Corporations: Packing It Away

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Americans are eating more meat than ever before, and the $14 billion meat-packing industry is patting its tummy with satisfaction. This year Americans will consume more than 32 billion Ibs. of beef, pork, veal and lamb, or 170 Ibs. per person. The meat packers are ready for the rush. The past few years have been lean ones for the industry, which suffered from inefficiency, slowness to change, and overcapacity created by allegiance to outdated methods of processing and marketing. But the meat packers have learned to adjust to a new era of supermarketing and new methods of livestock-raising. No company has learned better than Chicago's Armour & Co., the nation's second biggest meat packer (after Swift) and its most aggressive. Last week Armour reported earnings of $16.3 million on sales of $1.8 billion, three times its profit of five years ago.

Beef to Impress. Butchering still accounts for 80% of Armour's sales, but the business has changed vastly since Philip Danforth Armour, with $2,000,000 earned from short selling barrels of pork in the Civil War, helped make Chicago the hog butcher for the world. Big-city slaughterhouses, geared to seasonal rushes and stretches of idleness, have been replaced by busy little "country" abattoirs closer to such cattle towns as West Point, Neb., and Worthington, Minn. Meanwhile, since supermarkets buy out of Chicago and a few large centers, Armour has steadily closed down a quarter of the distributing plants that it once needed across the U.S. to serve 250,000 corner groceries. With farmers finding increasingly better ways to raise meat animals, Armour now can slaughter all year instead of just in the winter rush.

Chopping hard, Armour has cut its physical plant by 42%, but has managed to maintain its sales rate and increase its gross margin, the meat packers' measure of profit. At the same time it has geared its buying and processing to what Americans like rather than to what is merely available. The amount of pork eaten by Americans has remained remarkably steady for 40 years, but lamb is declining everywhere except in New England, New York and Los Angeles. The real advance is in beef eating, which has risen 77% since 1940. "After all," explains Armour Chairman William Wood Prince, 50, "when a fellow takes a girl out and wants to impress her, he buys her beefsteak."

Armour in recent years has pushed both modernization and diversification to make use of almost everything in an animal but its squeal. Most of its processes, from skinning to tinning, are now controlled by buttons, and new byproducts have led Armour in promising directions. From bone meal, it has moved strongly into all types of fertilizer. Tentative steps into Pharmaceuticals with pepsin from hog stomachs have led to a line of non-meat products that includes tranquilizers and cosmetics. Excursions into soapmaking to utilize fatty acids produced Dial soap, got Armour so interested in the grocery end that it now even makes pizza pie. Diversified Armour has been reorganized into seven divisions.