Photo by Kris Kathmann

Tom Rosen, 51, stands tall in a tasseled cornfield. He's a great big mountain of a man, 6'5", 250-plus, who towers over a crowded room both physically and professionally. Success didn't stunt his growth. The family business he guides, Rosen's Diversified, Inc. (RDI), grossed $550 million in 1998, which makes it Minnesota's sixteenth-largest privately held business. Of businesses headquartered in south-central Minnesota only AMPI ($1.1 billion) and Taylor Corp. ($950 million) are larger.

Years ago, he took root in the rich, black soil of Fairmont, Minnesota, where his father and grandfather had earned a living before him, and he has since grown into his own man. His heritage stays close to his heart: just a three minute drive south of RDI and Tom can meander across the grassy barn lot where cattle and tractors still mark the farm his grandfather once owned.

RDI's headquarters building reflects the nature of this big man and his family's business. From the outside it resembles more a Dairy Queen than the heart muscle of a 1,500-employee ag-based corporation. A black-lettered Rosen's sign has been stamped onto the building's clean white exterior. Besides the sign, nothing differentiates this building from others on Fairmont's west side. Even Tom Rosen's dark blue Buick blends in.

Inside the building, a cramped waiting room is at the vortex of what feels like a double-wide mobile home. To the right and down the hall, his office ­ and every other office, for that matter ­ can't be much larger than 10x12. Except for his mountain-like size, nothing about him or his family's business stands out. Only a number, $550 million, differentiates.

Besides Fairmont's Tom Rosen, Connect Business Magazine interviewed Peter Jones of privately owned Crysteel Manufacturing in Lake Crystal (p. 14). Both Rosen and Jones share the joys and headaches of guiding a large, privately held family business.

CONNECT: Tom, your family business brings in $550 million a year, yet most people outside Fairmont haven't heard of you. Does it surprise you when you travel to Mankato, for instance, and people don't know who you are?

ROSEN: No, it doesn't. We've tried to be unassuming and live our lives as quietly as possible.

CONNECT: How did Rosen's Diversified begin?

ROSEN: It started in 1946 with my father and uncle, who were both just out of military service. They had two things going against them: They didn't have any education or money. But they did have a strong work ethic. They started the business by buying livestock out in the country and hauling it to St. Paul, Omaha, Sioux City or Sioux Falls. They traded in livestock for a number of years and did very well at it.

In the late '50s, my dad, Elmer, began selling feed, fertilizer and chemicals to farmers. Since my father and uncle had a great number of trucks on the road anyway, due to hauling livestock, they began backhauling chemicals. They entered the ag chemical business at the right time and grew up along with it. Then my dad, who had been selling primarily to farmers, began selling to dealers as well ­ like elevators and fertilizer plants. Then they began buying distributorships.

Since then we've increased the chemical business to where we have nine warehouses and a presence in fourteen states. The last few years we've developed our own product line, some of which is patented. One patented product has been huge for us, Array, which is used with Roundup Ready soybeans. Some chemicals we used to distribute for Monsanto and DuPont have come off patent, so we're selling them as generics. That has been good for business.

Even though we've been in the chemical business a long time, and had good days and bad days, the course we've plotted, with our own private label products and generics, is a good course. I think our future looks very good even though the whole ag economy is down, and many of the basic companies in the industry are struggling.

We made enough profit off the chemical business in the '60s to take the business to the next step. In 1974, my uncle was involved in selling livestock to a small packing house in Long Prairie that went broke. So he talked to the manager, bought the plant out of bankruptcy and began developing the meat packing business.

CONNECT: What does Rosen's Diversified Inc. own?

ROSEN: We're in the meat packing business in Long Prairie and South St. Paul, and in Yankton, South Dakota. We have a processing facility in Omaha, where we process liver, cut steaks, ground hamburger, and then distribute quite a few food lines for retail purchase out of there. We have the Cimpl Dakota Brand of meats. We operate a barge terminal in Winona, where we handle fertilizer and salt. We have a regulatory company in Lawrence, Kansas, which does regulatory compliance, insurance audits and loss control for insurance companies. It operates all over the United States. In the chemical business we have nearly thirty salesmen in fourteen states. Overall, we have about 1,500 employees.

