Tom Erdmann

Tom Erdmann , Managing Director

Tom Erdmann , a managing director of the eVentures Group for Cargill , says selling one shipment of product , such as a crate of frozen pork chops , typically requires five or six phone calls , up to a dozen invoices , and two or three faxes.Multiply that paper shuffling and phone work by the millions of shipments that take place every year in the food industry and the value of digitizing such transactions adds up fast.

Because there aren't any clear leaders yet , analysts cite a long list of sites with the potential to gain ground among business-to-business food marketplaces , including FoodUSA.com , GlobalFoodExchange.com , Gofish.com , Instill , ProduceOnline.com , and SellMeat.com.

GlobalFoodExchange.com is one of the more broadly ambitious sites , covering the perishable-food categories of meat , seafood , dairy , and produce.It cut its first deal last October and now has 1 , 600 members , a list that's been growing by more than 10% a week.

But 1999 sales had actually declined, to $45 billion from $51 billion the previous fiscal year. (This, in the middle of a booming economy.) So company executives started searching for ways to revitalize Cargill's bottom line, says Tom Erdmann, one of the managing directors for EVentures.
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EVentures Managing Director Tom Erdmann found that contact with the incubator's startups helped bring an entrepreneurial flavor to Cargill.
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Erdmann, who spent nine months participating in two EVentures startups, says Cargill employees were palpably excited at the prospect of helping out."We had people knocking on the doors, saying, 'What can I do?Anything I can do to help I'll do,'" says Erdmann.Barn raisers happily tackled tasks such as hooking up the technology infrastructure and setting up the offices, he says.

The eagerness is simple to explain."Here was a chance for employees to get an inside look at entrepreneurial, startup dotcom organizations," Erdmann explains."It was fulfilling and educational."He adds that Cargill employees took part of the culture, excitement and buzz back to the corporate offices when they returned.A few people even stayed with the companies they helped build, leaving the comfort of working for an established company behind."They went into these companies with no safety net," says Erdmann.

In April, Tom Erdmann, who heads Cargill's North American sweetener group, said he Hammond plant's losses were significant and required swift action.

"Hammond has a cost structure that we simply can't support," said Tom Erdmann, head of the Cargill/Cerestar North American transition team."The plant has been losing tens of millions of dollars a year.We need to figure out a way to make it profitable, and we need to do it pretty fast."

There were layoffs in the Hammond plant March 5, while it was still part of Cerestar USA.At least 40 employees - fine operators and maintenance personnel - were let go from the company's Hammond starch and sweetener processing facility - the most significant union layoffs at the plant in more than 20 years, a union official said.

"Hammond has a cost structure that we simply can't support," said Tom Erdmann, head of the Cargill/Cerestar North American transition team."The plant has been losing tens of millions of dollars a year.We need to figure out a way to make it profitable, and we need to do it pretty fast."

Erdmann, who also heads Cargill's North American sweetener group, said he expects to have a clearer picture of what specific actions will need to be taken in about two weeks.He is among a handful of people from Cargill's Minneapolis headquarters reviewing operations at Cerestar following the completion of the sale last week.

On Thursday, Cargill purchased 56 percent of Italy's Montedison, which owned Cerestar, and is planning to purchase the remaining 44 percent traded on the Paris Stock Exchange during the next couple of months.Erdmann said his team got a look at preliminary numbers when it bid on the company, but didn't get many details until the deal was completed.

"It's like opening up a Christmas present and seeing what you've got," he said."Some of it has been great, and some of it hasn't been so great.It's not any one thing you can point to.It's a variety of things.It's the taxes.It's the transportation.It's the energy costs, and it's the number of people."
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In fact, Erdmann said when Cargill managers initially looked at the taxes Cerestar paid in Hammond, they were so high they thought there must be some mistake.In 1999, Cerestar reported paying annual property taxes of $4.7 million.More recent numbers were not available Monday.

He said he expects workers will be laid off across the board -- in production, research and development, and administration and supportive jobs.Union employees are represented by Local 6-0210 of the Paper, Allied, Industrial, Chemical and Energy Workers International Union.Last year, the membership approved a new three-year agreement retroactive to Oct. 1.
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On Monday, Erdmann and Cargill spokesman Bill Brady said the layoffs -- which will be done thoughtfully and carefully after a review -- are designed to keep the Hammond mill financially viable in the long-term.
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"We know that this is going to affect the employee, the family and the community," Erdmann said."We want to do what we can for our employees."

Cargill managers will be working to turn Hammond around, but Erdmann said he doesn't want to single it out.In the transition process, the company likely will be eliminating jobs and centralizing operations among all of its U.S. plants.He said all three of the U.S. Cerestar plants -- Hammond, Decatur, Ala., and Dimmitt, Texas -- will remain open, however.

Less than two weeks ago, the Hammond plant laid off 40 workers, saying there were improved manufacturing processes and a decreased demand for glucose.That layoff followed the termination of 30 salaried and clerical workers several months before.

A year ago, Cargill cut 10 percent of its own staff to improve the bottom line.

"That's why we've been able to survive," Erdmann said.

Cargill officials said the purchase of Cerestar is in line with the company's growth plan.Cargill wanted to expand its European operation, where Cerestar is stronger.Cerestar makes a number of specialty starches that Cargill also wants to take advantage of.Erdmann said Cerestar has many assets Cargill wanted -- including an excellent research and development department, lab and test mill in Hammond.

"We hope to realize real benefits from things like the intellectual property and the products," he said."The Hammond plant is a good plant, and there has been several upgrades to that facility."

Erdmann said Cerestar has a number of long-term contracts with local farmers -- who supply Cerestar with commodity and specialty corn -- that will remain in place.

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Erdmann also announced Monday that Cargill has appointed Mike Jones as the Hammond site manager.
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"If anyone can turn that plant around, Mike can," Erdmann said.