Cargill CEO David MacLennan on Politics and Pandemic
When you do business in 70 countries across the globe, uncertainties in weather, politics, and market demands are a given. Adapting to constant change is par for the course for David MacLennan, CEO and board chairman of Cargill. But he acknowledges the coronavirus has been starkly different than a cyclical economic downturn.
“In the early days of the pandemic,” MacLennan says, “I was concerned we might crash our IT system.” That calamity didn’t happen when employees were adjusting to remote work. Most Cargill plants kept running. “Obviously we had some moments when we had to close our plants because of illness,” he says. Beef plants in Canada and Nebraska were among Cargill facilities temporarily idled because of Covid-19.
But Cargill has fared remarkably well in the face of the novel coronavirus. For Cargill’s fiscal 2020, which ended in May, the privately held company generated $114.6 billion in revenue, a 1 percent increase over the previous year.
MacLennan spoke to Twin Cities Business recently about navigating the pandemic and Cargill’s growth strategy. MacLennan, known internally as DMac, succeeded Greg Page as Cargill CEO in 2013. He is only the ninth person to hold the job since the company was founded in 1865. In 2015, the board elected MacLennan its chairman.
Beyond steering the giant agribusiness company with 155,000 employees, MacLennan is an outspoken leader in the business community on state and federal issues. In his TCB interview, he answered questions about the destruction of the middle class, the challenge of rebuilding Minneapolis, and Cargill’s racial reckoning.
The son of a veteran Cargill employee, MacLennan did not join Cargill until 1991, a decade after he earned his bachelor’s degree in English from Amherst College. He also holds an MBA in finance from the University of Chicago. A recent chairman of the Minnesota Business Partnership, MacLennan serves on the board of Ecolab.
Q: You were Cargill’s CFO in 2008 during the Great Recession, and you are serving as CEO during the pandemic. What are your takeaways from crisis events that you are applying to manage Cargill?
A: You’ve got to have as a core competency, or as part of your culture, the ability to make quick decisions, to be agile, and, more importantly with Covid, to be resilient. With Covid, there’s been so much more uncertainty. It proved to be far more widespread and destructive than anyone imagined in the early days of March and April.
The lessons learned are: You’ve got to have resilience and the ability to stay the course, to keep true to your values, to keep true to your strategy. Senior leaders have to have the ability and skills to articulate a message of optimism that is properly framed with reality. In a big multinational like ours, get the decision-making authority to the most appropriate level as fast as you can. You cannot make decisions on behalf of China or Brazil or India or Singapore sitting in corporate offices in Minneapolis.
Q: So your decision-making became more decentralized?
A: Some of it did; some of it didn’t. We had an executive crisis action team. So our Cargill CAT in the early days would say, “Directionally, here is where we want to go with the company in terms of standards for shutting down and also trading information.” So we knew where were the outbreaks coming the fastest or where we needed the resources. We also had regional CATs for Asia, Europe, Latin America, and North America. In China they went through [Covid] for the first 60 days [after the outbreak there], and by April they were pretty much back to normal. You certainly couldn’t be making policy decisions that were very appropriate in North America or Europe but completely inappropriate for China.
Our beef supply chain in North America was under significant stress in the early days, so we had to make decisions on what to do in those locations in North America very quickly. Obviously they were very different than what we might be doing in Argentina or Western Europe.
Q: Under the new Biden administration, what key changes in policy do you anticipate that could have a major impact on Cargill’s businesses?
A: Modernizing the United States’ immigration policy, which we are fully supportive of. I don’t yet know what their stance or policies will be toward China, but our farmer customers depend on China for markets to sell their products. I’m hopeful that there will be less antagonism toward China in terms of trade policy. In the short term, I think the most important priority is Covid relief and helping those who are most vulnerable and who have been hit the hardest. Ideally there will be an infrastructure bill. We are users of America’s waterways, railroads, highways, barges, trucks, ships, and port facilities.
Q: If you could encapsulate Cargill’s overarching principles on trade policy, what would they be?
A: We believe in open trade. We believe that food and agriculture should not be used as a weapon to try to create policy changes in our international relationships. Our belief is one of comparative advantage, meaning produce what you are best suited to produce in terms of your climate, soil, skill set, and your manufacturing capabilities. Then use open borders for trade to fill in the gaps for the products that you need.
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Q: If the federal government were more functional and made policy decisions in a timely fashion, how would that help businesses?
A: It would allow for business growth. Business success is directly linked to the health of the American consumer and the American population, which was affected by the [second] stimulus bill negotiations dragging out [until December]. Creating certainty and allowing businesses to operate quickly and plan with certainty ultimately is the best thing you can do for the U.S. economy.
