CEO of $2.5 billion Fairmont corporation ranked No. 184 on Forbes 500 listing of privately owned businesses.
Photo by Jeff Silker
A Mankatoan, upon first learning of Rosen’s Diversified and its $2.5 billion beef processing and agriculture-related corporate empire, likely would begin thinking of Chief Executive Officer Tom Rosen as the “Glen Taylor of Fairmont.”
But a compelling case could be made to say the opposite: Taylor could be the Tom Rosen of Mankato. After all, the most current Forbes 500 listing (as of press time) of U.S. privately owned corporations has Rosen’s Diversified of Fairmont resting at No. 184. Printing behemoth Taylor Corporation of North Mankato holds down spot No. 286.
Rosen’s Diversified is the nation’s fifth largest beef processor, has hundreds of trucks hauling hamburger to fast food restaurant chains, exports to 38 countries, employs 1,800 in Green Bay alone, has agriculture-related warehouses servicing half a nation, has developed a pet products division, and operates an in-house marketing company. The corporation had humble beginnings in 1946 when Tom’s father Elmer and Uncle Lud started moving Fairmont livestock to St. Paul, Omaha, and Sioux City.
For the most part, Rosen seems to crave anonymity and Midwest simplicity. For example, far more southern Minnesotans know his wife, State Sen. Julie Rosen (R-Fairmont), than him. And his Fairmont headquarters hasn’t changed much the last ten years—it still has more a simple doctor’s office feel than that of a corporate command center mobilizing 4,500 U.S. troops. The complex has mobile home-width hallways spraying out to sardine-can offices enveloping exceedingly bright senior-level executives. Hurried employees donning headsets as from a fast food drive thru scurry to and fro. The corporate lobby with the required receptionist has a couple of office chairs, a smallish Culligan water cooler, nostalgic corporate photos, and dog-eared copies of Connect Business Magazine sprouting from a display table. This may be one of the larger rooms in a corporate headquarters employing 40.
For the interview, Rosen makes eye contact and firmly grasps a hand. He is transparent as fresh spring water. Nothing about his neighborly disposition or corporate headquarters would indicate his being anyone or anything other than just next-door Tom.
What does it feel like being Mr. Julie Rosen? Most people in southern Minnesota are far more aware of her, a state senator (from Fairmont), than they are of you.
That’s true. I’m proud of her accomplishments. She’s done a good job and takes her job very seriously. I’m willing to play second fiddle and that doesn’t bother me at all.
Have your very busy schedules placed strain on your marriage?
When not seeing each other for long periods of time, you have a tendency to go your own separate ways. For six months of the year, we see very little of each other. So it does put some strain on the marriage.
One of the most important things accomplished in recent years in the state of Minnesota has been the methamphetamine legislation Julie helped push through. Not many people realize the destruction done to people with methamphetamine in terms of their health, family, and finances. After the legislation, I understand usage is down 75 percent. In terms of (alleviating) suffering, misery, child neglect—how much was that legislation worth? It may not seem like a big deal, but it was really huge. It was one of the most important bills passed. The government does do good things and that was one.
Could you define your company in terms of size, employees, divisions, and output?
Ten years ago, we were doing about $500 million and now we’re about $2.5 billion with 4,500 employees.
So you’ve more than doubled the number of employees?
Yes. And we have acquired and sold companies. We’ve expanded in the meat industry. We grind about a million and a half pounds of hamburger daily. We bought two more packing plants in the last ten years. We have a new trucking operation and grown the chemical business. We’re now into dog and cat food. We entered that almost by demand because of the problems with dogs and cats dying eating pet food from China. People wanted American-made products. We also have dog chews and pig ears—the dog treat business, with a plant in Mitchell, South Dakota. We’re in the chemical business and have tripled the size of that from ten years ago. We have a new trucking business. And last year, we sold the fertilizer business to CHS, which included our barge business on the Mississippi River.
Who buys your hamburger?
It goes to major retailers and fast food restaurants.
Who owns Rosen’s Diversified?
I, along with my three children, my brother Richard, and two employees own the company. There is no one else. Obviously, we are a very closely held company and run it as an S Corp, which is very unusual.
Your revenues are $2.5 billion. Your company is the fifth largest beef processor in the nation. It’s one of the nation’s largest private corporations. You could have your headquarters anywhere, yet have chosen to stay in Fairmont, Why?
Our company is decentralized. The main meat activities go on in Green Bay. Our chemical division sales and marketing functions are in Kansas City. I grew up in Fairmont, my family is here, and my mother and relatives are here. I travel a lot, and probably don’t spend as much time in Fairmont as I used to, but it’s home. There are places, from a tax standpoint, where we could operate and (financially) do much better. But this is home. I plan on continuing to operate out of here.
