The balance of trade

Posted on 8 Apr 2011 by The Manufacturer

In an age of globalisation, when multinational corporations span the globe, it is hard for large enterprises to hold on to a sense of scale and perspective - to remember that locality is important and that community matters. But however hard the challenge, some organisations are responding in exemplary style. Jane Gray finds out why Cargill is one of them.

Cargill at a glance

Established 1865
Sales revenues in last financial year $107.9bn
Employees 131,000 (3,000 in the UK)
Key markets Agriculture, food, industrial and financial

Established in 1865, now headquartered in Minnesota, USA, Cargill is a manufacturer and marketer of a diverse product portfolio ranging across food, agriculture, industrial and financial services markets, the latter area specialising in risk management.

While such a disparate set of customers with varying demand types must be daunting, the diversity is also the secret to Cargill’s strength as plant manager for Cargill’s Manchester-based facility, Paul Kingston explains: “We have a very diverse portfolio but it is also a very balanced portfolio.

The diversity of Cargill’s offerings has evolved over the last 146 years. We started off as a grain trading company and over the years that focus has grown incredibly and we still have designs for further significant growth.

“That strategic intent is founded on core values that have been with the business throughout its long heritage.

We have a strong ethical culture, a strong health and safety culture – meetings at all levels always begin with a discussion of relevant safety issues first and foremost – the balance of the business works because these concerns remain central in everything we do.

“It is in times of volatility, such as those we are experiencing right now, that our diversity really helps us. We have a very strong pedigree for risk management and raw material procurement, the Cargill risk management business unit was grown on internal capability, I think that really helps to differentiate us at this stage.” Cargill operates its four major divisions across 66 countries with the support of 131,000 employees. The company first came to Europe in 1953 and now operates in 33 countries including, of course, the UK, where it has 19 locations across the length and breadth of the country.

Just a few of these sites take in Liverpool, York, Wolverhampton, Hereford, Cobham and London. Of course, not all of these are active in the manufacturing steams of the business but Cargill does have manufacturing strength in the UK across its oilseed crushing and refining processes, its primary cocoa processing, industrial chocolate manufacture, speciality food ingredients manufacture and many more, not least of which is the starches and sweeteners business based in Manchester.


Centenary celebrations

“We are very proud to be celebrating the centenary year of glucose production from this location,” says Kingston, and to prove it Cargill will be staging numerous events throughout 2011 to give recognition to the contribution made by the Manchester glucose plant to the prosperity of the local community and, most importantly, the contribution of that community to the success of the plant.

Cargill will be publishing a book, commissioned from a local author, to commemorate this centenary year. The work will detail the sites heritage, from the creation of Trafford Park as one of the UK’s first industrial parks in 1896 to the establishment of the first glucose refining plant by Nicols & Neagle in 1911. The history lesson will then take readers through the mill of acquisitions and re-brandings that the glucose refinery has experienced right up until its incarnation as Cargill in 2002 and the exciting success it has seen since. The book will also include anecdotes and stories from retired, as well as current workers.

Planned events for the enjoyment of Cargill employees, past and present, and families too of course, include:

Family open day in May
Summer Fayre and Ball in June
Stakeholder Event in September
A number of sporting events throughout the year

With such a wide range of activity going on it would be easy for anyone at Cargill to feel lost – a small cog in a very large machine. However, as Kingston explains, consistency of values makes for a united front: “Starches and sweeteners Europe falls under a larger overall platform called food ingredient services. We make up a big chunk of Cargill’s portfolio but such organisational structures are only for internal convenience. To the outside world we are just Cargill. One customer faces no matter where in the business they may be getting services or ingredients from.

“The starches and sweeteners Europe business links up with those in North America, Asia and so on. Each business unit is grouped regionally but within the Europe group we operate as a network. Each plant supports the other so that, although the Manchester plant produces predominantly for a domestic market, the proportion of exports can change from week to week.” It’s all about finding the most logical location to supply a customer from in order to meet their needs, whether that includes the very niche products supplied by some of the network or more generic ones which are manufactured more widely.

Running concurrent with this ethos of company camaraderie however, it is obvious at the Manchester plant, which represents Cargill’s Sweeteners and Starches business unit in the UK, that there is a great deal of local pride on site. In part this can be attributed to the strong manufacturing heritage of the area.

The Cargill factory stands on a 41 acre footprint which has known starch processing operations for one hundred years – a fact that Cargill is celebrating throughout 2011 with a series of centenary events.

But this heritage alone would not bring about the workforce engagement and grass roots innovation which is so noticeable around the Manchester facility. These characteristics are the product of several years of hard work and investment on the part of Cargill since it took a decision in 2005 to close its Tilbury-based plant, consolidating the UK starch processing business in Manchester, and then in 2008 to radically change the Manchester plant’ starch modification process by swapping its traditional raw material, corn, for the more locally prevalent wheat.

With the escalating price of wheat regularly hitting headline in the last couple of years, Kingston looks back on this strategic decision: “In 2008 a significant investment was made in this plant to change our production process over to the use of wheat rather than corn. The investment cost was in the order of £100m.