Q: What are your top business goals for Cargill in 2021 and beyond?
A: First of all, we want to expand our presence and our business in Asia. You’ve got [a huge portion] of the world’s population living in that region, and Asia is not a monolith. We also want to move ahead with diversifying our portfolio into specialty ingredients and to new foods that consumers of the future are going to want.
We do have a plant-based protein business, and that’s going to be a growing part of the world’s preference. We are feeders of salmon and shrimp today, but we also want to be processors, like we are with poultry and beef, of seafood as well. Bio-industrials is an area of focus. We recently made an acquisition of a bio-industrial company, which is making products from agricultural products to go into beauty products. Those are some of our areas of focus for 2021, but also we’ve outlined them in our strategy we are calling Cargill 2025.
Q: Beyond leading Cargill’s employees, you are a business leader. As chairman of the Minnesota Business Partnership, you gave a candid speech in 2018, saying, “We must get back to being a more unified Minnesota.” How do we begin to do that?
A: I felt that there was an underappreciation of the contributions that the Minnesota business community makes to the state in terms of employment and philanthropy. I was frustrated at that time because I felt that there was a picture being painted in political circles that big is bad and businesses get a big break and businesses are abusing their position or not doing the right thing.
The rhetoric has calmed down since then. As we come back in 2021 from Covid, but also in Minneapolis from the devastation following George Floyd’s killing, the business and the political communities are really going to need to come together to restore downtown Minneapolis. We’re not successful as a state or a community without a healthy and thriving business community.
Q: You’ve previously expressed concerns about Minnesota’s tax levels. What’s your message to Gov. Tim Walz and Minnesota lawmakers who will be determining the next two-year budget during the legislative session?
A: You don’t want to be the highest-taxed state in the country, whether it is either corporate rates or individual rates. We understand that living in Minnesota has a lot of privileges. But we still need to be able to recruit talent to come here, and we still need to be competitive with other world and domestic companies. We want to support the social programs and social aspects in the state that need to get done, including educating children.
Getting Minneapolis back up on its feet is something the business community is going to need to support. So my message would be: Let’s work in partnership to make sure that there’s good strong fiscal policy that brings the strengths of the business community to the state but doesn’t make us an outlier in terms of taxation policy on a national basis.
Q: You’ve talked about the need to “fight against isolationism.” Tell me why you’re worried about nativist messages.
A: The last four years had more nationalist messages and isolationist messages than in the past. Our belief is we need to connect as a global citizen and as a world, whether it’s on trade or on cultural or educational ideas. In terms of being able to grow the American economy and state economies, we have to rely on more than just domestic sales. If we become just inwardly looking and isolated, that’s not healthy for our economy.
Q: Do you think there should be additional interventions, from either business or government, that address creating a larger and more robust middle class?
A: At the heart of what has been going on in this country for the last five to 10 years is the destruction of the middle class or the pushing down of economic classes as people have either lost jobs or lost skills. Whereas another class of Americans has prospered and created more and more wealth. So that type of inequality and that type of separation by economic circumstances is not a good thing for our country long-term. I think business has an obligation to make sure that there are skills-retraining programs for workers. Continuing to reinvest in manufacturing capabilities, in the skills and talent of the people who run those facilities, is much needed and one of the many things that I think businesses need to do to help shore up and grow the middle class.
Q: You’ve lived in the Twin Cities a long time, and you’ve seen that a racial reckoning has unfolded in response to George Floyd’s death in May. What are you doing to promote a diverse workforce at all levels at Cargill?
A: First and foremost, we have signed on to the Paradigm for Parity, which is to achieve 50 percent gender parity in our ranks by 2030. [We also are striving for] 20 percent for African American leadership by 2030. We just joined a coalition called the OneTen partnership, which is to hire 1 million African Americans in the United States in the next 10 years. Initially, there are 37 companies that are sponsors of OneTen. I think that will grow.
In particular, when we talk about inclusion and diversity, we discuss what we need to do to change the culture and the profile of our company. For example, we went through all of our job descriptions and scanned for words or language that subliminally may have discouraged either persons of color or women from applying for a job. We made changes and we found that not only were applications from diverse candidates increased, but those jobs getting filled by diverse candidates were increased as well.
I ask all of my direct reports, at mid-year and year-end, to tell me what they have done in terms of inclusion, equity, and diversity. It’s not only subjectively, but also statistically. [I ask them to] tell me what your representation is as we aspire to reach the 50 and 20 percent goals.
Liz Fedor is the senior editor at TCB and previously covered politics and business at daily newspapers.