The Livingston Industrial Revitalization Plan: Building Its Own Base

Chapter 399 The Livingston Industrial Revitalization Plan: Building Its Own Foundation (Part 2)

"Deep processing of food?" Old Cargill looked surprised. "Forgive my bluntness, but your idea isn't exactly novel—"

But you have to understand, this is a completely different industry. We don't understand it at all—”

"I didn't intend to involve Cargill. This is my business. I'm just telling you my plan to put your mind at ease—" Larry said with a smile.

"—Okay, tell me!"

Larry glanced at the other two and said with a smile, "I'd like to give you an example to illustrate the added value of wheat after processing. Note that I'm referring to price ratios common in the East and Midwest—"

Currently, one dollar can buy five pounds of beef, which retails for 20 cents per pound. But what about wheat? A bushel of wheat, totaling 60 pounds, only sells for 75 cents.

If we grind wheat into flour, 60 pounds of high-quality wheat can produce about 42 pounds of refined flour. And the price of flour is 7 cents per pound. That's a profit margin increase.

Everyone nodded.

Larry was stating a fact: wheat is traded between farmers and mills, a large-scale transaction between merchants, so the price is naturally very cheap.

Flour, on the other hand, is sold by retailers to end customers, so the wholesale price is naturally much lower than the retail price.

"Let's say we produce a five-pound bag of refined flour. Our suggested retail price would be 35 to 45 cents, which is equivalent to 1.75 to 2.25 pounds of beef. The profit is hidden in the unseen areas."

Larry concluded.

"But even if your flour price is the same as others, your wheat cost is still higher."

McMillan reminded him.

"We can continue to explore profit potential—for example, cookies. What I've seen in Chicago is that a five-pound bag of sugary, fatty cookies retails for 60 to 75 cents, which is equivalent to 3 to 3.75 pounds of beef."

Larry laughed and continued, "God bless! The United States of America is currently in a period of abundance. A skilled worker with a weekly wage of five dollars can buy 25 pounds of beef, or 55 to 70 pounds of refined flour, or 30 to 40 pounds of cookies that can be stored for a long time."

Gentlemen, you can see a phenomenon: if we can perform advanced food processing, the so-called cost of wheat becomes insignificant compared to the final profit —

Old Cargill frowned and continued, "But people have flour and beef, why would they buy your biscuits? It doesn't seem like a good deal."

"Risks are everywhere! People always need to keep some emergency food at home." Larry waved his hand and continued, "As we all know, there are no east-west mountain ranges in North America. Every fall and winter, from Chicago to St. Louis..."

From Memphis all the way to New Orleans at the mouth of the Mississippi River—a single cold snap can freeze half of the North American continent.

Every family should store life-saving food.

At the same time, summer also brings tornadoes, blackout storms, cattle thieves, bandits who make a living by plundering, and indigenous people—all of these pose risks.

A jar of cookies might cost only 75 cents, less than a worker's wages for a day and a half. But it could provide a family of four with three days' worth of life-saving calories during a famine. Those cookies were more than just food; they were insurance.

If you gentlemen broaden your thinking a bit more, consider the gold prospectors in the West, the migrating caravans, the oil workers tirelessly working on exploration sites, and the sailors at sea—they all need simple and convenient biscuits. There's no need to worry about finding a market for this kind of fast-food that can be stored for a long time.

McMillan suddenly asked, "Wait a minute—you mean, can your cookies be stored for a long time?"

McMillan's question was very "timely," because at this time the biscuits were like dry bread and Central Asian naan bread, which had to be extremely dried and dehydrated to extend their shelf life, but they had to be soaked in water before eating—otherwise they would break your front teeth.

But Larry said that his cookies were not only rich in oil, but also had a very long shelf life—which was what others couldn't understand the most.

Larry said casually, "Yes! Waterproof and moisture-proof. I will use tinplate and oil paper to solve the age-old problem of traditional wooden box cookies being prone to insects and dampness—we can even produce military-grade cookies with a shelf life of several years, which can be sold to the U.S. Navy!"

After Larry finished speaking, the father-in-law and son-in-law looked at each other again. Old Cargill, having spent his entire life immersed in the food industry and familiar with the downstream market, knew that biscuits had been in high demand in Europe and America since their invention, but the problem with biscuits was their short shelf life.

These have always been industry challenges. Previously, people could only try to solve them using cookie recipes, but unexpectedly, Larry focused his efforts on packaging.

But it seems that Larry's proposed solution can actually address these pain points.

When it came to "selling to the Navy," George Eastman gave Larry a deep look.

If Cargill and McMillan were wary of Larry having the governor of Illinois as his guarantor, Eastman was consistently surprised that Larry also had the backing of the U.S. Navy.

In the eyes of both groups, Larry always maintained a mysterious background, believing he had powerful connections.

After thinking for a few seconds, McMillan suddenly asked, "Wait a minute—you just said the flour comes in five-pound bags—how is that possible? Shouldn't flour be sold individually?"