Times they are a-changing

Why does it make a difference to the Cargill plant that it uses wheat and not corn? This section looks at the practicalities of that switch over and how it was achieved without disruption to customers.

The decision was actually made to convert the Manchester site into a wheat plant, rather than corn, around the time of the Tilbury plant closure in 2005. The conversion project took 18 months in all and the new site opened in April 2008.

For a brief period the plant maintained both the wheat and corn processes in order to ensure that all customer orders were fulfilled to specification. However, the corn plant has now been raised to the ground.

Until recent years, the vast majority of glucose production has been made from a corn base and the process for milling corn in preparation for glucose production is well established so the decision to switch to wheat was a significant departure from the industry norm.

While the refinery processes for both wheat and corn starch are almost identical it is the frontend of the process that differs significantly and which required such heavy conversion investment for the Manchester site.

This front-end process includes the milling which separates the bran from the starchy part of the wheat, and a three phase separation process which categorises the starch yield into;

High quality A and B starches with large, easy to process starch molecules.

Lower quality C starches which are harder to process but can be used in the fermentation of potable alcohol

Vital Wheat gluten which is used in animal feeds, particularly aqua-feed and in baked goods where it gives fresh bread its ability to spring back into shape when pressed

The high quality A and B starches are those which Cargill uses in its glucose refinery where the process for creating a range of glucose products and specialised blends once again become similar to that used for converting starch from any raw material whether it be wheat, corn or potato.

The end glucose products, which are blended to suit a wide range of applications, are used predominantly in the food and beverage industry and the pharmaceuticals industry.

During the site conversion project Cargill ensured that it was taking time to build an understanding of the new process employees would be working on. Expertise from North America, where Cargill has a flour producing business, were brought over to assist with training with the commissioning and stabilisation of the process as it got up and running.

This help stayed in place for the first couple of years that the site was operational with the wheat milling process, working alongside the Manchester workforce. Such careful risk management was entirely necessary according to Kingston who comments: “We run through about ¾ of a million tonnes of wheat every year so if we don’t get it right we end up with a lot of wrong very quickly.”

“There were a number of reasons for doing this; cost being among the foremost. We have great wheat crops here in the UK for making glucose so it made a lot of sense to move to a native material. It’s far more sustainable than the practice we were in of importing corn, predominantly from France.

“Of course it was not long after that that wheat prices started to rise and you inevitably question whether you have made the right choice. But we have remained committed to our decision and are happy with it because of all the thinking I mentioned before about our ability to deal with risk and with volatile markets. We see the bigger picture. There are huge benefits to processing wheat grown locally in the UK which include benefits for the farmers in our supply chain and for the stability of the UK economy as a whole. In addition overall transport costs are reduced lessening our environmental footprint as well.”

Whatever the strategic business decisions behind the change however, there is no doubt that the rationalisation of the starches and sweeteners business in the UK, and then the overhaul of a process which employees were well versed in, took experienced staff out of their comfort zones and posed the challenge of re-skilling and working for process improvement on new ground. Although Kingston has only been manager at the Manchester plant for a short time, he knows the steep learning curve that staff had to take in their stride and says: “We’ve got a very talented and engaged workforce here in Manchester and we have a very nice mix of experienced employees and new, younger blood coming into the business.” Kingston goes on to clarify how that level of engagement is produced: “We have a solid graduate intake programme based on close links with Manchester University. This allows us to keep up with how to offer the right, exciting careers to the best graduates. We also have huge support for apprenticeship programmes and learning and development programmes to ensure that everyone has the right capabilities. So what does that lead to? It leads to a very engaged workforce that utilises the knowledge of our guys who have been with us for, perhaps, 43 years or more, and balances it with the new knowledge of those who have been with us for only a matter of days or weeks and whose knowledge is keen but mostly theoretical.

“We find that this balance pools a great deal of energy for improvement and we really promote ideas and continuous improvement from within.” This effort to encourage autonomous improvements to Cargill’s processes is currently being formalised in an Ideas to Innovation campaign which is advertised around the site on poster and pop-up stands, particularly in recreation areas like the canteen.

Although these ideas and innovations are welcome everywhere, there are certain areas of focus. The main area targeted for improvement has been alluded to already by Kingston in his talk about reducing the environmental footprint of the Cargill supply chain. “We have been working pretty intensively for the last ten years on our energy footprint,” Kingston says, emphasizing that the company’s strategy here is far from being a ‘green wash’ but rather a core part of the ethical business model at the company’s heart.

A Cargill career?

Cargill is pro-active in ensuring that it takes every opportunity to make itself an attractive career destination for talented and engaged individuals whatever their personal ambitions or requirements.

Acknowledging this, Kingston says: “If there is not a realistic opportunity for someone at Cargill then something is seriously wrong because there is so much going on here.

