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History of Armour-Klarer

HISTORY of Armour – Klarer

                Theodore Klarer was one of several thousand German immigrants to come to Louisville in the 19th Century.  He built his home at Amy and Market Streets in Louisville’s West End.  Beside the house was an outbuilding that became the first Klarer Plant in 1886.  In it, the immigrant butcher would slaughter Beef, Pork, make Sausage and sell products to neighborhood housewives.

Within a few years, and young man named Henry A. Broecker, and a handful of other employees, were turning out Sausage for Theodore Klarer in a mill powered by a horse, plodding in a circle.  Their meat cooler consisted of ice cut from ponds in winter and stored for summer use.

In this paternalistic environment, it was natural that Henry Broecker would marry Katherine, one of Klarer’s tow daughters.  When Theodore H., Leonard and Leo, the three sons of this marriage, grew to manhood, it was natural that they should enter the business.

Henry Broecker died in 1933 in the house where his father-in-law had begun the family business.  He had carried it on successfully, but he could not have envisioned over 40 years ago the heights to which this team of sons would carry the business.

The eldest, Ted, became President, the inspired and inspirational leader of the business.  Leonard was the operations expert who knew machinery, engineering and production.  Leo was the livestock procurement expert.  They operated the business with equal shares of stock, equal salaries and no doubt, equal contributions to the growth of Klarer.

To the rest of the industry, and to the business world, Ted Broecker was “Klarer of Kentucky”, because it was with him that people dealt.  He was dynamic yet gentle, a man on a first-name basis with the powers of his industry and with production workers in his plant.  Under Ted’s Leadership the business Grew.

In 1947, the Company acquired the Louisville Provision Company, which produced and marketed the “Southern Star” brand of meat products.  Three years later, the C. F. Vissman Company and its “Derby” brand became part of the Klarer Empire.  In 1957, the Emmart Packing Company and its “Magnolia” brand were acquired.

Like Klarer, each of these Companies was a family business that had grown and prospered.  Unlike Klarer, each had reached the end of its business life as an independent operation for different reasons – lack of capital for continued growth, absence of heirs to carry on the business.

At the time, there was no omen for Klarer of Kentucky because these were golden years.  Klarer was big and had aggressive plans.  In the mid 1960’s, annual sales soared to above $75 million and profits moved close to the million dollar mark.

In 1959, Klarer began to consolidate and reorganize its acquisitions under the Southern Star brand name.  Along with this reorganization came plans for expansion.  In December of 1964, the time had arrived to share these expansion plans with the stockholders.

The plans for expansion were based in large part on a study conducted for the Company by Arthur D. Little, a Cambridge, Massachusetts Research Firm, retained to determine the feasibility of expansion.  The study noted:

  1. Louisville geography is right for shipping and receiving.
  2. There are adequate supplies of water, gas and electricity at favorable rates.
  3. Transportation facilities are good and steadily improving.
  4. Labor quality and attitude are favorable.
  5. The area has “almost unlimited” potential for increased livestock production.
  6. Bourbon Stock Yards is a major marketing center for better grades of cattle and hogs.

These were reasons enough for the Klarer Directors to report to shareholders:

“On December 7, 1964, your Board of Directors approved plans for construction of an enlarged plant.  This facility will be situated on 14 acres of land served by the Louisville & Nashville Railroad and will extend from Story Avenue to Main Street, and will be within three blocks of the Interstate Highway system.  It will be the most modern manufacturing and processing installation for meat products in the United States.  Many new applications for engineering innovations and installation of newly developed processing equipment will make this plant highly productive.  Financing of this new plant is being sponsored through Institutional Monetary Corporation of New York City with the cooperation of the Louisville Trust Company….”

The message did not convey how long the dream of this new facility had burned in the minds of the Broecker brothers.  It did not mention how the marketing program had been steeped up to sell meat in the volume this plant was designed to produce.  It didn’t mention how Ted Broecker negotiated agreements for substantial financing through a series of face-to-face executive suite meetings in New York’s financial district.

The public announcement of these plans in August, 1965, was with little more flourish.  Klarer executives referred to the project as “… the largest and most modern, fully integrated plant built in the United States for the past several decades.”

They estimated that within about 30 months, “Klarer of Kentucky will be prepared to serve a much larger segment of the American consumer’s meat food needs.”  The dream was close to reality!