CONNECT: You used to own Kandiyohi Bottled Water. Why did you sell it?

ROSEN: At one time I thought bottled water was going to be the beverage of the future, and my guess turned out to be right. Bottled water and sparkling water was selling well, but we had taken it about as far as we could. We sold it for a fair price, and it fit our buyer's business a lot better. He was a Coke bottler from Sioux City, and a friend of mine at Morningside College. He had really wanted into the business and was the kind of guy who could take it to the next step. And he has. Since then he has purchased other bottled water brands as well.

CONNECT: How is genetically engineered seed affecting your chemical business?

ROSEN: Oh, tremendously. A lot of the chemical business we had is being lost to genetically engineered seed that can take care of corn borers and such. It has hurt our business. The dollars farmers used to spend on chemicals are being spent on seed today. It has hurt a lot of the big chemical companies as well. However, we have a product, Array, that is used along with the Roundup Ready soybean, and that product has helped us recoup some of the losses.

CONNECT: According to Corporate Report magazine, your sales have been flat the past two years at about $550 million. Is the shift away from chemicals the main reason why, or are there other reasons?

ROSEN: The chemical business is off. The meat packing business went through some really difficult times until recently. We're involved in commodity-type businesses, and they have their ups and downs. Out of all our businesses ­ and we have many ­ some are up, some are down, and that's the cause for flat sales. If we're going to grow sales though, we'll probably have to make more acquisitions. We can grow some of our current businesses somewhat, but a huge change in our sales numbers will require acquisitions.

CONNECT: How do you answer people who say herbicides and fertilizers are dangerous to the environment?

ROSEN: The question with herbicides and fertilizers was answered about 1900. Without them, we'd be growing about half as much food as we grow today, which means we could feed about half as many people.

CONNECT: I've read that the nationwide kill at slaughterhouses is increasing while the number of slaughterhouses is decreasing.

ROSEN: That's true. There has been way too much capacity in the hog and cattle industry. Up until the last three years, it has been a pretty tough go in the meat packing industry. The industry has returned to profitability by eliminating some facilities and by consolidating capacity. We'll probably see more of that.

CONNECT: Will it ever come to a point where a packer will choose cattle based solely on genetics?

ROSEN: Yes. It's being done with the hog industry now. Eventually that scenario will come to the cattle industry. It would have come sooner, but with cattle there are more fingers in the pie. You have the rancher, the feeder and the slaughterhouse. In the hog industry it's just the producer and slaughterhouse ­ a two-step process. In the cattle industry it's a three-step process. It will eventually happen in the cattle industry, and it should happen. Currently, there is a lot more inconsistency in cattle than there is in hogs.

CONNECT: Mad Cow Disease hurt the British beef industry. What's your take on what happened?

ROSEN: From what I understand ­ and I talked with a gentleman from Wales just a few weeks ago ­ the industry is just as confused now about what Mad Cow Disease is, what causes it, and did it really spread to humans, as when it first came to light. At one time they said they had the answer, but they don't. They thought it came from the rendering of sheep, mainly the brain and spinal cord, and from there it transferred to the cow. They still think that's where it came from, but they aren't entirely sure.

The British don't have as high a temperature in their rendering plants as we do in America, so they probably weren't killing the disease. By government regulations, they render at a lower temperature than we do. I also believe we don't have it here because we don't, relatively speaking, have many sheep in the U.S.. North America has had only two confirmed cases of Mad Cow Disease and in both cases it involved imported cattle. Now we learn that some British farmers were pouring vodka down their cow's throats in order to get them drunk. There isn't a way to test for Mad Cow Disease. It's done by sight.

Scientists are even beginning to question the link between the cow and humans. More research needs to be done.

CONNECT: Why not go public? What are the advantages of staying private?

ROSEN: Commodity agricultural businesses, like we have, never trade well in the stock market. They don't trade with huge multiples like 50:1, which is where many high-tech issues trade. IBP (Iowa Beef Processors) has very consistent earnings, and is very strong, yet trades at only 8:1.

Secondly, running a publicly traded company would be very difficult. I sure wouldn't like doing it. A public company is run from quarter-to-quarter. A private company can do more truly long-term planning than a public company. I don't care what these publicly traded companies say, they have to plan from quarter-to-quarter, or year-to-year at most.

