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city. In a city of 600,000 people they can lose $100,000 a month very easily, merely because the men in the producing end of this chain and those in the distributing end are unable to bring their ideas to a common agreement.
Now, imagine the men in the production part of the Standard Oil Co. getting at loggerheads with the men in the distribution department and causing a loss of $100,000 a month. I bring that point up merely because I feel, and feel very deeply, that we owe a very great responsibility to the producer and to the public, and we fail to realize that when we get into these discussions and these difficulties. If we realized more fully our necessary inter-relationship and our responsibility to these two groups, we would work together more freely than we do and eliminate, more or less, this very great loss.
Mr. Hough (of Connecticut). I just want to say a word in connection with that very subject. I have seen a striking small example of the waste in the industry that does take place right along. In our own State only a year or two ago I found creameries making butter within 15 miles of some of the best consuming cities, while milk was being imported into the same State from long distances. I call it an economic sin, and any of us in the industry that are so narrow as to see those things going on and intensified are not true to the industry. We should keep those wastes down. I wouldn't like to see Wisconsin milk, as an example, shipped to New York City while they are running condenseries in New York State in great numbers or cheese factories; shipping in the bulky stuff while the same kind of stuff is being concentrated closer to the market. It would look to me like a terrible waste. I think the industry through this Congress is going to learn, at least I hope it is, how to prevent such economic wastes.
As Mr. Greene says, we owe it to the producer and we owe it to the consumer to stop this waste. Much of it can be done by eliminating discord between producer and distributor, as has been suggested.
Chairman Miner. This discussion has profited us in two ways. It has stimulated a good deal of good, honest thinking, which I wish we had time to continue. I have always believed that friction of that sort is good for the individual, and I am sorry we don't get together oftener and have a round-table talk of this sort from dif. ferent parts of the country.
The next paper on the program is by Mr. Maggs, chairman of directors, United Dairies (Ltd.), England. He was unable to be present; therefore Mr. John F. Phillips, a director of the United Dairies (Ltd.), will read his paper instead. So, with your permission and for our pleasure, I shall introduce Mr. John F. Phillips. of London, director of the United Dairies (Ltd.).
Mr. JOHN F. PHILLIPS (director of the United Dairies Ltd.). Mr. Chairman and gentlemen: I should just like to preface this paper by saying that I am very glad indeed to have this opportunity of being a delegate to this World's Dairy Congress. It has been a revelation to me the way in which the foreign delegates have been received. This is my first visit to this great country, and although I have heard rumors of the warmheartedness of our American cousins, I did not expect such generous hospitality. In fact, I have not yet begun to realize I am away from home.
I am here officially to deputize from my chairman, Mr. Maggs. I don't know whether the chairman would like me to read this paper in full or give the salient points; or if you are still more interested and will come across the pond sometime, I shall be only too happy to return the many kindnesses I have received on this side. [Applause.]
(Mr. Phillips presented the prepared paper on behalf of Mr. Maggs.)
THE ORGANIZATION OF UNITED DAIRIES (LTD.).
J. H. Maggs, chairman of United Dairies (Ltd.), London. United Dairies (Ltd.) is the largest British dairy company. As implied by its title, it unites a large number of dairy businesses, most of which, before amalgamation, were competing in the same market so that their services overlapped. It is a “holding" company, for the trading is carried on by about 37 subsidiary companies, the share capital of which United Dairies (Ltd.) owns.
THE FIRST AMALGAMATION.
Founded in 1915, it was originally an amalgamation of the three largest wholesale milk distributing companies in London, including a strong milk products manufacturing side, and a considerable dairy engineering business. The companies comprised were: The Dairy Supply Co. (Ltd.), the oldest London wholesale milk firm, with its auxiliary country milk depots and dairy engineering sections; The Great Western & Metropolitan Dairies (Ltd.), the largest wholesale milk business in London, with its condensery and creameries in Staffordshire; The Wilts United Dairies (Ltd.). In addition to its London wholesale milk business, this included a large condensed milk and creamery business with many creameries in the southwest of England and two in Normandy (France).
