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American Food & Ag Exporter

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Do We Have To Wait Another Seven To Ten Years To Make A Merger Happen?

Jim Prevor’s Perishable Pundit, July 30, 2012

Our piece, A Modest Proposal For Reviving The Merger Of PMA And Unitedwas an attempt to identify a strategy for selecting a new CEO for the new combined PMA and United, since, technically at least, this was the hang up that was identified publicly as the reason the merger could not go through. We have dealt with some of the responses we received in separate pieces in this edition of the Pundit; here is some additional feedback received:

This came from one who works with both Bryan and Tom:

Wouldn’t it be a good idea to ask Tom and Bryan to come out of the closet and agree at least on a personal basis to your proposal even if they cannot speak officially for their boards?

I am sure a lot of people are worried about taking responsibility for risking the job of one or the other. The two people most involved should declare themselves willing to follow this method. That could help a lot to get things moving.

A good deal — assuming it is a good one — cannot be allowed to collapse on the grounds of the personal interests of two (very nice, very capable and very professional) individuals. And if one has to go, he should of course be amply compensated and — as you say — if possible be kept on as a (very) well-paid consultant.

We have spoken to many board members and many staff members, and we have good reason to believe that at least one of the CEOs involved would have no problem if the industry decided to adopt a fair and unbiased mechanism, and, further, that the specific mechanism we suggested in the piece would be acceptable to them as fair and unbiased.

We suspect that if the industry’s leaders wanted to make it clear — say by having the top ten financial contributors to the associations write a letter saying that they wanted the merger to go through and they wanted to resolve the CEO question by adopting a fair and objective process such as we defined in the Pundit — the leaders could probably get the board of one association to endorse the concept and that would put great pressure on the other board to do the same.

After all, what would they be holding out for — an unfair and biased process?

The big problem now is that, as we mentioned in a subsequent piece titled, United/PMA Impasse More Than Just A Decision About A CEO — It Is A Battle For The Soul Of The New Associationit may be only technically true that all the issues were resolved and only the CEO issue remained. The very fact that the issue of the CEO has risen to such importance strikes us as proof that the “constitution” of the new association is too vague.

The agreement to form the new association needs to define its priorities — then you can make a technocratic management decision as to the top staff position.

A former Chairman of the Board of PMA also weighed in on this issue:

I have always been uncomfortable with a merger due to the make up and different core values of each association, and as you know I currently serve on boards or committees of both. In a merger, I felt if the stronger, financially more sound, and larger association (PMA) would impose its will, the grower/shipper and transportation issues may suffer.

I was the Chairman of the PMA during the 90's when merger discussion came up, and after lengthy discussions (not as lengthy and professionally led as this one), we agreed the divide was too wide to bridge. I have also stated that if there was a time for a merger it was now as many of those issues that divided us are now shared equally with the production and the “sell part” of the business — those issues being food safety, food security, consumption increases, food recall standards, and the whole ID process from ground to retail shelf.

From everything that was reported, I was pleasantly surprised that the two associations were able to work through those issues and come up with compromise and agreement.  I am sure this is credited to the really fine Chairmen of both Associations, the strong merger teams, and the general make-up of both boards.

I am disappointed that the issue of CEO was pushed "down the road" and couldn't be resolved. When you have a merger of such magnitude, there is often found a way to use the talents of both and, in this case, they each have different skill sets. 

If there is not room for the current outstanding CEO's of each in some manner or the other and on a temporary basis (1-3 years) and it has to come down to a choice, I am in favor of what you have recommended.  However, with no disrespect intended, I would be comfortable with your choices or an alternative set of choices for the committee.

— Dick Spezzano
Spezzano Consulting Service, Inc.
Monrovia, California

Yes, of course, the key point is that there are mechanisms for making a decision. Our choice of whom and how many people should serve on such a committee could, of course, be altered or changed. We appreciate Dick’s vote of confidence that our recommendations for the committee were good ones.

We certainly can defend our choices, but there are many people who would surely be acceptable. The world is filled with critics who contribute nothing; at least we put out a real proposal that is actionable if the industry wants to identify a CEO for the new association.

A former Chairman of United’s Business Development Council joins Spezzano in endorsing the Pundit’s proposal:

Having served in various capacities within both associations, I firmly believe that the two associations should indeed merge and be led by one CEO. 

