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Continental Grain Company

 


Address:
277 Park Avenue
New York, New York 10172
U.S.A.

Telephone: (212) 207-5100
Fax: (212) 207-5043


Statistics:
Private Company
Incorporated: 1921
Employees: 14,500
Sales: $15 billion
SICs: 5153 Grain & Field Beans; 2048 Prepared Feeds Not Elsewhere Classified


Company History:

The second largest grain and related commodities company in the world, Continental Grain Company also represented one of the largest private companies in the world and one of the most secretive. Starting as a commodity trading business in Belgium in 1813, Continental Grain developed simultaneously with the modern industrial and agricultural age. Indeed, the company evolved from a humble European trading house to become a diversified commodity trading company with operations in livestock, shipping, food processing, oil, and financial services.

In 1994, Paul J. Fribourg was named president and chief operating officer of Continental Grain, representing the sixth generation of the Fribourg family to enter the company's highest echelon of management. Concurrent with Paul Fribourg's promotion, his father, Michel Fribourg, made room for his second-born son in Continental's executive management hierarchy by moving aside to become the company's chairman emeritus. This event marked the gradual transfer of power from one Fribourg to another in a chain of command that stretched back nearly two centuries. It was Michel Fribourg's great-great-grandfather, Simon Fribourg, who founded the commodity trading business in his native Belgium in 1813. Fribourg's business was nearly two decades old when the industrial revolution commenced, forever changing the face of Europe and creating fertile ground for Simon Fribourg's commodity business.

That Simon Fribourg founded his business before this monumental shift from an agrarian Europe to an industrial one was propitious. In the coming half century, Europe would experience unprecedented scientific progress and social change, engendering significant and wide-ranging developments in industry, commerce, and trade that brought vast new wealth to western European countries. Before the century was through, an extensive system of railways, under construction in Belgium by the 1850s, would not only significantly increase the speed of shipping goods, but it would also cut the cost of transportation in half. The methods by which these goods were produced changed as well, as small-scale craft industries and guilds gave way to the age of mechanization and full-fledged manufacturing plants. With the proliferation of these modern, heavy industries came large towns and cities and the emergence of a new class of citizens able to survive and prosper through the manipulation of capital rather than by owning land or tending to it.

As the effects of this industrial revolution spread, a society and marketplace for Fribourg and his business were made immeasurably stronger, buttressed by the advent of a middle class, the development of railroads, and the emergence of large urban and industrial centers. The effects of the forces that created this new Europe would enable Fribourg and his descendants to flourish in a world of commerce that, as the industrial revolution took firm root in Europe then spread elsewhere, witnessed the rise of merchants, manufacturers, bankers, and commodity traders like Fribourg.

Before Europe was transformed by the industrial revolution, Fribourg operated exclusively in Belgium, maintaining his company as a domestic commodity trading business. Simon then gave control of the company to his son, Michel Fribourg. Under Michel Fribourg's watch, the family business would make a significant move beyond Belgium's borders, as the currents of the industrial revolution reverberated from their origin in Britain to reshape three continental countries in particular: Germany, France, and Belgium.

Although many of the changes taking place during the century pointed toward industrial progress, rapid advances in agricultural methods occurred as well, leading to more abundant crops and occasional surpluses of food. Steam-plows and steam-threshers were becoming more and more common by the 1840s, replacing the tedious and millennia-old method of tilling and harvesting by hand. By the time these new agricultural implements were emerging in substantial numbers, investments by the Belgian aristocracy stimulated the growth of heavy industries in the valleys of the Meuse and Sambre.

Despite these early technological gains, the Irish potato disease of 1845 and 1846 had repercussive effects on the European mainland, leading to a grave shortage of wheat that doubled prices in western Europe in the late 1840s. Food riots erupted in Italy, France, Germany, and Belgium, and a financial crisis erupted after banks exhausted stocks of gold to pay for wheat. To exacerbate the situation, a severe drought crippled Belgian agriculture in 1848. In the midst of this tumult, Michel Fribourg made a fateful decision that forever changed the future course of his family's business. In 1848, Fribourg traded several trunks of gold for the as yet untapped market of Ukrainian wheat, which he in turn sold to his hungry fellow Belgians. This event signalled the beginning of the rise of the Fribourg family fortune.

In the coming years, the tides of change moved in a favorable direction for the Fribourg family, particularly as it began to operate as an import and export commodity trading business. Although industrial output had doubled in Europe in the 35 years spanning Simon Fribourg's founding of the business and the decision by his son to purchase Ukrainian wheat, free trade in the region continued to be stymied by a complicated web of tariffs and import restrictions. However, this web began to unravel slowly, just prior to Michel Fribourg's foray into Ukrainian wheat, making the second half of the 19th century a much more hospitable environment for the family business. As with the industrial revolution itself, Britain led the way toward the easing of tariffs and import restrictions, repealing the Corn Laws in 1846 and removing regulations which hampered wheat imports. Other European countries followed suit, enabling the Fribourg enterprise to expand and prosper; by the end of the century it had become a grain trading empire.

Nearly all of the changes that made the 19th century a signal era in modern history also made countries highly dependent on traded grain. As the 20th century approached, the company's position as a premier commodity trader put the Fribourg empire at the crest of the remarkable period of commercial growth that would affect the entire world. The same industrial, social, and scientific advances which had swept through Europe were, by the turn of the century, raging in the United States, a country with tremendously vast agricultural potential. Accompanying this shift from east to west, particularly in terms of agricultural production, Russia, which had become Europe's primary grain supplier in the 19th century, ceased to serve as such after World War I, creating a new market for the Fribourg family to broker their commodity services.

