"I enjoy the challenge of finding the right group of people who can make a company run like a Swiss watch and turn them loose."
- Thomas J. Stewart (1945-2010)
Tom Stewart was a lot of things. He was a long-time philanthropist who supported education and the arts; a community activist championing free enterprise over government intervention; and an adventurer visiting the far reaches of the globe.
His 40-year career was remarkable for its continual theme of building successful companies along a road that took him from the rough docksides of Seattle to the careful development of one of the fastest growing and most successful privately-held corporations in America. But what made Tom Stewart a business leader was his skill at building teams that could adroitly manage the business challenges he created.
Since he was a young boy in the 50s, Tom Stewart knew that he wanted to be his own man. He watched and learned from the age of eight as he worked on the docks of Seattle for his father's shipping company. Even at that early age, he learned that hard work and a "can do" attitude was the path he should follow to achieve his goal. Growing up in Seattle, especially on the waterfront, was no gilded existence. The weather can often be bleak and the work hard. In lieu of allowance, his father always had work for him to do every school break and summer vacation. As he grew older, his resolve to follow his own path grew stronger.
This resolve that he learned at a very young age played itself out in world-class accomplishment. Tom Stewart sat atop a multi-billion dollar enterprise that employs thousands of hard working Americans as its sole owner and chairman. Services Group of America's very existence is living testimony to his skill as an opportunistic visionary, a deft financier and a calculating risk taker. During his career, he formed or acquired 45 companies; sold or spun-off 22; merged 18 into other companies and wisely closed 79.
Fresh from finishing college in 1967, Stewart joined his father's business, Seattle Stevedore Company, one of several stevedoring companies operating at the Port of Seattle. In those early years, he embraced a tenet that has guided him throughout his career -- always take care of the customer. With this customer-centric approach, he knew that he could multiply the company's $9.7 million in business, given the chance. Named vice president of the company in 1970, Tom Stewart set out to do just that.
In 1972, the US Congress passed the Longshore and Harbor Workers' Compensation Act that forced insurance companies to shy away from writing workman's compensation policies. But his employees needed coverage. Feeling compelled to respond, Stewart created his own independent insurance company called Hanseatic Eastern Insurance Company to cover his workers' compensation risks.
In 1982, he purchased Eagle Pacific Insurance Company and merged the two companies.
So successful was his approach to protect his workers with an independent quality care program, Stewart wanted to take his program to the open market. Between 1984 and 1986, he expanded and improved his management team. After replacing two CEOs and assembling the right management mix, the company, writing $10 million in premiums annually, Eagle Pacific signed its first outside customer in 1986. By the time Stewart sold Eagle Pacific Insurance for $100 million in 1998, it was the west coast's largest longshore workers' compensation insurer with eight offices and active policies in 12 states and Guam generating over $67 million in premiums.
Also in 1972, Seattle Stevedore Company diversified into the food distribution business when it acquired northwest dry goods purveyor, Miller Produce. Desiring to expand its sales and customer base, the Miller Produce decision was the springboard for what was to become one of the food distribution industry's biggest success stories.
While Miller Produce was a well-respected 50 year-old local company, Stewart saw an opportunity to increase his presence in the foodservice distribution business when in 1974 he engineered the acquisition of local foodservice distributor, United Cascade Foods located in Tacoma, Washington. During a particularly antagonistic Teamsters strike in 1977, he merged United Cascade with Miller Produce to form Miller Cascade with combined sales of $36 million. With the merger, the company flourished, now able to compete with larger foodservice distributors. Employing his "always take care of the customer first" tenet, Miller Cascade became so successful that in 1983 it broke the $100 million mark and earned the honors of being Distributor of the Year by its industry bible, International Distribution Magazine.
In 1975, Stewart added to the continually expanding stevedoring company by creating Seastar Stevedoring to manage the north and south Alaska port facilities now on the company's roster.
In a significant event in 1976, at 31 years of age, his father turned his shares in the company over to Tom, giving him his 50% ownership of Seattle Stevedore Company. That cleared the way for him to fully engage his vision and by 1979 as executive vice president, Stewart and Seattle Stevedore Company operated in every port in the states of Washington and Alaska.
Named CEO of the company at 36 years of age in 1981, he set about his expansion plans. In November 1982, he purchased Oregon's largest stevedoring operator, Brady Hamilton Stevedore Company.
Six months later he purchased California's largest independent stevedoring company, Crescent Wharf and Warehouse Company in May of 1983. Forming Stevedoring Services of America in 1984, Stewart had control of every port on the west coast of the US from Anchorage, Alaska to San Diego, California with sales topping $200 million. Adding the purchase of Indies Terminal in Los Angeles harbor a year later, Stevedoring Services of America's west coast market share had increased from 2.7% when he started with the company in 1967, to 42% of total market share out of the west coast with revenues of $320 million by 1989 when he left the industry.