The above businesses were themselves the products either of amalgamation or acquisition by purchase of many of the old London businesses, and at the time of the foundation of United Dairies they represented the greater part of the wholesale milk trade in London. The fusion of these interests was undoubtedly hastened by the conditions brought about by the great war, which made it imperative that every possible economy in man and horsepower should be adopted. The principals of the three businesses came together, and with good will and large-minded vision quickly hammered out a scheme under which each business was valued on a common basis. The shareholders of the old companies accepted scrip in the new company in exchange for their old shares, and without going to the public for a penny, United Dairies (Ltd.) was launched with a capital of £1,000,000. The initiator and principal architect of the scheme was the first chairman, Sir Reginald Butler, Bart., who retired owing to ill health in 1922.
RESULTS OF ORGANIZATION.
Shortly after the formation of the new company a large provincial wholesale milk business, that of F. W. Gilbert (Ltd.), Derby, was acquired with several country plants in the Midland counties, Mr. Gilbert coming on the board of United Dairies (Ltd.).
Reorganization was immediately taken in hand. The first step was to divide London into three zones geographically. A managing director from each of the original companies took charge of one zone. Customers were transferred from one company to another so that overlapping services were dispensed with and, although the original three companies' organization remained intact, the number of routes was quickly halved and the number of horses more than halved by distribution being made from the nearest plant. Naturally competitors outside the United Dairies were alarmed, and worked upon the trade and the press with anticombine propaganda. The criticism no doubt served a useful purpose for keeping ever before us the ideal of lifting the milk trade of London to a higher level in every respect. We have undoubtedly proved to the smaller dairyman that the “combine” has been his best friend and gives a service which for efficiency and reliability is far ahead of the best possible in pre-combine days.
TWO OFFICIAL TRIBUTES.
In this connection it may be apropos to quote from the report of “the departmental committee on prices, 1916” (a committee set up by the Government to inquire, among other things, into the prices charged for milk). The report states, “ on a general view, the United Dairies (Ltd.) represented an economy in labor and plant, in distribution, much waste of competitive effort being eliminated. It also performed a useful necessary service in supplying the small dairymen who were not in a position to make direct contracts with the farmers for the fluctuating and uncertain quantities of the daily output of farms, with the exact quantity required delivered to their premises at a uniform price, thus relieving these dairymen of the risk of surplus and shortages involved in the system of direct contract."
In 1920, United Dairies was the subject of another inquiry by the subcommittee of the standing committee on trusts. That committee reported that the company had not dealt unfairly with either the producer or consumer. They have effected considerable economies and we consider that they have operated in the interests of the consumer as well as in the interest of their shareholders.”
THE FINAL AMALGAMATION OF THE WHOLESALE MILK SECTION
The process of amalgamation was perfected by degrees, and, finally, in 1921 was completed by the formation of the London Wholesale Dairies (Ltd.), a subsidiary company formed to take care of the wholesale milk distribution of United Dairies in London. The organization was concentrated in one office under one managing director. This organization deals daily with about 800,000 pounds of milk, besides cream, all of which is distributed wholesale to private
dairies, large institutions, and the larger caterers. This huge volume of milk is now distributed over Greater London, an area of 300 square miles, by means of only 310 horses and 12 electric lorries. The total number of employees, including clerical staff, numbers 443
THE CONVERSION OF SURPLUS MILK.
The shortest road between producer and consumer is the right road for milk to travel, and therefore while by far the largest portion of the supplies is directly consigned from the farm to the London termini, yet in order to insure the fluctuating demands of the public being adequately filled, and the varying surplus being dealt with to the best advantage, it is necessary to maintain a large number of plants in the producing districts. The milk for these plants is usually collected by motor transport, and is either chilled for the liquid-milk trade or converted into various milk products such as cheese, butter, dried milk, etc. As the price of milk in England is to a large extent governed by the fresh milk demand, it will be realized that the conversion of it into goods which have to be sold in competition with the world market is not in itself an economic proposition, but is a necessary adjunct to a fresh-milk business.