You started your career with this company under your father and uncle as a sales representative. What’s most important in sales?
With many bigger accounts especially, you have to make sure you get involved with all the people, not only those at the top, but people throughout the organization. In other words, you can’t just sell one person. If you want to have a sale in the organization, you really have to sell through the whole organization. You treat the “lowliest” person on the organizational chart the same as you treat the top person. We try to do that now—sell through the organization. The guy on the loading dock has more power than you think. I learned that a long time ago. You have to go deep when selling into an organization.
Beef processing accounts for about two-thirds of your revenue. On the surface at least, it would appear that would make your company vulnerable to shifting consumer trends away from beef or to industry crises affecting it, such as recalls or Mad Cow disease. You had plans to diversify, and in the ‘90s you tried it with a bottled water company and a software company. But you sold them off.
Over the years, we’ve bought and sold companies, and started companies. We’re now in the process of starting a new company in which we extract serum which is sold into niche research markets. Our dog food company, Performance Pets, is another. We sold the fertilizer company, Winona River and Rail, to CHS. Over a period of time we buy and sell—that’s our M.O. One of our big acquisitions, three or four years ago, was when we purchased American Food Group of Green Bay. That was a major acquisition. It really changed the company.
The press releases I read called it a merger.
It was a merger/acquisition that turned out to be more of an acquisition. We put the two companies together and almost doubled the size of our company in terms of processed beef. We ground a lot of hamburger there. The organizations fit together well. They were grinding a lot more hamburger than we were and they had a trucking company, America’s Service Lines, which had 150 trucks.
You ended up being a co-CEO along with theirs. Is that still the case?
No, their CEO stepped down about six months ago. Many of the corporate functions and people in our meat business have moved to Green Bay. It’s one of those few deals you put together in which no one was fired. It just came together and really made the business a lot stronger.
Sometimes when you put companies together it’s good, and other times it’s a disaster. If not for that acquisition, we certainly would not have been as big today. It turned out to be a win/win and took us to the next level in terms of the beef industry.
For the deal, they initially talked with investment bankers out of Chicago. We put most of the deal together within 120 days and the rest within six months. Everybody lived happily ever after. The big winner was Green Bay, Wisconsin. Instead of losing employees, they picked up some. We have 1,800 employees there now and are one of the city’s top employers.
How has the chemical industry changed the last fifteen years?
Due to consolidation, the world is down to six major manufacturers. As distributors, we deal with the six: Monsanto, Dow, Dupont from America; and Syngenta, Bayer and BASF. After that six, there are a lot of generic chemicals manufactured all over the world in which the patents have expired. We’re dealing with companies from India, China, Israel, Italy—it’s truly an international, global business. Over the last fifteen years, the number of competitors due to mergers, and the number of customers we deal with, is only about one-third what it used to be.
Aren’t you fighting for a smaller and smaller pie?
One thing about the chemical business: the traits in the seed are doing much of what the chemicals used to do. The industry has totally turned upside down. There will always be an industry, though, and it will probably be smaller. The seed industry has definitely taken some of the chemical business away. Seed technology is amazing.
If you take away seed technology—and the chemical industry—the world would be producing only about 40 percent of what we’re producing now. There would be mass starvation. American agriculture is feeding the world, and through cotton we are clothing the world, and we are producing energy driving the world. Agriculture is into everything. And yet it seems to have a black mark even though the food system is probably safer than it’s ever been. Agriculture has done so much to keep the world going. Agriculture is southern Minnesota, and has grown as an energy source and a food source. It’s very misunderstood.
How much of your sales are for export?
We had a very good export market until six or seven years ago when sales dropped off because of the Mad Cow scare. That totally changed the export business and it never came back. Now there are a lot more export restrictions and much of it is politically motivated. We still export to Mexico, Egypt, Russia, and some to Southeast Asia. Every country has its own rules about beef coming in.
The federal government has raided some meat processors. How do you protect yourself from a (illegal immigrant) raid like that?
You have to make sure your human resource people are up to speed with all the regulations and they are diligent. We are especially proud of our enrollment in the “E-Verify” program sponsored through the U.S. Government. The program, run by the Department of Homeland Security, assists us in hiring only those persons authorized to work in the U.S. One thing: As the recession has been going on, we’re having more people apply, we’re seeing a better quality of applicant, and the ones hired are staying longer. Our work is hard, but it’s good money with health benefits. It’s pretty stable employment. Making sure our workforce is legal is one of our main focuses and we work very hard at it.
Your company, which is based on beef processing, has its headquarters in the middle of one of the largest hog producing counties in the nation, Martin County. What are some basic differences between beef and hog production, and why haven’t you entered the hog industry?
