As the chief executive officer of The Scoular Co. since August 2016, the mandate of Paul T. Maass has been straightforward – institute change and generate growth. In many respects, this directive strongly resembles that of new top executives brought on at innumerable food and agribusiness companies over the past few years.

At 126-year-old Scoular, though, there is a catch. While most of the industries’ new leaders are expected to remedy chronically anemic performance, Scoular’s track record is different. To be sure, Scoular has experienced stumbles in recent years, but its shareholder returns over the last 23 years have approached 15%.

Paul T. Maass, CEO of The Scoular Co.

With a bolstered executive lineup featuring several recruited over the past year from outside the company, Maass is confident Scoular is positioned to sustain the company’s track record of growth and is equipped to pursue moves into promising new areas of business.

Maass has initiated a range of changes aimed at lifting the company’s core business while also pursuing bolder initiatives in new areas while maintaining Scoular’s commitment to integrity. For example, the company in April announced plans to build a plant in Seward, Nebraska, to produce freeze-dried protein products for the pet food sector.

In a series of interviews with Milling & Baking News, sister publication of Pet Food Processing, over the past year, Maass discussed Scoular’s plans for change and continued growth.

Privately-owned Scoular is the nation’s 10th largest grain company, as measured by grain-storage capacity. According to the 2019 Grain & Milling Annual published by Sosland Publishing Company, Scoular operates 78 grain storage facilities with 131 million bushels of storage capacity. The capacity is centered in the southwestern US, and nearly all is situated west of the Mississippi river. The company’s services include grain storage and handling, risk management and transportation and logistics services. In addition to grains, the company’s products include ingredients for the food, pet food and livestock feed sectors.

Notwithstanding its many successes, Scoular has endured numerous challenges, including being victimized in a $17 million wire fraud case in 2014 and costly missteps in the durum market. These episodes and the marked impact they had on Scoular’s financials prompted the decision for the company to recruit new leadership. Maass is the first externally-hired CEO since the company was acquired by the Faith family in the 1960s.

 

Seeking to serve pet food makers

The Seward plant will be built at a cost of $50 million and is expected to allow Scoular to serve the pet food industry with freeze-dried meat to be used as a pet food treat or ingredient. Pet food companies have shown considerable interest.

“It’s a nice fit strategically,” Maass said.

Scoular broke ground at its new pet food ingredient manufacturing facility in August 2019.

While bringing Scoular into manufacturing, he said Scoular already had been an ingredient supplier to the pet food market for many years. Its market involvement gave Scoular clear sight lines into inadequate production capacity for freeze-dried meat products.

“Our customers were asking for solutions,” Maass said. “The traditional suppliers focused on freeze-dried vegetables. The focus of our investment here is on the protein side. That’s what was missing in the market. That’s what our customers are asking for, driven by the consumer. The more we studied it, the more we asked, ‘Why not us?’ We decided to take a plunge and make it happen.

“It’s an example of investing in an adjacent category. It fits in for our team that has been supplying pet food ingredients for many years. And it expands on some capabilities we haven’t had in the past on the manufacturing side.”

Also in recent months, the company has built out its executive leadership team by recruiting executives in development, marketing, compliance, plant safety, business management and risk management.

Many of the changes were precipitated by the retirement of longtime Scoular executives. In addition to attracting new talent, the changes have allowed Scoular to become more externally connected, Maass said.

“Bringing different experiences and fresh perspectives to the company will help us,” he said.

He also voiced a commitment to invest in professional development and other programs that will allow Scoular to develop talent from within.

 

"We have to be nimble, agile"

Given the company’s history of success, Maass said there can be a natural tendency to follow strategies from the past, particularly within parts of the business doing well.

“For me, the objective is to embrace that history of success and acknowledge it and at the same time be super aggressive in our effort to be sure people understand that the world is changing so fast,” Maass said. “We have to be nimble, agile, aggressive in certain spots so that we’re able to reach our full potential. We’re taking the right steps to be successful. And there is external outreach – I push the team harder to make sure we are externally connected.”

Standing out among recent recruits was the addition of Bill J. Hahn as senior vice-president of business development. In this role, Hahn is succeeding John M. Heck, a longtime Scoular executive, who is retiring this year.

Hahn most recently was senior vice-president of mergers and acquisitions at Conagra Brands, Inc., and he was described by Maass as “super instrumental” in negotiations leading to the creation of Ardent Mills LLC. A merger of the milling businesses of Conagra, Cargill and CHS, Inc., Ardent was established in 2014 while Maass was still an executive at Conagra.

