lost acres to corn, which has become the crop of choice for farmers in recent years because of the high-yielding GM varieties that are available. Consequently, more farmers are planting rotations of corn and wheat, which exacerbates the vomitoxin problem, Don Mennel said.
“I think we’re going to be dealing with the vomitoxin issue for a long time because corn is king,” he said. “The no-till corn and new varieties of corn don’t break down as fast, and the rotting corn stalks in the fields become the incubator for the fungal diseases.”
Thus, corn, with its genetics making it an easier crop to manage, is becoming more and more a “no-brainer” for farmers, he said.
“Without GM wheat, it’s becoming a real challenge,” he said. “We have to clear that hurdle for GM wheat at some point in time. My fear is we’re only going to have one bite at that apple, because if we blow it, it’s going to be a long time before we can do it again. If we’re going to feed the populations of the world going forward, we’re going to have to have biotech wheat.”
Another issue that is becoming more challenging with each passing year is the regulatory environment that is forcing milling companies to use more financial and human resources to comply with rules and regulations that are increasing in complexity.
He noted that agencies like USDA and FDA often contradict each other, making it very difficult for companies to make the right rules interpretation.
“I think more so today than at any time in the past, the regulatory agencies are really almost out of control,” Don Mennel commented. “Problems today that you see are things like OSHA citing things out of the National Fire Protection Code, which is not a regulatory agency but a voluntary agency making suggestions, and all of a sudden OSHA’s interpreting them as rules.”
He said the company has two employees who deal with regulatory control on a full-time basis — covering issues such as food safety, personnel safety, plant safety and sanitation.
“Years ago we didn’t have that,” he said.
Not only has the government raised the bar when it comes to safety standards, but customers’ expectations are also higher in regards to product safety and sanitation.
“New laws addressing food safety force everybody to be more diligent in regards to sealing of trucks and making sure there is no tampering of product between our mills and our customers’ facilities,” Don Mennel said. “There’s a lot more demand in that area. You have got to dot all your i’s and cross your t’s and be very, very careful.”
Another part of the milling business that’s changed dramatically in recent years is the functioning of wheat markets. The past four years have been particularly challenging for purchasers who have seen history-making fluctuation in the price of wheat, even on a daily basis.
He said the biggest problem today is not so much with the volatility in the markets but that factors besides supply and demand are influencing the price.
“The markets aren’t performing like they really ought to, so the cash basis has to carry the load, and that’s where you can’t protect yourself,” he said.
Despite all these threats to the profit margin, Don Mennel said the company has never lost sight of how critical it is to stay ahead of the curve from a research and development standpoint.
“We reinvest almost all of our profits back into the company, because if you don’t stay innovative, catching up is really tough,” he said. “There haven’t been a lot of changes in what we do. We still grind wheat into flour, but at the end of the day there’s still a lot to that wheat kernel that we don’t know about.”
To gain a better understanding of the process and to work to improve the product it sends to customers, Mennel last year completed construction of a 60-cwt-per-day pilot mill at the Fostoria plant.
“It’s not going to produce a lot of flour, but it gives us a huge tool for the research and development department to study, train and teach,” he said. Timeless lessons
With his father now 93 years old, Don Mennel said he often reflects on the many words of wisdom his dad imparted to him over the years about the milling industry.
“The most important thing he taught me is that this is a penny business and you have to watch all of the pennies,” Don Mennel said. “My father taught me that the markets are bigger than all of us and you have to be an absolute hedger. Both he and I have an affinity for operations, so while our operations guys may get frustrated from time to time, we want to be involved in the mill and know what’s going on.”
These are lessons Don Mennel has also passed down to his sons, Ford and Drew, who works in the grain accounting department at Mennel, along with the importance of involvement, leadership and being a positive force in the industry. Like his father, Don Mennel served as chairman of Millers National Federation before the North American Millers’ Association (NAMA) was created. He also has been active on various committees for NAMA.
“We want what’s best for the industry, and we want the industry to survive,” he said. “We encourage our people to get involved in the industry with IAOM (International Association of Operative Millers), NAMA and on committees … that’s how they learn.”