On the other hand, a public company does have access to more money.

CONNECT: Any plans to run for political office? Your wife is very active in Martin County politics.

ROSEN: No. My wife will run, probably, but I won't. My wife enjoys it.

CONNECT: If you could break down your day, what tasks take up the most time?

ROSEN: Talking on the telephone. It consumes anywhere from a third of my day to three-fourths of the day. But then I travel quite a bit, so the calls tend to pile up because I have to play catchup.

CONNECT: How many hours a week do you work?

ROSEN: I really don't know because I can't define what is work and what isn't. Is it work to be at a function and golf with employees or go out to dinner with a business associate? If you add in social functions I'm putting in a minimum of 50 hours a week, and some weeks 60 or 70. Many days I work from seven to seven.

CONNECT: What do you read?

ROSEN: I read a lot now, but when I was in school I wouldn't pick up a book. One of my hobbies is collecting books and reading them. I read nonfiction and history.

CONNECT: What gives you the most satisfaction?

ROSEN: My biggest satisfaction in life isn't the business, but my family and kids. I've enjoyed them as much as anything. I was married at 35, and not only did I think I'd never be married, but I never thought I'd have three children. I have enjoyed them more than I thought I would. Whatever happens during the day, I can go home and the kids are always glad to see me. After I've been gone for a week, the little one, 8, follows me around everywhere.

CONNECT: How is the ownership of the company split?

ROSEN: It's split up fairly evenly between six family members. Then there's a block of ESOP (employee stock ownership plan) shares that are owned by the employees, of course.

CONNECT: What specific process do you follow when acquiring a company?

ROSEN: The bigger the company, the more we put into it. We've been involved with investment bankers for quite a few years. They bring us offers and help us find opportunities. Basically, we make an acquisition, and then build up reserves to make another acquisition. As a public company, we could raise more money and make acquisitions even faster, but I wouldn't like that. In a family-owned business, moves are scrutinized enough, so I can't imagine what it would be like as a public company.

CONNECT: Why has your company been successful?

ROSEN: We hire the best people we can and then let them run their own show. Everybody says that, but with our company it's true. We're not micro-managers.

CONNECT: What's keeping you in Fairmont? You have only thirty-some employees in town. You could move anywhere.

ROSEN: Absolutely. But the company started in Fairmont, and my folks and friends are here. As I've gotten older and had children, I've become very happy with life here. I'm happy with the school system. The town is a decent size and aesthetically nice. But you have to understand, I could be happy anywhere. You could put me in Buzzard Breath, Wyoming, and I'd be happy. If you look to a town to bring you happiness, you're not going to be a very happy person.

CONNECT: How has the pork industry impacted Fairmont?

ROSEN: First of all, I have no vested interested in the pork industry. But what I do know is that Fairmont has done relatively well in comparison to other towns in rural southern Minnesota, and the driving force behind this city's economy the last twenty years has been the hog industry. It employs 900 in Martin County alone, and many more indirectly. The industry has some problem with odor, but overall it's very professionally run. People who want to run them out of town have to think through whether they can first find another industry to fill 900 empty job slots in Martin County. We're not going to bring a General Motors to Fairmont. We have to be realistic about finding companies that would relocate to Fairmont. Some towns in the U.S. have lost their livestock industry and it has been the death of them.

CONNECT: Anything else you'd like to add?

ROSEN: This company has been wonderful for me. I'm thankful I had the opportunity to attend college and very thankful and grateful for what I've had in life. It hasn't always been easy, or fun. When you get older you realize you're only around life for a short time, and you figure you have to give it your all. Some people, when they're 80, look back and say, I wish I could have done this or that in life.

When you're running a business, you're either going forward, or going backward. Even if you don't want to, you have to move forward and make the business better. Some people reach a plateau and just slide by, but that's not a possibility with me. I have a lot of enjoyment and satisfaction with the business.

TOM ROSEN BIOGRAPHY

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.; Winona River & Rail; Regulatory Consultants, Inc.; Long Prairie Packing; Skylark Meats.
 

©1999 Connect Business Magazine