“We’ve done other deals together, too, and he’s just a super talented person,” Maass said. “We’ve got a great background together and bringing that into the company will really help us on where we deploy capital. He’s a really exciting addition to our team.”

Also new in the past two years to the Scoular team are:

  • Bryan Wurscher, vice-president, division manager and general manager of the company’s special crops business; (formerly vice president Cargill cocoa business),
  • Amy Patterson, director, freeze-dried pet ingredients (formerly vice president Spicetec Flavors & Seasonings),
  • Megan Belcher, senior vice president, general counsel and corporate secretary (formerly vice president and chief counsel of Conagra),
  • Andrew Kenny, chief financial officer (formerly vice-president and CFO of the global trade business of Archer Daniels Midland Co.),
  • Edward Prosser, vice president of commodity risk management (formerly chief trade and risk officer at Gavilon),
  • Jeff Schreiner, chief information officer (formerly chief information officer of Ardent Mills),
  • Amy S. Bailey, director of brand marketing and corporate communications (formerly senior director of brand, buzz and insights for Blue Cross Blue Shield of Nebraska), and
  • Derek Farmer, director of operational safety (formerly environmental health safety and security manager for Arconic).

 

Committed to core grain unit

Scoular’s largest business measured by assets and employees is its North American Grain and Oilseeds Division. Maass described numerous business niches the company has established through this division.

“While we’re not an exporter of record, we ship tremendous volumes of grain to the Texas Gulf and the Pacific Northwest,” Maass said, describing the division as a mature business. “So we’re selling to the guy loading the boat. That activity is pretty significant for us. More than on storage, ours is a merchandising focus. And we still have significant expertise in truck markets. And that’s a part of the business that some grain companies just don’t want to do. We have many customers who have to be serviced by a truck.”

Scoular’s 1-million-bushel elevator in Selkirk, Kansas.

Also over the last 20 years, Scoular has strengthened its domestic positioning, investing tens of millions of dollars to build a rail shuttle network on the Union Pacific and BNSF railways.

In combination with the company’s considerable network of grain facilities together with customer relationships at origin and destination, the company’s freight resources allow it to offer a host of transportation services.

Scoular’s core domestic business is as a supplier to grain processors, including flour milling companies, Maass said. The company is a leading grain originator, with particular strength in the hard winter states.

Customer relationships go deeper, though, he said.

“Origination muscle, trucking capabilities are a big part of it – that’s true,” he said. “But I also just would describe, culturally our high integrity is key, being really focused on making sure we’re not letting anybody down, while maintaining our commitment to compliance.

“We’re really curious about, ‘Hey what’s happening in your world?’ and ‘What do we need to be doing?’ being in this position to get them the right answer further out.”

 

Scoular’s pillars for growth

A decision to build a new freeze-dried protein pet food plant in Seward, near Lincoln, may be traced to a strategic planning process launched by Scoular not long after Maass was named chief executive officer in 2016. The process generated a strategic plan built on three pillars – responsible growth, investment back in the company and innovation for the future.

“My role is to really understand what has made us successful and promise our employees, our customers, our partners that what makes Scoular unique and special is sacred,” Maass said. “We will absolutely honor that and leverage that for our future success as well. And at the same time we will increase the appetite for change and recognize that we must change in order to not become a statistic. Only 12% of the S&P 500 companies from 1955 exist today. I wasn’t hired to coast and run the status quo.”

The planning process followed a listening tour conducted by Maass after he joined the company. Interviewing numerous Scoular executives, many of whom had decades of experience with the company, Maass identified a number of recurring themes. Team leaders expressed a distinct sense of satisfaction in the success of their discrete areas of work but some unease around the question of “Where is the company going?” In response, Maass sought to work with management to create a plan “that we all believe in and so people can connect to the vision of where we are headed as a company and the rationale behind it,” he said.

“It isn’t that it wasn’t happening before, but the approach really relied on bottom’s up action, so there were, perhaps, many different strategies at work in the company,” he said. “Now we have a framework for the company, a clear vision of where we are headed and why we believe it is the best path.”

Turning to the underlying strategic objectives, Maass offered his perspective on growth.

“We don’t want to grow for the sake of growth,” Maass said. “It’s about responsible growth, and our near-term focus is what I would describe as good fits.”

