A veteran of the North American beef industry, who worked his way through the business from a meat cutter to a top executive of
one of the largest meat processing companies in the world, says he has no doubts he can turn a long-shuttered Alberta beef packing plant into a profitable business.
Rich Vesta is already getting a steady stream of visitors at his temporary headquarters in the receiving office on the back parking lot of the short-lived Rancher’s Beef packing plant just on the north edge of Calgary. He has a large desk, a cell phone, computers and a coffee maker, while out the window over his shoulder some $18 million in renovations and upgrades have already started inside the nine-year-old “state of the art” plant that was mothballed six years ago.
“I’ve been in the meat business all my life — started as a meat cutter when I was 14,” says Vesta, former CEO of JBS North American beef division. “I’ve owned food retail, owned and managed packaging plants across the U.S. I know every aspect of this business and have always made money —sometimes I didn’t make a lot of money, but I always made money.
“I wasn’t ready to retire and when I found this gem of a facility here in Alberta I knew it could make money too. It is a state of the art facility. I don’t want to sound flippant, but often raising the money for a project like this is the easy part. The challenge is to know how to manage and operate the facility and market your product.” Joining Vesta in the management of the family-owned company is his son Jeremy, a risk management specialist and former grain trader with Bunge, now learning the meat packing business.
NEW NAME, NEW TECHNOLOGY
As retrofitting continues over the coming months — mostly to introduce new technology to the existing infrastructure, Vesta says the new company Harmony Beef will be up and running by June 1, 2014, with about 125 workers processing up to 775 head of cattle per day. The initial six to nine months of operation will simply concentrate on getting everyone trained and any kinks out of the system. Vesta says while he plans to supply any local markets he can, the main focus will be on a global marketplace with branded beef products, all produced in the largest EU approved packing plant in Canada.
“I am not here to compete with the existing meat packing plants, because we wont be producing commodity beef,” says Vesta, who now has a home in nearby Airdrie. “It took me a while to realize it myself, but Alberta and Western Canadian ranchers produce some of the highest quality beef in the world. As one of the leading beef industry experts in the world, David Hughes, put it “Canada is home to the world famous Alberta beef, known only in Alberta”. So I see an opportunity to take this product and sell it for what it is worth — as high quality Alberta beef.”
IN HINDSIGHT REALLY BAD TIMING
The original $40 million Rancher’s Beef plant, backed by 50 investors, was launched in 2005 as a producer-owned facility aimed
at shoring up the Alberta beef industry in the wake of the 2003 BSE crisis. But burdened by debt, a period of high Canadian dollar, limited markets, high labor costs, regulatory issues and a number of other local challenges, the business began bleeding money almost immediately and closed 14 months later.
Rick Martinez, Rancher’s Beef president said in a 2007 radio interview as the plant was shutting down, “If you threw a dart at the wall you couldn’t have picked a worse time to open a facility in the beef industry. The margins were at 10 year lows.”
The bankrupt plant and 140 acre site valued at $75 million was bought through a court-ordered sale by Alberta-based Sunterra Beef in late 2007 for an undisclosed amount, although it never did operate as a beef plant again.
Vesta’s company, Vesta Holdings bought the facility from Sunterra for an undisclosed amount, with the sale to be finalized by Nov. 1, 2013.
The new company will operate as Harmony Beef, a name which Vesta says has particular significance.
“That is our plan, to be here and operate in harmony with all aspects of the industry,” says Vesta. “With the technology we are incorporating in the plant we want to operate in harmony with the environment, and also be in harmony with our employees, our suppliers and our customers.”
Lee Hart is editor of Cattleman’s Corner based in Calgary. Contact him at 403-592-1964 or by email at [email protected]