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Pineland Farms Inc. tops $100 million with William Haggett at the helm

BY James McCarthy

8/25/2014
PHOTo / Tim Greenway
PHOTo / Tim Greenway
William E. Haggett, Pineland Farms' CEO, has proven himself to be an adept chief executive by land or by sea. Here, he's pictured at the Pineland facility in New Gloucester.

Pineland Farms Inc.

32 Farm View Road, New Gloucester


President and CEO: William E. Haggett


Sales: $100 million in 2013


Employees: Naturally Potatoes, Mars Hill, 110; Pineland Farms Cheese Co., New Gloucester, 30; Pineland Farms Natural Meats Inc., several locations, 35.


Contact: 207-688-6800


www.pinelandfarms.org

William E. Haggett could have rested on his laurels when he retired from shipbuilding in 1997, and no one would have thought the worse of him.

Those laurels are a big reason he's receiving the Maine Maritime Museum's Mariners Award this week in honor of his contributions to the state's maritime industries, most notably his 28 years as an executive at Bath Iron Works, including eight years as president and CEO during the shipyard's critical transition into the Navy's Aegis cruiser and destroyer programs in the 1980s and early '90s.

But Haggett, now 80, discovered about two weeks into his retirement that he needed something to do with his time. Something more meaningful than golf.

It didn't happen overnight, and it hasn't been a straight line to success, but Haggett found the challenge he was looking for in his second-act career as president and CEO of Pineland Farms Inc. in New Gloucester. Under Haggett's leadership, Pineland Farms' three for-profit companies have hit the $100 million mark in collective sales, and they're profitable and growing.

That might seem to be an unlikely stage for the son of a BIW pipefitter and a lifelong shipbuilder, but Haggett says the business challenges are not that different from those he faced in shipbuilding.

“If you spend any amount of time in the business, as I did at BIW, by osmosis you learn enough as an executive to know the technology and the problems you need to solve in that business,” he says. “Those kinds of attitudes are transferrable. You can leave an industry like shipbuilding and do what I've been doing in working with potatoes, beef and cheese and pick up enough knowledge about each area so you feel comfortable dealing with their unique problems and challenges. Cattle is not a foreign subject to me anymore.”

Haggett's entry into the farming and food business began with a call in late 1999 or early 2000 from his longtime friend Owen Wells, who'd been leading the Libra Foundation since its creation in 1989 by the late philanthropist Elizabeth Noyce. Wells asked Haggett to take a look at the “inch-and-a-half thick” prospectus for Naturally Potatoes, a Mars Hill company founded in 1996 by fourth-generation potato farmer Rodney McCrum and several other potato farmers in Aroostook County. Naturally Potatoes needed some fresh capital to move beyond the startup phase.

“You can evaluate a situation for a business that's different from what your own first-hand experience has been and make a judgment,” Haggett says. “My conclusion is they had a terrific facility that makes an excellent product. There appeared to be growing demand for that product. To me, that all made sense. I felt that with some financial support, the company could get itself better situated and move in the right direction to success.”

What Haggett didn't know at the time is that after Libra had signed on as an investor in Naturally Potatoes, Wells had asked McCrum to review five resumes of potential board members and pick the one he thought would be the best fit to serve as chairman of the company's board of directors.

“I told Owen, 'How about Bill Haggett?' Owen said, 'That's a great choice.' At that time I didn't know Bill and Bill didn't know me,” McCrum recalls, adding that Haggett's “resume was very intriguing.”

McCrum, who now serves as Naturally Potatoes' chief operating officer, says Libra's capital and Haggett's business experience came onboard at just the right time. “At that point we were bleeding money,” he says. “We saw a future and we went for it. We built a state-of-the-art facility. As with most entrepreneurial startup companies, although we had done our research, our sales did not happen as quickly as we had hoped. We had to start from ground zero and then we fell on hard times.”