This section of the business has by various steps been reorganized and at the present time the creameries, whose function it is to care for the needs of the milk-distributing trade, are amalgamated under the title of United Dairies (Wholesale) (Ltd.). This controls.some 40 creameries placed in the best dairying districts of England and Wales.
The manufacture and wholesale distribution of cream and casein is looked after by another subsidiary, trading as Edwards' Creameries (Ltd.).
The condensed-milk business and manufacture of dairy produce, other than hard cheese, is concentrated under the title of the Wilts United Dairies (Ltd.). This also controls the manufacture, import, distribution, and export of fancy provisions, table delicacies, etc.
The dairy engineering side is cared for by a separate company known as the Dairy Supply Co. (Ltd.), with branches in Edinburgh, Cork, and Belfast.
REORGANIZATION OF THE RETAIL TRADE.
In 1917, United Dairies, which up to that time had confined its energies to the wholesale trade, were approached by several of the leading men in the London retail milk trade to formulate a scheme for the retail trade, on the lines which had proved successful for the wholesale. This involved a radical change in policy. Many were skeptical as to the possibilities of combining retail and wholesale. However, these objections were sunk. A scheme was propounded and accepted under which the greater part of the large milk retailing businesses in London transferred their interests to United Dairies, taking the latter's scrip on a common basis of valuation of their respective businesses. The heads of the larger businesses remained to manage, and the reorganization was taken in hand under the direction of United Dairies.
The plan which had proved successful in the wholesale amalgamation was largely followed. London was divided up into a nunber of zones, one subsidiary company controlling each zone. The managers of these zones being managing directors of their respective subsidiary companies, collectively formed what is called the retail directorate, an advisory body to the main board on retail matters. There are now 14 of these zones covering greater London and delivering milk twice daily to about 500,000 different homes and handling daily over 1,000,000 pounds of milk.
At the end of the first nine months, by the amalgamation of the retail businesses, no less than 736 routes were cut out and 592 horses dispensed with, and from that day to this, as other businesses have been acquired, the good work has gone on.
In 1921 was acquired a considerable business established at Buckingham by Thew, Hooker & Gilbey, manufacturing milk products, particularly malted milk, dried milk, milk chocolate, etc. Our company is always seeking remunerative outlets for surplus milk in the form of milk products, and is now developing what promises to be a considerable business in artificial ivory, the base of which is casein, a by-product of cream.
The scheme of management is, briefly :
The board of directors of United Dairies (Ltd.) is composed of eight managing directors, each of whom is responsible for a separate department. Below the board are various committees which report to the board. The chairman of each committee is a director, but on each committee, except the executive, are co-opted members of the detail directorate and other departmental managers, selected for their special knowledge of the particular subject. These committees are:
The executive committee is practically in constant session. Its function is to give effect to the decisions of the board, to control finance, property, and the head office departments (legal, architectural, engineering, estates, laboratory, etc.).
The milk committee controls the policy of milk buying, farm inspection, and relations with producers' organizations.
The manufacturing committee deals with the policy of the manufacture of milk products, sales, and advertising.
The transport committee deals with all mechanical transport.
The laboratory committee deals with the purity of supplies, efficiency of plants, and controls all laboratories.
The provisions committee deals with the supply of all goods other than milk, for sale in the retail companies' shops, which number 600. This side of the business has been greatly developed and enables distribution costs to be spread over a much greater turnover.
The engineering committee deals with policy of the companies engineering business and supply of plant equipment to allied companies.
The head office supplies a common organization for the whole of the subsidiary companies in respect of finance, legal, estates, engi