Our company started out buying hogs, but over the years, we entered the beef business and have stayed. The beef business isn’t quite as integrated and has different dynamics. Right now, I’m glad I’m not in the hog business. It’s an industry in which we’ve had our opportunities, people have talked to us about entering, and we know many of the key people; but we have chosen over the years to get out and not be involved. It’s a consolidated business that is so tightly held. I don’t think we’ll be getting into it anytime soon.
Your company has accomplished explosive growth the last ten years without going public. What do you attribute that to?
Our top management team has been together more than 20 years. We’ve always grown in a logical manner.
Logical, in what sense?
Well, I don’t think we’ve overpaid for any acquisitions. We try to be aggressive, yet conservative in some ways. We try to do it the right way. We surround ourselves with good people. Our company has a track record dating back to 1946. We’re also better at (growth and acquisitions) than we used to be. We (the top management team) started out together in our 20s and 30s with the company. We’ve learned many hard lessons about business and life, and have become savvier in terms of doing deals.
Hard lessons? Can you name a time when you really got burned?
We’ve made bad purchases. The software company didn’t work out. You hit some good ones; you miss some. No one ever bats 1,000 percent. As for the software business, we didn’t understand it—that was general ignorance on our part. We have taken our licks, but we’ve had more winners than losers.
What about younger employees moving into top management to get that valuable experience?
One problem we have is our management team is aging. We’re trying to hire and bring younger employees up through the ranks. But we’re not in the most desirous business. Most people don’t go to college to get into the beef processing or chemical industry. The recession has given us access to better people and we’re mentoring and bringing them along.
So they can gain the experience?
Our current management team was thrown into the industry years ago. We learned our job through trial and error. It was on-the-job training. Our young guys have been thrust into business situations and learned from them, too. Hopefully, they have become smarter because of it.
The primary reason you came into this business was because of your father and uncle. If not for them, what would you be doing right now?
I’d be in sales of some kind. I’m a salesman first. When you’re the CEO, you’re like the head cheerleader. You have to make sure when you’re CEO that people working for the company like and trust it. I employ these people and they have given their life to me. I have to take care of them the best I can. And so, I want them to believe I have their best interests in mind, will do the right thing for them, and will treat them well with respect.
When the company was smaller, I had more hands-on everyday responsibility. Now I’m more of a public figure. I go around and see people and talk to them and make sure they understand our company is a good one. We have more of an image now, and I have to do more public relations and public affairs work.
My job has evolved. My role has changed and I have changed. As I’m growing older, I’m stepping back. I don’t set the alarm clock anymore. I do more of the things I like doing. I’m involved as ever, but let other people do more. I just can’t do the things I did back then because of the size of the company—and I don’t want to. It’s time to move on and give more responsibility to other people. In many companies that fail you find people that have not let go of the reins.
That process of change is going through this company right now. I have three children. It doesn’t mean I have to leave. Now being here is actually fun and I get to do fun things. Business is fun. The main difference between now and ten years ago—for the fifteen years prior to ten years ago, we had one tough thing happen after another to us. Then about ten years ago, right after I did the cover story for Connect Business Magazine, things started changing around for the better. More things went right.
The company just functions better now, and I have better people taking care of the problems so little problems don’t become bigger problems. Now we have in-house counsels. We still have problems, but now we don’t let them get out of control. That’s one thing we have learned. Get to problems early and attack them before they become monster problems.
What is the Center of the American Experiment and why become involved?
It’s a conservative think tank. I’m also involved with the Minnesota Chamber and Minnesota Business Partnership. More and more, I’ve become involved in public affairs and public policy.
In my opinion, business hasn’t done a very good job of explaining its role (to the public) and how much public policy affects it. If you didn’t have business, you wouldn’t have your house or job or anything. I’m more active with these organizations because it’s a worthy cause. Business is the backbone of our country. It has created what we have and what we’ve achieved. I’m a business guy.
When most special interest groups get upset about something, they go out and march or protest. They are very vocal.
Business people don’t have the time to do that. In addition, on a statewide level, CEOs of companies come and go. Many aren’t Minnesotans. They haven’t been part of the landscape. They might be here for only five or six years. I was born and raised and grew up here. I have a lot more invested in this state. I think that’s part of the problem—for many of these top CEOs, being in Minnesota is only another stop on their career. They are punching a ticket. For them, perhaps it’s easier and a lot less messy to back away and not fight.
Business (in Minnesota) has a great story. I just don’t think we’ve done a very good job of explaining what we do and how we do it. There are thousands of public companies, for example, and yet you only hear about the bad apples. You don’t hear about the local guys who are in charge of the mentoring program or the leaders making their city or company better. You never hear about these guys—only the bad apples, like the Petters case. Many business leaders do nice things that never make print.