These investments have been in areas of core Scoular competencies, such as purchases of and investments in elevators. Recent examples include an acquisition in Julesburg, Colorado, and expansion of an elevator in Wellington, Kansas. Capital investments add speed, efficiency and other capabilities, such as the one the company added to its elevator in Salina, Kansas. Another elevator in Kansas will be transformed into a shuttle loader.

Scoular recently acquired the grain assets of Farmers Grain Co. (known locally as Kontny Grain) in Julesburg, Colorado.

A bit further afield is a recent investment the company made in a fish oil/fish meal partnership in Namibia, near the southern tip of Africa.

“We have really deep knowledge, really deep expertise, and we can make that work,” Maass said. “We’ve also made a capital investment in Dutch Harbor, Alaska, which also is a long way from here. Those things are a core for us. When I say, ‘invest responsibly,’ it means where we’re strong, where we have a right to win and just making it happen.”

Similarly, the pet food business has been evolving with consumers steadily raising their expectations of what ingredients are being fed to their pets. This shift created the opportunity to build the Seward plant, Maass said.

“There are players in the freeze-dried market today, but they’re smaller players,” he said. “The growth caught the market off guard. Capacity hasn’t kept up. For The Scoular Co., it has created a nice strategic path forward.

“I like the fact that this gets us into true manufacturing, end to end. Developing that competency and having that competency, when we think long term about investment into adjacencies, we will gain confidence and have more optionality to invest in other areas of manufacturing. It’s not a colossal capital investment but an important investment in the marketplace. It will give us experience we don’t have today.”

The second Scoular pillar, investing back into the business, spans multiple areas of emphasis, including investing in the company’s employees and its systems.

“There’s a huge opportunity for our organization to feel better about their own professional development and the impact that they are making and connecting with that,” Maass said. “But that only happens if we’re intentional about the investments back in leadership development, and that’s the employee piece. With customers, we have a long history of partnerships, whether they’re formal partnerships where we’ve actually invested money together to relationship partnerships and pushing ourselves to be really intentional about that.

“It also means understanding what’s going on in our customers’ world.”

Maass said Scoular’s embrace of technology will extend beyond updating systems and products (like apps). He described a sweet spot of new product lines that extend beyond the company’s current activities but still represent a “natural fit.”

 

For new career chapter, Maass returns to his roots

Paul T. Maass has been a prominent figure in the grain-based foods industry for 30 years, and only a short physical distance separates ConAgra Foods, Inc. (now Conagra Brands), where Maass spent most of his career, and The Scoular Co. in downtown Omaha, Nebraska. But the career path Maass has traversed during his professional life has encompassed a wide range of responsibilities, moving him steadily in the direction of the processed food industry. From his start as a ConAgra millfeed merchandiser in 1988 after graduating from Iowa State University, Maass rose to lead the company’s feed ingredient unit, flour milling division, its commercial products business and was on the short list to succeed Gary Rodkin as chief executive officer. He left in 2015 when the CEO position did not materialize and took time to consider his next steps. Discussions with Scoular began in the spring of 2016.

“Running Scoular was not where my head was to begin with when I left ConAgra saying I was going to run a company,” Maass said. “I was not sure what company that would be. It was clear that I wasn’t going to run ConAgra so I said, ‘I’m going to step off and figure it out.’ They went external, and I was an internal candidate. There was zero negative emotion; ConAgra was so awesome to me through my whole career. It was great. I probably assumed I would end up more in the food space instead of back to agriculture, but as my process unfolded, it was a case of self-discovery – that I’m really passionate about agriculture. I realized how much I missed a lot of the dynamics of this space. If you think about the baking industry, the flour milling industry, there’s just a lot of really enjoyable people that I can relate to very well, with my background being raised on a farm. As discussions with Scoular got serious, the more we talked, the more positive energy developed. I knew Scoular from my trading past, the reputation, always great people and just a real solid, honest company with a customer focus.”

Maass specifically credited David Faith, the chairman of Scoular and part of the family that acquired the business in 1967.

“He deeply believes in sharing the success of the company with those who create it,” he said, noting the company is primarily employee owned.

“You have employee shareholders who are all aligned around the idea, ‘We want to create shareholder value,’” Maass said. “‘We want to do the right things. We want to grow the company the right way, thoughtfully. It’s about not doing anything that would harm shareholder value or the company.”

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