Executive Q & A: Jim Wegner

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Darigold, which has $2.4 billion in annual sales and 1,415 employees, is the marketing and processing subsidiary of the Seattle-based Northwest Dairy Association, a producer cooperative with 542 member families. Jim Wegner, previously senior vice president of operations in charge of the company’s 12 processing plants, was appointed CEO last year. He was photographed in the test kitchen at Darigold headquarters on Rainier Avenue South.

SCOPE: Most people don’t realize how big Darigold is. We handle 8.74 billion pounds of milk a year and only a third of that goes to consumers as milk. We have a huge export business, accounting for nearly a quarter of all United States exports of cheese, butter and powdered milk. In places like Southeast Asia and Mexico that are hot and humid, cows do not thrive and so the countries have to import milk powder. There is also a growing market in North Africa, where Nestlé, one of our biggest customers, sells little sachets of single-serve milk powder, chocolate drinks and infant formula.

EARLY YEARS: I was raised on a wheat and cattle ranch in Reardan, a small town west of Spokane in Lincoln County. The ranch was originally purchased by my immigrant great-grandparents in 1905. Reardan is a community of people with a strong work ethic trying to build a good life for their families under very challenging circumstances. I used to raise and train cattle to exhibit in Eastern Washington livestock shows. I worked side by side with my father to raise animals. People in the city don’t realize that on a farm you can do everything right but still fail due to things out of your control, like weather or prices.

CAREER: I graduated in food science and technology from Washington State University and went to work at a Safeway processing plant. I had to learn every job in the plant, from cleaning up to pasteurizing. I worked all the night shifts. I can relate well to the people who are operating our plants because I have done a lot of their jobs.

MANAGEMENT STYLE: I try to involve people a lot more to get input from them. We’ve put a process in place where every day we shut the line down and talk about what’s going on. We try to identify problems and talk about what we can do to fix them. It’s a way to bring fresh ideas in. We talk about what are appropriate measures of success and allow people to measure if they are winning or losing. People like to win. They like to think that things are better in terms quality, productivity and safety.

HISTORY: Darigold started in 1918. We now have 542 member families. Over time, smaller co-ops have merged with larger co-ops for greater efficiency. Two years ago, we merged with a co-op in Montana. They had more milk than their one facility could handle. By working with us, they had a [guaranteed] market for the milk. About 30 percent of the milk goes as fresh milk to the grocery shelf. The rest gets converted into cheese, milk powder or butter.

THE MARKET: What’s unique about the dairy industry is that it produces a highly perishable product every day and it is essential to have a place where the milk can be processed every day. Before the [United States] government stepped in to provide some stability, there were times when milk would get dumped because there wasn’t a market for it. Darigold converts the milk into something stable that can be stored and easily transported. As more milk continues to be produced in the United States, more and more of it will have to be exported.

COMPETITION: We’ve improved the science for optimizing the diets [of cows] so that the amount of milk we produce per cow is twice what it is in many places in the world. But it’s difficult for us to compete on price in global markets with countries like New Zealand, because we have a highly regulated pricing system. We pay our producers based on a federal price that’s set based on the domestic price of cheese and milk. We produce a million pounds of milk powder a day and we are often selling it [globally] two or three months out without knowing what we will have to pay for the milk.

MARKETING: We need do a better job connecting our consumers with the producers. One of the big issues in our society is that people are disconnected from where their food comes from. They don’t know Darigold is a producer owned by farmers. They don’t know how sustainable dairy farming is and how significant it is to the state’s economy. It’s second to apples, but the jobs that we provide are year-round jobs. In 2011, Darigold was the first winner of a national award for dairy sustainability. People don’t realize that dairy cows consume feeds like hay and byproducts from cotton production that people can’t digest and turn that into high-value protein. Cows are a very efficient way to produce protein.

NEW MARKETS: As the population gets older, the demand for fresh milk will decline. So how do you find other ways people can incorporate milk into their diets? We have invested a lot of money in technology to do the higher-end products. We just spent $20 million in Boise for a facility to produce cottage cheese and sour cream. We’re looking at products like Greek yogurt that are high in protein. We developed a coffee creamer made with real milk that people love. We produce Refuel, a protein drink that’s good for athletes. We’ve got the only plant in the Northwest that produces ultra-pasteurized milk products that have a longer shelf life, like the single-serve milk cartons used in school cafeterias.

BEING A CO-OP: Having your suppliers be your bosses makes for interesting dynamics. On the one hand, we need to reinvest in new products for long-term growth and stability. On the other hand, the [dairy farms] would like to be paid as much as possible for their milk. Each member of our board of directors represents a region and has occasional meetings with member dairies in their area. In addition, two of the 17 members of our board are outside directors, so they can bring a different perspective. One formerly worked for Goldman Sachs. He was amazed at how complicated the dairy business is.

