Griffin Industries, Inc. Business Information, Profile, and History

Company Perspectives:

Privately owned and managed by the Griffin Family, Griffin Industries is a recognized leader in sanitary, efficient and punctual service to all customers. Although it's now a global business, the family still runs it the way John L. Griffin taught them--treating customers and associates the way they'd like to be treated themselves.

History of Griffin Industries, Inc.

Privately held and family run, Griffin Industries, Inc., is the second largest independent rendering company in the United States. Griffin collects a variety of waste products, including used restaurant cooking oil; offal, scraps, and hides from slaughterhouses, packing houses, and butchers; poultry feathers; dead farm animals; supermarket discards; and inedible bakery waste from the production of bread, dough, pasta, crackers, cereal, bagels, sweet goods, and snack chips. These materials are transported by a fleet of company trucks to Griffin recycling plants, where they are converted into saleable products. Animal proteins, feeding fats and tallows, and bakery meal are sold as animal feed and converted by other manufacturers into pet food. Bakery waste is converted into Cookie Meal, a corn replacement ingredient used to make animal feed or pet food. The company also makes a biodiesel fuel out of soybean oil and recycled restaurant grease. Griffins' trimmed and cured hides and skins are used as a raw stock in the production of leather goods, including shoes and automobile interiors. Animal proteins are converted into an organic fertilizer product called Nature Safe. Griffin also recycles vegetable oils and animal fats into a methyl ester called VersaGen, which can be used to replace hazardous materials used in such applications as asphalt, cleaners, coatings, compounding, construction, dust control, ink, lubricants, metalworking, personal care products, process oils, and pulp and paper. In addition to its headquarters in Cold Spring, Kentucky, Griffin maintains about 50 rendering plants, bakery plants, hide plants, blending plants, spent cooking oil plants, biodiesel plants, and transfer stations located in a southwest arc from Pennsylvania to Texas. To conduct international business the company also owns and operates ships using Gulf of Mexico ports.

Company Founded in the 1940s

Griffin Industries was founded by John L. Griffin, who was born in Lockland, Ohio, in 1922, and grew up well familiar with the rendering business. As a boy, he often accompanied his father and uncles, employees of the Elmwood Rendering Company in Reading, Ohio. He quit high school to join his father at Elmwood Rendering, and in 1943 moved his wife and newborn son to Falmouth, Kentucky, to start his own business, initially called Falmouth Fertilizer Company. He bought a used furniture truck, left the rocking chairs painted on the doors, and traveled within a 35 mile radius to pick up dead farm animals, which he then sold to Jonathan Smith Rendering in Reading, Ohio. At home, his wife, Rosellen, kept the books and raised the increasing number of children, eventually reaching a dozen. As he began advertising his service, Griffin took on a different company name for each community, supplementing Falmouth Fertilizer with such business names as Brooksville Fertilizer, Maysville Fertilizer, and Williamstown Fertilizer. As these names imply, the focus of the business at this stage was on the production of organic fertilizer.

The early years were difficult for Griffin, especially due to the rise of cheap chemical fertilizers after World War II, which made organic fertilizers too costly. To remain competitive in an expanding rendering industry, he was able to secure a $30,000 Small Business Administration (SEA) loan to buy 40 acres of land and build a plant in 1947. He was now able to skin the deadstock to sell the hides and cut up the rest of the animal for sale to the largest rendering company in the area, Kentucky Chemical. By now, Griffin owned two trucks and employed two men, but he was still operating on a knife's edge. Chicago-based Darling and Company, which had acquired Jonathan Smith Rendering, attempted to buy him out, threatening to ruin him if he did not comply. Griffin refused and, despite missing a payment on his SBA loan in 1948, he persevered. Granted an extension, Griffin took advantage of improving markets to stabilize the business and was soon expanding his routes and building a second processing plant. He invested in a hydraulic press that was used to convert processed materials into 40-pound cakes. These were sold to Kentucky Chemical, which ground them up for animal feed, another area that made up for the loss of the fertilizer business.

A New Name in the Early 1960s

By the early 1950s, Falmouth Fertilizer was picking up deadstock in surrounding counties and as far away as Cincinnati. During this period, the company began servicing its first slaughterhouse, a sausage plant operated by Webber Farms. In addition to the meal cake sold to Kentucky Chemical, the company also sold grease and tallow to Procter and Gamble in Cincinnati. In 1952, Falmouth Fertilizer added chicken feathers to its business after Griffin developed a way to make a meal out of the feathers that could be used to produce organic fertilizer. In the process, he also realized that the meal was extremely high in protein. By accident he found a way to make a meal that he could sell to Ralston Purina for use in animal feeds. Later in the 1950s, Falmouth Fertilizer installed equipment that allowed it to produce ground meal that could be sold directly to feed mills. The company also expanded its sources of raw materials, adding a Kentucky turkey operation and two Cincinnati poultry processors as clients. As business increased, Griffin invested his profits in better equipment, which shortened the company's processing time and prompted it to search out new sources of raw material. By the early 1960s, the company was approaching Cincinnati packing houses and took on a more appropriate sounding name, Griffin Industries, Inc.