McCrum says the startup company had focused on cut-and-diced potato products to avoid going head-to-head with McCain Foods and other mega-companies in the frozen french fry markets. But those products weren't selling as well as he and the other farmers had hoped. Sales of the refrigerated mashed potato products, on the other hand, were beginning to pick up. Libra's investment enabled the company to make a switch and retool the Mars Hill facility's production line to meet the greater demand for refrigerated mashed potatoes.

Soon after being named chairman of the company's board, Haggett agreed to become CEO of Naturally Potatoes. He had one proviso: McCrum would be his COO. Picking the right leadership team is one of the key lessons he'd learned in shipbuilding, and Haggett says he knew McCrum was an essential player.

“Rodney has forgotten more about potatoes than I'll ever know,” he says. “He'd spent a lifetime of growing potatoes. He knew Aroostook County. He knew the facility. He appeared to me to be a terrific salesperson. He had everything I lacked in terms of knowledge of the business.”

With Libra's backing, Haggett and McCrum set out to build Naturally Potatoes' customer base. McCrum targeted national restaurant chains like Bob Evans and Ruby Tuesday and supermarket companies like Hannaford. “We continued to lose money but the trends were good,” Haggett recalls. “By late 2002 or early 2003 it was obvious the company was going to turn around. We started to see acceptable margins in 2003-2004. Sales were increasing 30% to 40% a year. We became very profitable.”

It was also apparently profitable enough that Basic American Foods, a privately held, Walnut Creek, Calif.-based food company, acquired Naturally Potatoes in 2005.

Haggett says it was clear Basic American Foods had deeper pockets and could make the investments the Aroostook company needed to reach its full market potential. “Our strategic priority is that we wanted someone who would be committed to leaving the business in Maine and expand the sales,” Haggett says. “We thought that in Basic American Foods we had a potential owner that would have the same long-range things in mind that we did.”

Although terms of the sale were kept private, Haggett says the sale enabled Libra, the banks and between 10 to 15 farmer investors “to make something in the transaction.”

“I told them I had no interest in staying with the company,” Haggett says, adding that McCrum agreed to stay on for a while as a consultant. “While they had some local managers on the scene in Mars Hill, for the most part they moved the company to California.”

Craig Denekas, who became Libra's president and CEO after Wells' retirement in 2011, says it might have been only a day or two after the sale of Naturally Potatoes that he and Wells invited Haggett to join them for breakfast at the Freeport Café. At that time, Libra was working with the Wolfe's Neck Farm beef and cattle business in Freeport on a plan to transition the nonprofit company into a for-profit venture. They asked Haggett if he might be interested in taking on that challenge.

Once again, Haggett found himself agreeing to be chairman and CEO of a Libra-backed agricultural business.

“I didn't know anything about cattle and beef except that I'd eat beef from time to time,” he says, adding that just as he had relied on Rodney McCrum's expertise in potatoes, he had Wolfe Neck's Erick Jensen and David Ordway as his go-to experts for all things beef. “If I'm going to get involved with anything other than ships I really have to have people who have the skills and knowledge of that discipline.”

Since Libra's 2005 purchase of the beef operations at Wolfe's Neck Farm, Haggett and his team at Pineland Farms' headquarters in New Gloucester have overseen a rapid expansion of the natural beef business, which now goes under the name of Pineland Farms Natural Meats. They looked closely at costs, sought long-term contracts with Wolfe Neck's original customers and explored new markets that would help increase sales and expand the customer base.

“From 2005 to 2010 the beef company grew rapidly,” Haggett says. “Our outreach grew to the point where, by now, we are sourcing cattle from Maine to Florida and west into Ohio and Kentucky. We are really an East Coast source of cattle and provider of beef for customers interested in all-natural beef products from the East.”

Haggett says the contacts he and Libra had made in Aroostook through Naturally Potatoes proved helpful when Pineland Farms Natural Meats needed land for a feedlot to fatten up thousands of cattle that had spent two-thirds of their lives grazing naturally in pastures without any antibiotics or growth hormones used in their feed. They found what they needed in Fort Fairfield, which granted Pineland Farms a 15-year lease on a 200-acre site formerly used as a potato-composting facility.