McMillan explained the state of the American food sales system at the time: customers were not actually receiving packaged flour, but rather bulk flour.

At that time, American mills sold flour by the bucket. Because the United States was in the early stages of industrialization, it did not have a developed packaging industry.

After the mill grinds the flour, it is stored in a large wooden barrel that weighs 196 pounds and sold to grocers or grain stores, which then sell it to customers at the retail price.

This is also where McMillan questioned Larry, because at that time, people simply didn't have a concept of "standard packaging."

concept.

Larry nodded and smiled. "You finally noticed this problem—yes! We're going to produce standard 5-pound bags of flour, packaged in moisture-proof kraft paper and oil paper bags, 5 pounds a bag—that way, even housewives buying flour can carry it themselves—"

After Larry finished speaking, all three of them stared wide-eyed.

If Larry had mentioned "deep processing of grains" before, people's impressions would still be of familiar mills and food factories—at least they could imagine that production scene.

Larry offered a brief explanation, but all three men's minds went completely blank. They had absolutely no concept of tin boxed cookies or 5-pound bags of flour.

Because people really can't imagine things they haven't seen.

"My God! Mr. Livingston, what are you thinking? Are these things even feasible? I don't think your special packaging will be accepted by the customers!" Old Cargill retorted, frowning.

Larry turned to him and said, "Sir, you may be an expert at buying grain. But when it comes to retail and discovering the needs of ordinary consumers, you certainly can't match my shrewdness."

In addition, while switching to tinplate or kraft paper packaging slightly increases costs, it allows for the creation of standardized, branded industrial products. Previously, customers didn't care whose flour or biscuits they bought were from—but my products can have "guaranteed net weight" and "highest quality" printed on each bag.

We can make all our customers recognize the brand and cultivate their trust and loyalty! Changing consumer habits is a long-term process, but believe me, folks, once people accept pre-packaged food, they'll never again be carrying wooden crates to queue at the grain store for bulk flour!

"So, reviving the food industry in Rochester is feasible?" Old Cargill exclaimed in surprise.

"Of course it's feasible! And I'll do it flawlessly, and Mr. Eastman will help me. Rochester is perfect for a new industrial cluster."

After Larry finished speaking, Cargill and McMillan immediately focused their attention on Eastman.

More than the deep processing of wheat, they were surprised by the address in Rochester, New York, and the role played by George Eastman.

George Eastman cleared his throat and smiled as he introduced the two men, "—Indeed, Rochester was the best mill district in the East for the previous 60 years, and I grew up there. The mills there once filled the banks of the River Jennie."

"Wait a minute," McMillan interrupted him, "you must be Mr. Eastman, the founder of Kodak?"

"Yes, I am the owner of Kodak." Eastman pushed up his glasses and gave a professional smile. "After receiving Mr. Livingston's telegram, I immediately began to collect information on the city's industries. Only then did I discover that previously easily overlooked causal relationships jointly contributed to Rochester's prosperity and decline."

George Eastman began to tell the three about his familiar yet not-so-familiar Rochester.

Rochester is located between Albany, the capital of New York State, and Buffalo, with the Erie Canal connecting the three cities. At its peak, the city was the largest flour processing center in the United States.

Rochester's rise to prominence was largely due to its location on the banks of the Janecy River and its proximity to the Erie Canal.

Local mills typically built watermills along the Jennie River to grind flour.

However, in the last decade, dams were built along the upper reaches of the River Jennie, reducing its water volume and significantly decreasing the efficiency of the mills. Coupled with the rapid development of the railway network, the advantages of canal transport in terms of speed and cost were gradually lost, leading to Rochester's decline.

"There's a strong foundation in the flour processing industry there, along with the necessary facilities. Building a flour mill there would be perfect," Larry said with a smile.

After hearing Eastman's explanation, Macmillan asked, "But how can you improve the efficiency of Rochester's mills? Are you suggesting building all the mills upstream on the River Jennie? That would negate the advantage of transportation—"

Larry smiled and looked at Eastman, who also smiled and said, "We plan to use renewable energy!"

"Electricity? Isn't this thing only for lighting?" McMillan asked curiously.

"This is a completely new energy source, and lighting is just its most basic and insignificant use," Larry said with a smile. "Electric power is more efficient, stable, and controllable than traditional waterwheels or steam power. At the same time, a modern electric mill can significantly reduce production costs and improve flour quality, which can allow Rochester flour to regain its market competitiveness in terms of both price and quality."

At this moment, old Cargill chimed in, frowning, "As far as I know, building a power plant is extremely expensive. Building an electric mill might be a good idea, but where will the electricity come from?"

Larry looked at Eastman again, who shook his head and smiled slightly, saying, "This is all thanks to Larry—when we went to Rochester together, we unexpectedly ran into Westinghouse's boss, Westinghouse House—"

Larry bet that he must have had his own purpose in going to Rochester, and when I found out later—it turned out to be true.