Also in the early 1960s, Griffin's eldest son, Dennis, was old enough to join the business, although, in truth, he had been helping since he was a small boy. After a few semesters of college, he quit school and in 1961 became a night foreman at one of his father's plants. In 1966, Griffin Industries completed its first acquisition, paying $75,000 for the Columbus Reduction Company, located in Columbus, Indiana, and 23-year-old Dennis Griffin was dispatched to run it. Less than a month later, the company's chief competitor, Wachtel Company, was hit with a strike, allowing the Columbus operation to take up the slack and pry away a large number of customers in southern Indiana. Wachtel was bought by National-By-Products and was soon back in business, but Griffin Industries had been so successful in raiding Wachtel's customers that Nation-By-Products decided to sell their southern Indiana transfer station in Underwood. Through a third party, Griffin Industries acquired the facility, its first transfer station, and was now able to move into the Louisville, Kentucky, market.

A major turning point in the history of Griffin Industries took place in the summer of 1968. John Griffin was contacted by Martha Jacobshagen, whose husband--the owner of rendering plants in Newberry, Indiana; Henderson, Kentucky; and Jackson, Mississippi--had recently died. She was interested in selling the business, but after the Griffins visited the facilities, they estimated the properties were worth several million dollars, well out of their reach. Nevertheless, they met with Mrs. Jacobshagen, who let them examine the financial records. Poorly run, the plants were losing about $100,000 a month and quickly draining the proceeds of her husband's life insurance policy. While it was not surprising that she would want to unload the assets, the Griffins were nonetheless shocked to hear her asking price, a mere $750,000. Nevertheless, it was still more money than Griffin thought it could raise. Consequently, they convinced her to keep a farm, oil wells, and some other property and finally settled on a price of $550,000. To fund the deal, Griffin Industries took out a loan with Central Trust Bank in Cincinnati, the start of a long-term relationship with the lender.

Griffin Industries completed another acquisition in 1972: Russelville, Kentucky-based Kentucky Animal By Products. The plant had suffered a recent fire, and the owner had just lost a son in an automobile accident and wanted to sell the business. Now operating six plants, Griffin Industries was thriving and outgrew its offices, which were shoe-horned into one of its plants located too remotely to accommodate the number of telephone lines and communication system the company now required. In 1973, the Griffins bought an old road house, the Eight Mile House, located on 5.5 acres of land in Cold Spring, Kentucky. Rather than tear down the historic structure, they remodeled it, adding modern wiring and heating. From this new base of operations, Griffin Industries was well positioned to engineer further growth during the 1970s. In 1974, it acquired West Monroe Rendering Company in northern Louisiana, which now acted as a transfer station for its Jackson, Mississippi, plant, allowing Griffin Industries to service northern Louisiana and southern Arkansas. A year later, a West Virginia operation was purchased, but it never fared well and was sold off a few years later. A more successful venture was launched in 1976, when the company built a facility in Cincinnati to expand its hide and pigskin business, cutting out the middleman to deal directly with tanners. Also in 1978, Griffin Industries opened a steel-fabricating and welding shop called Jay Gee to develop and make the company's own equipment. To close out the decade, Griffin Industries acquired a rendering plant in the Gainesville, Florida, area. In 1979, Dennis Griffin was named president of Griffin Industries and the other roles played by family members were better defined.

Family Difficulties Mar 1980s

The early 1980s brought more growth but misfortune as well. A transfer station was acquired in Alma, Georgia, in 1980, followed a year later by a rendering plant in East Dublin, Georgia, a facility that was destined to cause headaches 20 years later. Also in 1981, Rosellen Griffin was diagnosed with Parkinson's Disease, and her health steadily declined. Then, in 1984, John Griffin suffered a heart attack while attending a rendering convention. Although he recovered, he was left partially paralyzed and his speech impaired. He continued to come into the office but the management of the business now fell squarely on the shoulders of his children. In the meantime, the condition of his wife worsened, and in August 1985 she died at the age of 61. Her husband survived another ten years, dying from a heart attack in April 1995. The Griffin family also suffered another loss in 1988 when one of the brothers, Jim, and his two sons were killed in an automobile accident. (Another son, Ronald Lee Griffin, had died in 1968.) The founder's many offspring would also fall out among themselves over the division of the estate. In 1985, the Griffin children agreed to a redistribution plan that in effect turned over the Griffin Industries stock to the sons who worked in the company, while the sisters were paid in cash for their share. What seemed to be an equitable deal in the mid-1980s, however, was cast in a different light after the business enjoyed tremendous growth a few years later.