“That immediately became the largest feedlot in the East,” Haggett says, noting that its location carried the added benefit of having a close feed supply of barley used as a rotational crop by The County's potato farmers. “We're big enough that we're using up to half the barley grown in Maine. It's become a second commodity for a lot of Maine potato farmers. It's been a good fit for us to be up there in Aroostook County.”

To Denekas, the Fort Fairfield feedlot is another example of Haggett's business acumen.

“It's keeping your eyes open, looking at the world around you, that's what Bill does,” he says. “Within a year Bill came to us and said an important linchpin for success is the feedlot. It would give us the ability to finish the cattle in the way we need to — here in Maine.”

Not surprisingly, the Fort Fairfield feedlot also produces a lot of manure. Pineland Farms has turned that byproduct into an asset, shipping it to a composting facility at the former Limestone Air Force Base, where it cooks down enough to eventually be shipped to Coast of Maine Organic Products as an ingredient in its Schoodic Blend compost … another Maine product sold throughout the East Coast.

“Coast of Maine is taking hundreds of truckloads of it every year,” Haggett says. “You can get a lot of side benefits from these businesses.”

By 2010, Haggett says, Pineland Farms Natural Meats' business was growing rapidly — as was Pineland Farms Creamery, a cheese-making company Libra had started in 2005 at the Pineland complex in New Gloucester to capitalize on milk produced onsite by its “Wilsondale” herd of cows, which are one of the oldest registered Holstein herds in the country. It's now the largest creamery in Maine and its award-winning hand-crafted cheddar, Monterey Jack, Swiss and feta cheeses are sold to supermarkets, commissaries and restaurants across the country.

Pineland Farms also is back in the potato business, following its 2010 buy-back of Naturally Potatoes from Basic American Foods.

“Rodney, Libra and I got together and we bought the company back for a lower price than we had sold it for,” Haggett says. “It hadn't been performing well for Basic American Foods, but we still believed it had tremendous potential and could move in a positive direction. The impact of having Rodney back on site every day is that profitability returned almost instantly.”

Since 2010, Haggett says, Naturally Potatoes' sales have grown annually at 15%, it's been profitable every month and has been able to pay higher wages and provide year-end bonuses to its employees. With the capacity of its Mars Hill facility fully utilized, the company in early June began a $7.5 million expansion that will double its production and storage capabilities, giving it the capacity to process 50 million pounds of Maine potatoes when it's completed by the end of the year. A $1.2 million packaging line upgrade is nearing completion and the company expects to hire 17 new employees in the next few months, bringing its workforce to more than 100 workers.

Haggett says the upgrades are being financed by cash generated by the business and financing from Farm Credit East, the largest agricultural lending cooperative in the Northeast.

Recently, he says, with the cheese business achieving profitability, it was taken out of the nonprofit Pineland Farms division and folded into the for-profit potato company. “We thought it would create a lot of synergistic benefits,” he says. “We had individual marketing people for potatoes, beef and cheese selling all those products, for example, to Hannaford. It really doesn't make sense to have three different people selling our products to Hannaford.”

With a new macaroni and cheese product to be introduced soon and Naturally Potatoes' products being sold in every state, McCrum says he shares Haggett's optimism that the company's best days still lie ahead.

Walter Whitcomb, commissioner of Maine's Department of Agriculture, Conservation and Forestry, agrees, noting that as he stood with his shovel at the Mars Hill groundbreaking ceremony this June, McCrum told him, “Hang on to your shovel, you might need it next year.”

“Pineland Farms' success proves there can be a promising future for Maine's farmers, and that's consistently been Bill Haggett's message,” Whitcomb, commissioner of Maine's Department of Agriculture, Conservation and Forestry. “He's helped these companies [Naturally Potatoes, Pineland Farms Natural Meats and Pineland Farms Creamery] create a tremendous market niche for themselves in a very short time.”