Chapter 21: Earn Twice
In the early days, beef cattle slaughterhouses in the United States were mainly "family workshops", also known as "mom and pop shops".
The advantage of this traditional business model is that buyers and sellers are equal and can negotiate prices in every link, and everyone makes money together, and everything is easy to discuss.
However, the disadvantages of this business model are also very obvious, the preservation time of meat is very short, it can only be sold on the spot, and the market is very limited.
Meat households are tied to each other and can only rely on God to eat, and if they encounter a drought or flood disaster, the disease and plague will be wiped out.
Later, with the changes in technology and social environment, the beef slaughtering industry was also like other industries, small slaughtering sites were gradually eliminated, and large companies began to monopolize this industry.
Cold chain transportation technology and refrigerated warehouses have allowed pork and beef to finally be sold on a large scale across towns and cities, so these small "mom and dad shops" began to suffer the impact of capital.
Large companies can take advantage of the scale to reduce their own costs, buy beef cattle from pastures at cheaper prices, and sell the beef cheaply to consumers.
Since then, many small "mom and dad stores" have gradually been unable to survive, and the market that originally belonged to them has been slowly encroached upon by large enterprises.
When a monopoly is achieved in one place, the slaughterhouse will quickly adjust the price of beef, raise the retail price to a higher level than the previous "daddy and mom shop", and start harvesting consumers.
At this time, consumers were no longer able to resist big companies and had to give in, and the popularity of refrigerators has once again increased consumer demand for all kinds of meat.
Slaughterhouses and ranches also took this opportunity to deepen their monopoly, and they directly cooperated with each other to breed, slaughter and process, and the transportation costs in the middle were also saved.
During this period, the government also imposed certain restrictions, but in the end they still lost to capital, and now the slaughtering and breeding industries have achieved large-scale concentration.
More than eighty percent of the cattle slaughtering business in the United States is concentrated in the hands of a few monopolies, and most of the rest are medium-sized companies like the Butts slaughterhouse.
The reason why they were not killed was because the big monopoly meat companies needed them as a fig leaf.
The Butts family has been in the butcher business since his grandfather's generation, and it took three generations of hard work to survive the siege of the giants.
Today, Butz has a wide range of contacts in the industry, from upstream ranches to midstream transportation companies to downstream retailers.
So Butz can get more than 10 million dollars a year in peace, and he can pass on this business to his children in the future.
Not many people are willing to sell such a stable business, and if a large meat company wants to attack, Butz may hesitate.
If he doesn't agree, he will be attacked by the giants, who will cut off the supply of beef cattle from upstream and force retailers to stop cooperating with him downstream.
Butz will definitely not be able to resist such an offensive, whether he wants it or not, he can only choose to sell, and if he sells it, he can still get money, and if he doesn't sell, he will wait for bankruptcy.
But he just asked, it is not a big company that wants to buy the slaughterhouse, but an unknown investor, in this case, there is no need to talk about it, I continue to take more than 10 million yuan a year, isn't it fragrant?
According to the current market, if he agrees to buy, he can only get 100 million US dollars, which he can earn back in ten years by relying on the slaughterhouse.
It is not easy to get 100 million cash and find an investment project that can provide stable income of 10 million US dollars per year for a long time.
Who would give up a chicken that lays golden eggs? So despite the fanciful rhetoric of Aaron Anderson, a representative of the financial institution, Butz did not agree to their offer to takeover.
Butz's reaction did not come as Anderson had anticipated, as generations of middle-aged people in the same industry tend to be conservative and will not give up their business easily.
He and his team had made enough plans for this, and when the regular routine didn't work, Anderson asked the others to go out first, leaving him and Butz alone in the conference room.
"Mr. Butz, after taking over this work, I did some research on the slaughterhouse industry and found that slaughterhouses rely heavily on connections, and slaughterhouses that have a good relationship with the ranch can get better beef cattle in time and sell the cut beef as quickly as possible...... It's not easy for ordinary people to do this business. ”
"Yes! In fact, it's not all you say. Butz replied proudly.
In addition to these most visible, the slaughterhouse also has ties to many semi-black and white organizations, such as those who have bribed the unions to turn a blind eye to the harsh environment and high-intensity work in the slaughterhouse.
Another example is the gangsters and immigration bureaus, ordinary Americans will not come to them to accept the oppression, so they recruit a large number of immigrants, blacks, prisoners and other cheap labor.
Where do these human resources come from? Obviously, if there is no collusion with the immigration bureau and the gangsters, the slaughterhouse will certainly not find workers who are so convenient to squeeze.
There are many similar doorways, these are the accumulation of the Butz family for many years, and ordinary people can't do it.
"So, can I say that, if..... I mean, if you sell your slaughterhouse now to a new immigrant who has never been in the slaughtering industry, will he be able to keep it running and make a profit? Aaron Anderson asked, looking at Butz.
"Of course it can't be! Many slaughterhouses wanted to buy beef cattle from Barry Sr.'s ranch, but he only recognized me, our grandfather was a good friend back then, and their friendship passed on to our generation! ”
"And Walmart's regional purchasing manager is also an old friend of our family, and we are also an old friend of ours with the Los Angeles Teamsters......
Butz shook his head again and again, he hadn't said anything about the immigration bureau, gangsters and other things that couldn't be on the table, how easy was it for strangers to want to do this business?
"So can I assume that even if the acquisition is successful, he will not be able to operate well and will soon face the threat of bankruptcy?" Anderson's eyes lit up.
"That's almost for sure! It's not as easy as you think. Butz said firmly.
"After bankruptcy, the price of the slaughterhouse must be very cheap, right? Is it possible to buy the slaughterhouse back for a small amount of money? Anderson threw the bait.
You can definitely make money by doing leveraged buyouts, but if you make money once, you can make money twice? When Fang Xiu found Anderson's company, the scavenging vultures immediately realized that this was a good opportunity to slaughter fat sheep.
"You mean...... It's to say...... Butz's heart also began to accelerate, no one can resist such a temptation, who doesn't want the money they picked up for nothing?