Mr. Westinghouse plans to build a small hydroelectric power plant on a reservoir upstream of the Jenny River, but his ultimate goal is to utilize Niagara Falls on the US-Canada border to establish a large hydroelectric power hub capable of supplying electricity to the East!

After Eastman finished speaking, the father-in-law and son-in-law didn't react much, but Larry nodded approvingly. "Mr. Westinghouse's thinking is indeed very far-sighted and makes a lot of sense—but he first needs to solve the problem of long-distance power transmission. That's a huge challenge!"

Eastman looked at Larry in surprise. "How did you know, Larry? He told me himself that over 150 kilometers from Nigelara to Rochester, power loss would cause electricity costs to skyrocket, so he's planning to try out the small hydroelectric power station on the Jenny River first!"

Larry smiled and waved his hand, indicating that it was nothing and that the three of them shouldn't dwell on the matter.

Eastman withdrew his surprised look and concluded, "In short, Mr. Livingston communicated this industrial revitalization plan to me in the telegram. After careful consideration, I felt that it was not only feasible—but also, as I visited Mr. Westgrenhouse, for example, I felt that this plan to revitalize Rochester was of great importance."

As he spoke, Eastman looked at Larry, "You might bring a new life to Rochester! Not just the mill will reappear, but more importantly, your subsequent arrangements could transform this small town into one of the most important cities in New York State—"

Old Cargill and McMillan couldn't help but nod, because Mr. Eastman was right; if a city could truly be revitalized because of one person.

Therefore, Rochester will become Larry's "territory," and Larry will become its lord.

Even if Larry were to enter politics, Rochester would become a stronghold for him.

"Am I to understand it this way, Mr. Livingston? In your business empire, Cargill will be the starting point of the food industry chain, while Rochester is the end!" McMillan asked.

"Cargill is very important to me," Larry said, giving the elder Cargill and McMillan a deep look. "If I can successfully acquire a stake, Cargill's supply chain will be the root of this great tree. I've said before that I will make Cargill number one in America, and I will never go back on my word. The reason I'm taking the time to explain my food empire to you is because I'm being honest with my strategic partners."

This time, even old Cargill couldn't help but nod in agreement—he could tell and understood that letting Larry invest was genuinely for Cargill's benefit!

At that very moment, the knot in Old Cargill's heart, which had been nagging at him for over a month, was finally untied.

After thinking for a while, McMillan concluded, "So you're going to bypass all the intermediaries and go directly to the retailers."

"Really? If that's the case, from wheat to flour to biscuits—you might actually be able to keep the maximum profit in your own hands—and the cost of wheat wouldn't be an issue anymore!"

Larry raised an eyebrow and muttered to himself, "This is nothing. Wheat will give rise to flour mills, and flour will give rise to cookie factories and breweries."

Byproducts of flour processing, such as bran, can be used to produce feed for feed mills, which in turn can develop the livestock industry.

Packaging plants and glass bottle factories that supply flour mills will also become the most important tertiary industries. Crucially, Rochester doesn't lack glass.

Industrial clusters! What are industrial clusters? They are clusters where a single move can have far-reaching consequences, and a single strategic decision can revitalize the entire industry!

Of course, there's no need to tell them this.

What Larry needs now is to boost Cargill and Eastman's confidence.

Because of insufficient capital, if we want to expand on a large scale, we must ensure that our partners fully understand our strategic intentions so that we don't fall apart at critical moments!

Only in this way can allies be turned into one's core base.

After feigning thought for a moment, Larry solemnly replied, "Profit isn't the most important thing; the most important thing is the industry—if I can control the food processing industry—Cargill will..."

We no longer have to worry about sales.

McMillan looked at Cargill again; they could both see the astonishment in each other's eyes, but Larry was right—Cargill controlled grain procurement upstream and the food industry midstream, thus forming a vertically integrated trust that could maximize its control over retailers.

McMillan frankly shared this idea with Larry, asking, "Are you planning to control downstream retailers as much as possible?"

"You're right, but not entirely—" Larry said with a laugh. "Our food industry isn't about fighting retailers; it's about going straight to the customer because I have the best retailer network too!"

Upon hearing Larry's words, the three of them were once again shocked—they looked at Larry with incredulous expressions, their faces filled with doubt and astonishment.

The doubt wasn't that I couldn't believe what Larry said, but rather that I was too shocked by Larry's extraordinary approach, feeling that I might never truly understand his thoughts.

"Gentlemen," Larry said, glancing at the three men with a slight smile, but his tone was very calm, "America is changing. The old model of shipping our fertile Midwest produce to the East and even Europe cheaply, like raw materials, has come to an end."

He left farmers at the mercy of distant market fluctuations, and our cities gained little beyond the empty title of a war machine.

What I need to do is not struggle at the end of this old chain, wasting time and energy fighting over a few cents in cost.

"I want to create a brand new flour city and food industry valley that belongs to me!"

Finally, Larry looked at the three of them and said solemnly, "If you're willing, this industrial chain belongs to me, and it will belong to us! Are you willing?"

Having said that, the three of them nodded in agreement without even blinking.

"We are willing!"