Rather than progress, those 30 months were to bring a staggering array of problems, most of which were beyond the Company’s control.

The first came in 1964, when Leonard Broecker died while undergoing heart surgery.  A year later, Ted Broecker, Vice-Chairman and a Director of the American Meat Institute, went off to the organization’s New York Convention in good spirits and good health.  He suffered a stroke at the Convention Luncheon and died within hours in a New York Hospital.

These events left the youngest brother, Leo, as the only surviving member of the strong family team that had brought Grandpa Klarer’s neighborhood butcher shop to a prominent place in the industry.

Although sales continued to grow in the next two years, earnings never again approached the 1964 peak.  A shortage of hogs hampered 1965 production.  Costs in 1966 included a quarter of a million dollars to demolish an old plant facility for a new construction.  The cost of livestock increased substantially that year.

Earnings in 1967 slumped to a fraction of the 1964 profits.  Sales slipped substantially.  Labor problems, lower meat prices, costs associated with new construction, and the need to curtail some production to accommodate construction were major factors.

The following summer brought a general strike of craftsmen in the Louisville area, which set back new plant construction six months.

Sales continued to slump.  A tense labor situation, which had existed since Union units from the former Louisville Provision, Vissman and Emmart Plants were thrown together with the Klarer Unit, began to erupt.

On October 2, 1967, the Union walked out.  The wheels would not begin to turn again at Klarer of Kentucky until November 14.  In the interim, competitors who previously could not penetrate Klarer’s market area swept in to fill the product vacuum.

These competitors were difficult to dislodge when Klarer products again became available.  Fiscal 1968 brought an intense marketing effort without substantial success.  There were management shifts in an effort to regain the momentum lost during the strike.

Five days after Christmas in 1968, the Company reported to its shareholders that it was losing money.  An influential member of the Board began discreet inquiries regarding the possible acquisition of Klarer by a larger Company.

At the invitation of Klarer Management, representatives of Armour and Company visited the virtually completed new meat processing facility in Louisville.  They liked what they saw.  On January 3, 1969, Louisville newspapers reported that Armour had made an offer to purchase Klarer.

Two developments seemed likely to scuttle this proposed acquisition:  The last quarter of that disastrous fiscal year had been profitable for Klarer, and Senior Vice-President Leo Broecker became reluctant to relinquish the reins of this 75-year old family business.

At the same time, Armou’s attention was diverted from buying Klarer by the fact that two large companies where interested in buying Armour.  On April5, 1969, Klarer’s Board announced negotiations with Armour had been suspended.

Acquisition of Klarer remained in the minds of some Armour Management officials.  They showed Greyhound their predictions of profitability for Klarer.  Management of Greyhound agreed with Armour management and Armour made another offer to buy Klarer at the price above the market value of the stock.

In September, 1969, Klarer of Kentucky became a wholly owned Subsidiary of Armour and Company.  The new parent soon discovered financial results were not meeting the promises made to Armour’s new parent Company, Greyhound.  The purchase was beginning to look like a bad one.

With a hug effort on Armour-Louisville’s management, the operation began to turn around.  Production was good, labor relations improved and plant morale lifted after years of depressing mishaps.  Under its new corporate influence, the plant reached their top profit projection mapped out for it when Armour acquisition was first recommended.

Louisville’s Management was tested again in 1976 when the Louisville Plant was awarded the “Rusty Thorn Award”.  This Award represents the lowest achievement in the Cactus Itch Contest measuring plant effectiveness in most operating areas.  A vow was made never to repeat the humiliation of the “Rusty Thorn” again.

Fiscal 1977 brought renewed enthusiasm to Louisville’s Management with the Golden Cactus as the goal for Operations.  The Golden Cactus proved to be too lofty a goal in 1977, but Louisville did receive the “Sliver Cactus” Award for the most improved plant.  Fiscal 1978 was, however, a Golden Year.

With 1979 rapidly becoming the past, and the threshold of the 1980’s upon us, Armour in Louisville is anxiously awaiting the new challenges which lay before it.  Louisville plans to keep the future year Golden and drive for improvement in all areas.

posted by T.K. Broecker in major family news and have Comments Off on History of Armour-Klarer