When we bring people into the business here, we are, of course, looking for the best people to help grow business at the Manchester site. But we are also looking for people who will help Cargill grow as a whole. We have four operators who are currently over in Holland signing off a project over there. If I look at my own career – I started in the UK and have spent years in France, Belgium and Indonesia before coming back to the UK. So, for a young engineer coming into the business, it is an exciting career prospect.” At a time when, although long careers with one firm are said to have become a relic of a bygone age, youth unemployment is at an all time high, Kingston believes Cargill’s diverse business portfolio offers the perfect balance of opportunity with security: “Cargill answers the needs of ‘Generation Y’. I have moved in my career every two or three years. So I really think Cargill fits the profile of a generation that might not want to commit to being in the same job for a long time.

“The Cargill business units are already large multinational companies within themselves and it is very interesting to be able to change between those divisions and business needs while still having the security of working for the same company with the same core values.”

To wage this war on energy consumption Cargill have used a home-grown methodology known as Pinch analysis.

This tool for heat integration was developed by Dr Bodo Linnhoff of Manchester University following a period of industry experience with chemicals company ICI. The analysis tool is now well established in industry as a means for improving the design of energy systems. Kingston explains: “It looks at what the theoretical best ecological footprint you can have is, although practicalities mean that you cannot always achieve that, it gives you a starting point for setting targets.”

Whatever the methodology for target setting and creating a framework for environmental improvements, it certainly seems to be working. Cargill has achieved 40% energy reduction in the past 10 years but the company still has a five year energy plan to live up to and Kingston sees opportunity for further improvement all around him: “The fine tuning is going to take some time but there are still some big areas of opportunity. The price of energy is increasing all the time and so these projects are getting more attention and becoming sexier.” Looking beyond heat integration strategies to the broader opportunities available in Cargill’s operations, Kingston observes how the natural versatility of the products the Manchester site deals in are being exploited to find synergies with suppliers and business partners which rationalise the product distribution process: “One of the great benefits of our wheat process is that it is 0 waste.

Everything is useful and utilisable.

Even the bran, which has no starch or glucose potential, is used to make moist feed, largely for cattle.” Cargill’s moist feed, which is branded in the Manchester area as Trafford Gold, has provided opportunity for supply chain rationalisation and the reduction of carbon footprint since the same fleet of lorries used to collect the majority of wheat from local farmers is used to supply pastoral farmers in the area. This product is extremely popular in the Manchester area which has a strong dairy industry for although the fibre-rich bran base of Trafford Gold is unsuitable for human digestion it is a great source of nutrients for ruminant farm animals.

Another area in which Cargill has looked first for local synergies with its own business interests before going further afield is evident in what Kingston describes as an “over the fence deal” with neighbouring company Royal Nedalco who produce potable alcohol. In February, Cargill announced its intention to acquire these Royal Nedalco’s alcohol operations and completion of the acquisition is dependent upon regulatory approval, which is expected in the second quarter of 2011.

Kingston says that he sees environmental targets and sustainability goals as being intrinsic to what he describes as a “play to win” culture at Cargill. This culture makes no room for complacency, so the fact that past achievements have been made is no deterrent for looking for greater benefits in the future.

Of course, as is evident in Cargill’s determination to celebrate the Manchester site’s centenary in style, the company knows that ‘environment’ does not just relate to carbon emissions, energy consumption and ecological impact. It also means community.

Cargill takes its relationship with the local communities around its centres of operation very seriously and, not only puts corporate responsibility at the heart of all its business decisions, but listens to the concerns of the communities its workers represent and acts to alleviate them.

At the Manchester site for instance concern was raised that local charities were suffering in the wake of government budget cuts and a general decline in donations as recession hit home. Cargill has responded by filling an important gap in the support of local charities.

Cargill in Manchester

Site acquired by Cargill: 2002 (purchased from Cerestar)
Site invests in conversion from corn to wheat milling: 2005
Wheat process commences: 2008
Cargill employees in Manchester: 300
Core Cargill products from Manchester plant: Glucose Syrups, Glucose-Fructose Syrups

The company also drives forward key projects within schools and colleges in the region which promote literacy and scientific innovation in young people.

They run workshops in schools to help children understand important facts about nutrition and food safety and in addition they assist schools and colleges in building their capacity to deliver further educational schemes.

Last year the Manchester plant attracted £50,000 pounds in donations for 8 different causes. One Family Fun Day alone brought in £5,000 for the Children’s Adventure Farm Trust (CAFT).

This local charity provides holidays for disabled, disadvantaged and terminally ill children and their carers from across the North West Region. In addition to fundraising for CAFT, Cargill also gets hands on with improvement projects at the charity; with many Cargill employees investing considerable time in renovating and augmenting the farms to make them more comfortable and enjoyable for the children and their families. This is encouraged and supported by the Manchester site management.

All the above is instigated locally and voluntarily at the Manchester plant and is additional to corporate level support for global charitable causes including the Bill and Melinda Gates Foundation, The Global Food Banking Network, The Nature Conservancy, Living Lands and Waters, The Groundwater Foundation and many more. For Kingston this is all simply indicative of the appreciative culture that Cargill has to offer, one that has opportunity for all and seeks opportunity everywhere.