A well-kept secret
ELDORA In the words of Dave Hoyt, chemical division manager of United Suppliers Inc., his company “is the best kept secret” in the ag cooperative industry.
According to an Oct. 23 report by the U.S. Department of Agriculture, the Eldora-based ag supply co-op moved up to the No. 8 slot among all agriculture cooperatives in 2012, up two slots from 2011. The list is based on overall sales.
Longtime US employees – Hoyt, 25 years; Karen Miller, 34 years; and John Butler, 35 years – said the company’s secret to success is its co-op model and its dividend payment system.
“You have to understand,” Hoyt said, “most cooperatives sell to customers. Our mission is sell to, and better serve, our owners.”
US, which celebrated its 50th year in 2012, has 1,000 owners who use US as its go-to source for crop protection and crop management products across the U.S. and parts of Canada.
The company has 34 distribution sites all supplied from the Eldora nerve center, Hoyt said.
In fact, he added, US has an estimated 600,000 square feet in warehouse space, stockpiling products for when they are needed most – from April through August, the primary growing season.
After selling its feed business to Alltech three years ago, US is now divided into two separate business units crop protection, mainly for commodity crops; and crop nutrients, which has a more diverse sales base.
The second part of the success formula, said Karen Miller, senior executive administrative assistant, is the dividend system.
A sliding dividend repayment plan, based on annual purchases by primarily large retailers, their equity in the company is limited to $250,000 in the crop protection and the crop nutrient business units.
As their equity grows, so does the percentage of their dividend returned until they reach the maximum and then all dividends are returned 100 percent.
“That’s to keep the money flowing in their corporations,” Miller said, “and not accumulating in United Suppliers.”
Blessing in disguise
Hoyt said about a decade ago, US was looking at a fundamental change in the cooperative environment that it initially viewed as a threat.
He declined to name the entities, but referred to them as “nationals,” who were buying up as many independent ag nutrient and crop protection retailers as they could, locking in a bigger share of the market.
“That was our market place,” Hoyt said. “But we managed to put our heads down, went forward to assure that local-owned ag retailers could be kept competitive against the nationals.”
This was done by building its customer-owner base and using that buying power to purchase crop inputs at lower costs.
“We work to make sure they stay in business,” Hoyt said, “and they can compete against the nationals’ huge buying base. It must be working.”
John Butler, US’ bulk terminal gas manager in Eldora, said the growth has been rapid in the past five years.
“And as you look over the list,” Hoyt said, “some of the other top 10 are our owners.”
Hoyt said when the cost of crop inputs rose to double and triple from 2008 to 2010, many companies learned they couldn’t afford to stockpile their products when the prices started falling again in 2011.
That’s where a supplier like US can step in, he said, keeping huge quantities of inputs in storage and truck them around the country as needed.
US purchases products for both business units, and it also manufactures some products at the Eldora plant.
The home base warehouse measures 130,000 square feet, storing 3,000 different products, he said.
“Whether they are a large retailer or small,” Hoyt said, “they’re all buying on a larger scale” to compete with the nationals.
Miller said US also fills the role of an information clearinghouse for its owner-customers with a number of services including safe handling of hazardous materials for employees, controlling losses and financial management tools.
Hoyt added that US spends the energy to find the products owner-customers need at the best price, leaving the retailer with more time to service customers.
“Any local-controlled co-op or ag retailer,” Hoyt said, “is a potential customer and a potential owner. And when they reach that (owner) stage, we’re all in for their business.”
Miller said that since US has no long-term indebtedness, “it allows US to take advantage of opportunities in the market.”
Employee turn over
Miller said she thinks the company has been fortunate to be led by just three presidents in its 50-year history.
In addition, upper management has an average of 15 years left in their careers, which gives a sense of stability throughout the company.
“We don’t have a high turnover of people,” she said. “We’ve hired 150 in the past five years, and most of that is due to growth.”
Another 150 have been with US for at least 10 years, she said.
“Many people consider this their last place of employment,” Hoyt said.
Butler agreed. He’s been in one ag workplace or another for 42 years.
“I feel safe in the ag industry,” he said. “I’ve never been laid off or fired.”
Hoyt said the key is in knowing the kind of employee that will fit the work culture of United Suppliers.
“They are hired for a specific job,” he said, “and we give them a chance to grow.
“But we tell everyone there are only two jobs here you’re either in sales or sales support.”
Butler said there is no micro-managing. Employees are challenged to become part of a high-performance team.
“We hold them responsible for their jobs,” Butler said, “and we empower them and support them.
“All employees are challenged and that’s the way they want it. There are new opportunities. They want to come to work and we let them contribute.”
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