To capitalize on this limitless new market, the Fribourg family business, at that time led by Jules and Rene Fribourg, established its first U.S. office in Chicago in 1921. That same year, the company was reorganized as Continental Grain Company. Continental Grain strengthened its U.S. presence in 1930, when it leased a Galveston terminal from Southern Pacific Railroad. Interestingly, the Great Depression served Continental Grain well, for it enabled the company to purchase existing U.S. grain facilities at bargain prices. During the decade-long financial slide, Continental Grain purchased U.S. grain elevators across the country, obtaining facilities in such key locations as Kansas City, Nashville, and Toledo, Ohio. By the end of the decade and after less than twenty years in the United States, the company had established both a sophisticated grain network and a stable and growing business in North America.

The outbreak of World War II in 1939 not only signalled the coming of hostilities that would stretch across the globe, but it also portended flight from Belgium for the Fribourg family. When the Germans captured Belgium in 1940, the Fribourgs were forced to flee their homeland and emigrate to the United States, where they continued to run their successful agricultural commodities business. Among the family members in this abrupt emigration was Michel Fribourg, named after his great-grandfather who had established the firm foundation for Continental Grain's subsequent success.

After his father's death in 1944, Michel Fribourg, then 31 years old, assumed control of what had become a $300-million family enterprise. Ultimately, Michel would prove to be one of the company's most capable leaders, preparing Continental Grain for a modern global economy most notably through the diversification of the company's business network into the production of beef, pork, and poultry products and the broadening of their business scope to include feed and flour milling and financial services. Michel Fribourg also achieved considerable success in geographically increasing the scope of Continental Grain's operations by expanding them into more than 50 countries, which served customers in more than 100 countries.

The strides achieved by Michel Fribourg during the postwar period were momentous, particularly through two of his most noteworthy achievements, one of which bore a striking resemblance to the greatest achievement recorded by his greatgrandfather and namesake. Through the negotiating efforts of Michel Fribourg in the 1960s, Continental Grain hammered out a historic grain trade agreement with the Soviet Union, becoming the first company to export American grain to the United States' cold war adversary. This lucrative trade agreement was followed a decade later by a similar deal with China, and Continental Grain became the first company to export American grain to that country.

Against the backdrop of these two significant trade agreements, Continental Grain embarked on an aggressive acquisition program during the 1960s and 1970s, purchasing Allied Mills, Inc., a feed mill concern, in 1965, and absorbing numerous agricultural and transport businesses. These acquisitions, part of Michel Fribourg's diversification drive, brought together several notable properties under Continental Grain's corporate umbrella, including feedlots in Texas, an English soybean producer, a bakery, and Quaker Oats's agricultural products unit.

Entering the 1980s, Continental Grain narrowed the scope of its operations, divesting itself of its banking units and its commodities brokerage house. By the middle of the decade, the company was generating an estimated $14 billion in annual sales, up from roughly $5 billion a decade earlier, a prodigious sales volume recorded as the company underwent managerial changes of an unprecedented nature. One of the architects of the company's success during this period was Donald Staheli, who had joined the Allied Mills unit in 1969 and who eventually became president of Continental Grain in 1984. Four years later, when Michel Fribourg relinquished his chief executive post, Staheli became Continental Grain's chief executive, the first nonFribourg to hold such a position in the company's 175-year history.

However, this historic shift in power only lasted a few years before a new Fribourg embraced the family legacy. Paul Fribourg, son of Michel, had spent his entire career at Continental Grain after his graduation from Amherst College in 1976. He joined the company's Chicago office in the mid-1970s, beginning as a grain merchandiser and then climbing up the corporate ladder as so many Fribourg's had done before him. By the late 1980s, Paul Fribourg was exercising his own influence on the company, realigning its international grain and oilseeds operations to create Continental Grain's World Grain and Oilseeds Processing Group, a division which he headed. Paul assumed his place in the Fribourg family legacy in 1994 when he was named chief executive of Continental Grain.

As it had for decades, Continental Grain operated during the 1990s as the second largest grain and related commodities company in the world, trailing only Minneapolis-based Cargill Inc. Although sales were essentially flat during the first half of the decade, remaining static at an estimated $15 billion, the company maintained its firm economic foundation. Indeed, given the company's pervasive presence in the worldwide grain trading market and its nearly two centuries of success, Continental Grain enjoyed an enviable position as a steadfast leader in the international grain commodities market. As the company planned for the future with Paul Fribourg at the helm and the Fribourg family controlling 100 percent of Continental Grain's stock, the company was poised to thrive in the coming decades just as it had for nearly two centuries.

Principal Subsidiaries: Continental Grain Company Dutch Quality House; Continental Grain Company Fall River Feedlots Division; Continental Grain Company Grant County Feeders.





Further Reading:


Byrne, Harlan S., "Land of Plenty," Wall Street Journal, October 18, 1973, p. 1.
"Continental Grain Company Loads Historic Corn Shipment," Milling & Baking News, May 18, 1993, p. 29.
"Continental Grain Lumbers through Market," Bank Loan Report, September 14, 1992.
"Continental's Coup," Newsweek, February 3, 1964, p. 65.
Lavinia, Robert J., "Continental Grain-Tosco Joint Venture Launched," PR Newswire, October 30, 1992, p. 1.
"Michel Fribourg," Forbes, October 26, 1987, p. 154.
"Shh ... Hedging Going On!," Forbes, November 1, 1976, p. 47.
Vail, Bruce, "Continental Grain Realigns Shipping Units," American Shipper, September 1994, p. 23.
Zuckerman, Laurence, "Executive-Suite Shifts at Continental Grain," New York Times, July 1, 1994, p. D3.

Source: International Directory of Company Histories, Vol. 13. St. James Press, 1996.




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