I embrace the proposal you offer here today, and having the great fortune to have worked with all parties identified in your article, believe they are outstanding choices.  It’s time to put the “Egonomics” aside and focus on the economics of what is best for the industry.

— Mike Kemp
VP of Brand Development

Market Fresh Produce, LLC
Springfield, Missouri

Another industry veteran was prepared to accept the Pundit’s proposal to choose a CEO because he saw the merger as imperative:

Together we stand strong, divided we don't fall but are much weaker.

—Bill Schaefer
President & COO
Fresh King, Inc.
Homestead, Florida

An important industry leader says the concept of a search committee is a good one but wants the search to go beyond the current CEOs:

The CEO of the larger organization isn't necessarily the best candidate. 

Let the search be far and wide, beyond the two current CEO's. 

Remember, these organizations, and a combined one for that matter, belong to the produce industry. The CEO works for us. His or her position is to be a spokesperson for the industry and lead the day-to-day operations of the organization.

The CEO answers to each and every member at every step along the way.

Take the emotion out of this process, and the entire industry will end up as the winner.

— Mike Martin
President
Rio Queen Citrus, Inc.
Mission, Texas

An executive at an important importer thinks we need both a mechanism to select the CEO and a rallying cry for the industry::

Well thought out and reasoned as usual. I applaud your perseverance.

Hopefully reason will prevail and both organizations will get this issue resolved for the long term interests of the produce business. 

In addition to your efforts, I recommend some kind of industry-wide rallying cry to get these parties back to the negotiating table — how about "One Voice - United & PMA"? 

— Craig Padover
Account and Category Manager

Jac. Vandenberg Inc.
Yonkers, New York

Craig’s letter reminds us of a song in Les Misérables, the musical, titled Red and Black:

We need a sign
To rally the people
To call them to arms
To bring them in line!

The student revolutionaries were seeking a symbol to summon the people to join their small band against the national guard.

We are all in favor of a slogan, but, alas, in Les Mis, at least, the “people” never came.

We wonder how engaging this issue actually is to more than, at most, a hundred companies. These are the big companies that pay out significant amounts to the associations. For most, if they don’t like two trade shows, they only go to one; if they don’t like two dues, they only join one. The question really comes down to whether the big players want to push this through.

Another correspondent laments that this may all just be a lesson for history:

Great commentary on the collapse of the PMA/United matter. Agree that a more public forum would have helped, but there are those few from each board who do tend to make it difficult.

We need one organization, and I can see both “divisions” playing a major role for their stakeholders under the guidance of one organization with one CEO.

Wish they could have agreed with your suggestion in your commentary of a seven-person executive committee with that seventh person not being a member of either group (a qualified professional, of course, related to these kinds of decisions). Oh well, guess we have to wait another 7-10 years for this discussion to come up again and hopefully they will then remember what George Santayana wrote, “Those who do not learn from history are doomed to repeat it.”

— Bruno Dispoto
Purchasing Director
Grower’s Organic Inc.
Denver, Colorado

To some extent, the point of all these discussions is that those who Rick Antle, in his letter, called the “ownership” don’t, in fact, have to wait. FMI killed its trade show a few years back because the CEOs of the big supermarket chains got together and said that they wanted this ended.

We have now provided one mechanism to choose a CEO if the industry wishes to implement the merger as negotiated.

We have also provided an alternative plan that we could argue might more perfectly allow for an expression of industry will.

In general, we would say that the boards would feel a need to respond if 10 or 20 top players wrote a letter urging the boards to act in accordance with the spirit of either of these proposals.

What we are about to learn is the degree to which those who advocate for merger are willing to actually push for it.

If not, as Bruno points out, we write for history. The archives here at the Pundit are forever, and hopefully someone will have the good sense to review them should this issue not be resolved now and arise again at some undetermined date in the future.

It strikes us that this would be sad. The conditions for merger, as Dick Spezzano points out in his letter above, are as close to perfect as they are ever likely to be. Individual companies can serve their own interests while also serving the greater industry interest, and we can do it now. Why should we falter?

As Hillel the Elder, in the Pirkei Avot or “Chapters of the Fathers,” taught us, “If I am not for myself, then who will be for me? And if I am only for myself, then what am I? And if not now, when?”

When indeed.

We thank Bruno Dispoto and all our letter-writers for contributing to this important discourse that may help define the produce industry for years to come.

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