Executive Q&A: Toward a More Perfect Union

Executive Q&A: Toward a More Perfect Union

As president of Seattle-based SEIU 775, David Rolf represents more than 40,000 long-term-care workers in Washington and Montana.
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David Rolf expanded the number of home-care and nursing-home workers in his Service Employees International Union (SEIU) chapter twentyfold — to 44,000 — in the past decade. He was a leader in Seattle’s push for a $15-an-hour minimum wage and has received national attention by calling for labor unions to innovate.

FAMILY: I grew up in a middle-class family in Cincinnati. My great-grandfather on my dad’s side was the president of a distillers’ union. My grandfather on my mom’s side was born into poverty in Appalachia and worked on farms and at timber mills. It was joining General Motors and becoming part of the UAW that moved him into the middle class. 
 
INJUSTICE: I was brought up believing that people were fundamentally good and that if you worked hard, you would be treated fairly — which is either the most naïve or most dishonest thing you can teach a child. 
 
EDUCATION: At college [Bard College in New York], I spent as much time on picket lines as I did in class. As a student government leader, I supported all the progressive causes, but the place I felt I could make an 
authentic contribution was in the labor movement. I supported the janitors when they organized into the SEIU in 1989. Later, I did an internship at an SEIU local, and they ended up offering me a job.
 
ORGANIZING: I worked for a scrappy, heavily African-American local union in Atlanta, organizing public-sector employees like hospital orderlies and bus drivers. I always thought of unions not as talent agencies or negotiators but as social movement organizations that help ordinary people share in prosperity. I spent 20 years organizing some of the biggest union campaigns since the 1930s.
 
EPIPHANY: For decades, I thought that by being smarter and more strategic we could reverse the decades-long course of labor decline. But by early 2012, we had seen a generation of right-wing governors take office and repeal union rights. I began this quest to figure out how we could replace the model that we have with something that is stronger and more effective.
 
CHANGE: Unions grew because of the Great Depression, the large proportion of workers in factories, the unpleasant work conditions, and mobsters who were looking for new profit centers and promoted unions to loot their treasuries and extort employers. Factory owners decided that dealing with a union was better than waking up and not knowing if their factory was going to produce anything that day. But today, capital can be moved around the globe with a few keystrokes. You can source labor almost anywhere. The power of the industrial strike has been crushed. There is no Communist Party cranking out anti-capitalist organizers, and there is 
no Mafia. Good riddance, but still. People today take more jobs before they are 25 than those in my grandfather’s generation had in their entire lives.
 
WAGE STAGNATION: Now we’ve suffered 40 years of wage stagnation. Who would have imagined in the 1970s that if women doubled their workforce participation, the take-home pay of the bottom 90 percent of households would not increase at all? Who would have imagined that we would create more wealth in 30 years than humans had created in their entire history and none of that wealth would go to the bottom 90 percent? 
 
COMPETITION: If the unionization system is opt-in site by site, you create an incentive for employers to bust unions. Even a highly moral employer will say, “If I’m the only one with a union, I’m at a disadvantage.” If you employ janitors in Seattle, you’re fine because it’s 95 percent union here. [Landlords] aren’t competing based on the price of labor. But in the hotel sector in Seattle, only a tiny percentage is unionized. That tends to force wages down. 
 
ALTERNATIVES: Germany has the world’s largest middle class by percentage of population. Its automobile workers make twice what ours do and they still produce twice as many autos as we do. Their unions set minimum standards by sector and by region. We could do the same for the fast-food sector or the maritime sector. 
 
ORGANIZING BY TECHNOLOGY: In the old days, there were hiring halls where you would go to find construction workers. Now, you just get a message on your smartphone that tells you where to show up. One can imagine an app that helps workers engage in collaborative price setting and cut out the middleman, such as all these VC-backed platforms like Uber. Alternatively, Uber workers could meet and form an organization and collectively decide to turn off their apps until prices reached a certain point.
 
WIN-WIN: People characterize unions as “members first, pale, male, stale and possibly in jail.” But whether it’s protecting the bad teacher or the drunken guy on the assembly line, those were designed features of our collective-bargaining system. If you were going to design something for the 21st century, you would want a system that scales to touch millions of people so it doesn’t put individual firms at a disadvantage. Things like work councils and co-ownership also tend to promote efficiency and a win-win strategy.
 
DONALD TRUMP: American workers have been taking it on the chin for 40 years, so it’s not surprising that people are angry. Every time that happens, someone will offer a scapegoat to blame. The simplistic, populist appeal of someone like Trump doesn’t gain traction when people feel as if they’ve bought into the system in which they are working and voting. 
 
$15 MINIMUM WAGE: The cities with the most restaurants per capita — Seattle and San Francisco — are the cities with the highest minimum wages. Phased-in increases, even relatively steep ones, give businesses time to change and adapt. I met with labor leaders in Europe and among them were McDonald’s workers making $20 an hour under their union contracts.
 
GLOBALIZATION: It explains why we only sew 5 percent of our clothes in this country — down from 95 percent in the 1960s. It doesn’t explain why the guy who puts fuel in jet aircraft makes a minimum wage today versus $60,000 and benefits in the 1970s. 
 
EXECUTIVE Q+A RESPONSES HAVE BEEN EDITED AND CONDENSED.