For years, I’ve been around the top people in business in this state and they are very, very concerned about their workers and want to make their community better. Somehow, that always gets lost. People focus more on the bad apples. One bad apple spoils the bunch. Business has a great story—we just have to tell it better.
Similar to Minnesota State naming its sports facility the Taylor Center, your alma mater named its facility the “Rosen-Verdoorn Sports Center.” Why?
Because I gave a bunch of money. (Laughter.) I went to a little school in Sioux City, Iowa—Morningside College, with an enrollment of about 1,500. It changed my life. It was the kind of school that had many people from smaller, rural towns. We were just average Joes, yet many people that went to school there have become very, very successful in life. We did things the right way. We got up and went to work. We had character. We didn’t cheat people. We worked hard.
The college has gone through a remake. It’s had its ups and downs and is now on an upswing. The Sports Center was one of the last pieces to really make it a first-class college. To whom much is given, much is expected.
I went to college because I wanted to have more opportunities. There had to be more to life. I saw how hard my dad and uncle worked six or seven days a week. I wasn’t afraid to work, but there was opportunity out there. I looked at college as an avenue to have choices.
The future of outstate Minnesota: What must cities like Fairmont do to survive?
It’s pretty simple. You’re probably not ever going to get the big companies to come here, but you have to create a business atmosphere to find local entrepreneurs. Somehow we have to get opportunities out here. We have to get people to return to raise their families. We have to get business to develop here.
The biggest problem with public schools is declining enrollment. My oldest son graduated with 180 students in his Fairmont High class and the youngest with 135.
The state legislature is pretty much metropolitan dominated. I think they forget about us. The thing is—many of the educated people in the Twin Cities were raised in Greater Minnesota. They made St. Paul and Minneapolis two of the great cities of America. We deserve not to be forgotten. We sent a pretty damn good bunch of people to the Twin Cities to make it what it is.
Anything else you want to say?
The years go fast. I’m glad I grew up in southern Minnesota. It’s been a great ride. As for business, the worst we can go back to is zero. When I started, the company was worth about zero. We were nearly bankrupt in the early 70s and again in the early 80s. We worked our way through it. I’m just thankful I’m here. There were many times it was nip and tuck close and I didn’t know if we were going to make it. We had three kids and were raising a family. My biggest goal was just making sure they were fed. But I was never afraid. I realize you only get one shot at life and it just goes by fast. You don’t want to have any regrets about not doing this or that. I don’t have any regrets—we hung in there.
Have you talked with Glen Taylor about how he did his transition to the next generation?
I haven’t, but I should do that sometime. I see him every once in a while. He’s a little further along in the transition process. He’s a little older and I married late. You have to be realistic too. If your kids are smart enough, ambitious enough, and they have enough character, hopefully they can take the business to the next level.
When you have a business like this, you have to begin passing it on to the next generation early on. The way the inheritance laws are written make it damn near impossible. You have to start this process 20 to 30 years beforehand in order to pass it on. We started more than 25 years ago. Hopefully, they can take it to the next level. The business has a lot of potential.
From fsis.usda.gov, the U.S. Department of Agriculture has categories for grading beef. Prime grade is produced from young, well-fed beef cattle, has abundant marbling, and is sold in hotels and restaurants. Choice grade is high quality too, but with less marbling. Select grade is very uniform in quality and usually leaner than Prime and Choice. Standard and Commercial grades are usually sold as store brand meat. Utility, Cutter, and Canner grades are not usually sold at retail and are used to make ground beef and processed products.
Rosen’s Diversified At-A-Glance
Rosen’s Diversified Inc. has five divisions and a number of well-known name brands.
Rosen’s Inc. provides crop protection products to 22 states from 11 distribution centers, carrying major brands and a line of proprietary products, including Array.
American Foods Group has five beef processing plants, two ground beef plants, and two case-ready processing plants in six states. It’s a leading manufacturer of kosher and halal beef for U.S. consumption and export.
Performance Pet Products produces human grade, U.S.-manufactured natural pet treats and premium canned pet food, the latter processed in a 100,000 sq. ft. facility in Mitchell, South Dakota.
Light Inc. offers marketing, public relations, and graphic design services.
Based in Green Bay, America’s Service Line’s fleet of 280 refrigerated trailers and 160 tractors hauls for a number of national companies, including Rosen’s Diversified.
Getting to know you: Tom Rosen
Current Occupation: CEO, Rosen’s Diversified, Inc.
Born: June 26, 1948.
Education: Fairmont High School, ‘66. Morningside College, ‘70.
Companies owned by the holding company, Rosen’s Diversified, Inc.: Rosen’s Inc.; American Foods Group; Light Inc.; Performance Pet Products; and America’s Service Line.