Griffin Industries expanded at a rapid clip during the second half of the 1980s. In 1986, it acquired Jacksonville, Florida-based Southern Tallow, doing business from south Georgia to central Florida; Southeast Recycling Corp., located near New Orleans and subsequently linked up with the Jackson, Mississippi, operation; and Tampa Soap and Chemical Company, expanding the central Florida business. Access to the port of Tampa allowed Griffin Industries to directly export tallow and grease to Central and South America rather than rely on New Orleans' brokers. Within a few years, more than one-third of Griffin Industries' sales were the result of direct exports. To accommodate this business, the company bought a 5,500 ton capacity ship in Rotterdam, Holland, and renamed it the "Rosellen" in honor of Rosellen Griffin. In late 1987, the company bought Memphis, Tennessee-based Delta By-Products, and a few weeks later added Texas Rendering Company, located 30 miles southeast of Austin. Duncan Tankage Corporation of Union City, Tennessee, was acquired in September 1988, and a modern plant was built to serve the new slaughter houses that had recently been constructed in western Tennessee and western Kentucky. Also in 1989, Griffin Industries negotiated the package purchase of rendering plants in Marianne, Florida; Atlanta, Georgia; and Shelbyville, Indiana, a deal that was finally closed in July 1990.

The dispute over the disposition of the Griffin estate came to a head in 1990 when sister Betsy Osborn sued Dennis Griffin, executive vice-president John M. Griffin, an executive vice-president, their attorney, his law firm, and Griffin Industries in U.S. District Court. The two brothers had served as co-executors of their mother's estate. Osborn charged in her suit that they misrepresented their mother's will and estate, made a systematic attempt after her death to accumulate company stock, and among the six brothers realized $43 million in profits from 1986 through 1989, while the five sisters received less than $3 million. Over the next three years, the case worked its way thorough the court system. Just before the trial was set to commence in 1993, the two sides reached a settlement, which according to press accounts awarded some 1,400 shares of Griffin Industry stock to Osborn and nearly 200 shares to each of her two children.

Continued Prosperity in the 1990s and Beyond

Griffin continued to expand in the 1990s. In 1991, the company acquired a pet food operation in Carlisle, Kentucky, and a Dallas-area rendering plant. It was also during the early 1990s that Griffin Industries returned to its roots via the production of organic fertilizer, marketed under the Nature Safe label, a product that once again became viable because of stricter environmental regulations. In addition, the company developed new animal feed products, including BI-PAS, a protein product used to increase milk production, and RUMICAL, a dry fat product used in the dairy industry. In 1993, Griffin Industries acquired a bakery waste recycling company, picking up four southeastern facilities that processed bakery residuals into animal feed, changed the name to Bakery Feeds, Inc., and by the end of the decade added another five plants, spread from Pennsylvania to Texas, in what became a major business for the company. Griffin also moved into the biodiesel market, converting old restaurant vegetable oils and rendered fats from animals into a product that could be blended with petroleum diesel or used as a fuel by itself. Albeit a niche product, it held promise for the future.

Over the years, Griffin Industries had always viewed itself as a good corporate citizen and a company that, in terms of the environment, was part of the solution, not the problem. Nevertheless, during the late 1990s and into the 2000s, the company found itself cast as a polluter in the public arena, and sometimes found itself at odds with local communities. In 1996, Griffin Industries was persuaded, at a cost of $1.3 million to taxpayers, not to open a new plant in the Houston area, after candymaker Russell Stover threatened not to proceed with building a nearby plant, contending that the odors from a rendering plant might contaminate its confections. In 2000, Griffin Industries agreed to move a Bakery Feeds plant from Fayetteville, Arkansas, to Watts, Oklahoma, the result of a settlement connected to complaints by residents alleging odor and noise pollution. The most contentious case involved the East Dublin, Georgia, plant, which converted chicken byproducts into fertilizer and feed. In 1999, area residents complained bitterly about the offensive odors periodically emanating from the plant, leading the district attorney to consider charging Griffin Industries as a public nuisance. The Department of Agriculture stepped in, promising to deal with the problem, but the complaints continued and the matter became a political issue. In 2003, the plant was raided by state and federal officials. Among other things, they investigated whether the company was contaminating the groundwater through Bay Branch Creek, which ran through the plant site. In addition, four residents sued the company, and later in the year a Savannah, Georgia, grand jury indicted the company's five executives on charges that the plant polluted the creek and that company officials falsified environmental records. The criminal charges were settled in November 2004, shortly before a trial was set to begin, when Griffin Industries pleaded guilty and accepted a $50,000 fine. The plant's neighbors, in the meantime, sought to gain class action status for their civil suit on behalf of anyone living within 2.5 miles of the plant, totaling approximately 2,500 people.

Despite the adverse publicity and legal distractions, Griffin Industries remained a healthy and growing business, with annual sales reportedly in the neighborhood of $300 million.

Principal Subsidiaries: Bakery Feeds Inc.

Principal Competitors: Ag Processing Inc.; Darling International Inc.; National By-Products, LLC.

Chronology

• Key Dates:
• 1943: John L. Griffin founds Falmouth Fertilizer Company.
• 1947: The company builds its first major rendering plant.
• 1968: Three rendering plants are acquired for $550,000.
• 1984: John Griffin suffers a heart attack and turns over control of the company to his sons.
• 1993: Bakery Feeds, Inc. is launched.
• 2004: The company settles contamination charges.