Scope #11

Helena Chemical Company

Extended Helena Family Helps American Farmers Grow

By James Simms

MEMPHIS, Tennessee – Solids, you probably know, don’t spray well.

Just ask third-generation cotton farmer Brad Williams what happens when you’ve got to spray thousands of acres and you mix two liquid herbicides that you thought would work together. Instead, within ten minutes, they’re a solid block.

Alarmed because you’ve got to keep a tight schedule – one where a day or two could affect your harvest and returns – and you call up the dealer that sold you the herbicides. Will they just shrug their shoulders or ask you to call the herbicide help line for an endless loop of queries and options?

But to Williams’ surprise that isn’t what happened when he contacted his representative of Helena Chemical Company. His rep quickly ran it over to Helena’s research and development lab in neighboring Memphis. “We did a mix test right there on site. ‘Yeah, this is a problem. You can’t mix these two together (the lab said),’” he says.

“That brought a lot of attention, to me, about Helena,” says Williams, who has been a customer for two decades and procures about 70% of his inputs by value from Helena. “They go out there above and beyond.”

For Steven Fincher, a seventh-generation farmer from Frog Jump, Tennessee, Helena stepped up to resolve a problem that he had with a product that failed – one that Helena had sold but didn’t manufacture. That failure would have cost Mr. Fincher a full year’s profit.

“They helped us work through a solution that was over half a million dollars. I dare say any other company wouldn’t have been able to do so,” says Fincher, who noted that Helena’s honest and professional reputation in the industry enabled it to broker a deal with the manufacturer. “It was a big deal.”

Surprising customers – in a good way – isn’t unusual for Helena.

From a single farm supply store opened in 1957 in its namesake town of Helena, Arkansas, it has grown to become the No. 2 supplier of agricultural seed, fertilizer and chemicals in the U.S. by revenue. Still, that kind of ability and attention to client needs takes years to develop and starts in the field, office and lab – and most crucially with people.

“When we look at stakeholders, I have never just looked at one singular stakeholder. It’s our customers; it’s our employees,” says Helena Chief Executive Officer Mike McCarty, noting that if the company does well so does its ultimate stakeholder, parent Marubeni Corporation. And to do well by our clients, he adds, “We have to have our customers view us as a part of their business.”

At Juncture, Helena Moved to Value-Added Products

For McCarty, who joined Helena in 1980, the company was at a crossroads when he took the top job in 1996 because it was coming under pressure on several fronts, including its business becoming increasingly commoditized, changing technology and tougher competition. About 70% of Helena’s revenue was from crop protection chemicals, and new biotechnologies were reducing the volume of these products needed.

In 2001 and 2002, McCarty, with feedback from executives and staff in the field, hammered out a new strategic plan to turnaround unprofitable locations and move to higher-margin products and services. Marubeni’s $100 million equity infusion in 2001 was equally critical because it enabled Helena to become self-financed, he says.

“We were able to really work on the diversification of our product line and move away from ag chemical on a percentage basis – more to fertilizer, seed, and most importantly HPG (Helena Products Group), which is extremely profitable,” McCarty says.

As a result of the new strategy, between 2001 and 2016, return on equity almost quadrupled to nearly 20%, revenue just about tripled to $4.5 billion and HPG’s share of overall Helena sales doubled.

The only major distributor of agricultural inputs with its own lab, Helena has developed its own line of products, HPG, in conjunction with other companies’ chemicals or on their own, to improve the efficiency and efficacy of customers’ operations.

HPG products, for example, mixed with fertilizers improve fertilizer uptake by plants. Others reduce spray drift and increase rain resistance. Maintaining the same results – or improving upon them – with fewer applications enable the farmers to produce more, with less, and in an environmentally friendly manner.

Over the past decade, organic expansion, such as HPG, and acquisitions, primarily to increase geographic coverage, have contributed equally to growth. Some new businesses include aerial spraying and finance options for customers. McCarty adds that, in the next year, Helena expects to roll out significant improvements to Helena’s AGRIntelligence precision ag offerings. New offerings will include a combination of various technologies such as GPS, satellite imagery, soil testing and drones. This will allow customers to increase yields while applying the most suitable products for the specific crops.

Not surprisingly, Helena’s success continues despite a global downturn in commodity prices, which have driven U.S. farmers’ net income down 40% to 50% in the past three to four years, meaning they have less disposable income, he says. Some type of market recovery, however, is expected in the next year or two, McCarty adds.

Companies Like Helena Don’t Grow on Trees

Still, making the company both resilient and profitable was a tough row to hoe.

“Sometimes we all forget what happened over the last 20 years. It wasn’t easy,” he says. “Why has Helena been successful? It’s because of the people. A lot of people would like to go out and find the next Helena. Well, we’d like to find the next Helena. It doesn’t exist. It has to be built over time. And the next Helena can be built with the right attitude.”

Difficulties in getting the company to where it is today include the fear of change and the complacency that comes with having done well in the past – both enemies of future success. Overcoming that requires having an open culture, where staff can talk about new ideas for products and services – or problems, and fully explaining the need for change and how the company will accomplish it, McCarty says.

“It’s people-driven. And I think if you open up your ears and eyes to ideas – no matter where they come from – and listen, it breeds a certain culture that’s very long-lasting,” he says. “You must continue to evolve and change because everything around you is always changing. And once you instill that mind set, it becomes a little bit easier to change.”

Helena’s Mason branch operations manager in Tennessee says the company is open-minded. “It’s easy to talk to executives, to talk to anybody – division manager, branch manager. I can go to them with anything,” says Barry Maxwell, who moved over from a competitor 13 years ago.

Indeed, that effort to get buy-in from thousands of employees has had another effect: The long average tenure of both the managers and staff, including an executive team that hasn’t changed for over two decades.

McCarty says that the focus on people does have an impact on the bottom line. “Everything about Helena is very people and relationship-oriented. So our customers stay with us,” he says. “I think we compete more on value, people and our relationships, than we do on price.”

Customers seem to agree.

Scott Warren, a third-generation farmer near the Mississippi River, relates another instance of Helena surprising a customer. Mason branch staff worked until nine o’clock on a Sunday night to fertilize nearly 700 acres because it was dry enough after a rain and the fertilizer would have started drying up the next day. Warren, who procures 100% of his inputs from Helena, didn’t think rivals would go that far.

“They’re genuinely concerned about your business,” he says, noting his rep calls after a storm to see how much and where his farm got rain. “I don’t know if you’ll find a better group of people.”

All information contained in this article is based on interviews conducted in June 2017.

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