"I enjoy the challenge of finding the right group of people who can make a company run like a Swiss watch and turn them loose," says Stewart about what's central to making his companies successful. "It doesn't concern me how many times I have to reconfigure the mix. But when I get right people in place, I can step back, watch the magic work and look to create another opportunity."
That's exactly what happened in April 1985 when he was so comfortable with the ability of his management teams that he left for a long planned six-month trip to pursue his dream of riding the 2,600-mile Pacific Crest trail from Mexico to Canada with his wife and three oldest children on horseback. During the trek, he used the time to reset his goals to expand his future beyond the stevedoring industry in which he grew up.
In April 1986, Pacific Gamble Robinson, the100 year-old mid-west foodservice distribution giant, recognizing the company's dominance in the Pacific Northwest, made a run at Stewart to purchase Miller Cascade. The meeting didn't work out quite the way the PGR representatives had planned because little Miller Cascade acquired giant PGR. When the PGR deal closed, Miller Cascade owned 56 distribution warehouses in 17 states; distributed 3,000 national brands and five private labels; owned three retail grocery chains with 57 operating outlets; managed a produce brokerage and shipping operation; pallet companies; fertilizer plants and packing sheds.
What was evident was that the company with its various divisions was out of control and hemorrhaging money. Stewart moved in his Miller Cascade management team to begin the process of streamlining the company and getting the financials in hand. Between 1986 and 1989, the old PGR company underwent a total reconstruction. In February of 1987 he renamed the food distribution company Food Services of America, Inc. giving it a fresh, new look. Although they had an 18-month reduction plan in place to pare down the 56 warehouses to a more manageable 28, the company was losing so much money that the plan was accelerated and completed in seven months.
Along with the PGR acquisition came the Tradewell retail grocery chain. Not part of his long-range plan and unable to liquidate it, Stewart stepped in as president and CEO to run the company for two years. In 1988, he sold the Tradewell grocery operations to 18 separate buyers at auction, while retaining all of the real estate.
To manage the retained real estate in the Tradewell transactions, lease agreements and other properties that came in the PGR acquisition, Stewart created Development Services of America, Inc. Today, Development Services of America is responsible for the design, construction and expansion of all Services Group of America's companies' warehouse and office facilities while maintaining a stable of leased and investment real estate holdings. Currently the company manages 3.4 million square feet of space for 140 different properties primarily in Arizona, Alaska, Washington, Oregon, California and various Midwestern states.
At the same time, the produce packing business of Pacific Gamble Robinson, called Pacific Fruit & Produce Company, was on a money-making, money-losing merry-go-round. “I’m not in the habit of having my business dependent on the weather," says Stewart of the time. The only part of the PGR produce acquisition that showed promise was the brokering and shipping side of the business. But because Pacific Fruit Packaging wasn't big enough, he couldn't find a buyer. By identifying another packing shed in eastern Washington, and merging the two, enough size was created to interest California-based Sequoia Partners to purchase the operation.
Other parts of the PGR acquisition that didn't fit into Stewart's plan were the pallet company and the fertilizer business. Buyers for those were quickly located to get them off the books.
Retaining the produce brokerage and shipping operations in 1988, he created an independent produce marketing operation called Amerifresh. After four years and several management changes, under a new strategy of serving as buyer and seller of only the best produce available, Amerifresh began to make money. And since it did, it hasn't looked back.
Today, Amerifresh has grown to one of the nation's leading produce marketing organizations buying quality produce consistently from the best growing regions in the world. Under the Snoboy® brand, Amerifresh serves both foodservice and grocery customers in 46 states with Stewart's vision quadrupling the company's revenues from $30 million in 1986 to more than $157 million today.
Between 1988 and 1989, Stewart made one of the most difficult decisions of his career when he initiated the split of the Stevedoring Services of America partnership. In April of 1989, he took control of the Services Group of America companies that included Food Services of America; Amerifresh; Development Services of America; Travel Services of America (a travel agency) and Services Group of America as a holding company leaving Stevedoring Services of America behind. Combined sales at Services Group of America were approximately $850 million.
On May 1, Stewart went to his Fargo, North Dakota distribution center to spend the next two months working every position from sorting tomatoes to warehouseman, from delivery driver to sales associate and from accounting to assisting the branch president. This immersion into the line operations of the company gave him a deeper understanding of the needs of the business and a keen appreciation for associates' talents in these areas. Even years later, associates who trained Stewart in these positions greeted him warmly and talked fondly of that period.
Over the next 15 years, Stewart didn't hesitate to make changes - as many as it took - until he found the right team to take Food Services of America into the future. Between 1990 and 1995, he changed the CEO position four times alone. He has also changed branch presidents 19 times until he had the best executives in these positions. Today, Food Services of America operates nine high efficiency mega-distribution centers with the most advanced warehousing, delivery and customer service technologies available.
So confident was Stewart in the strength of his Food Services of America management team, that in 2000 he took three months away from the office and completed an epic overland drive from Cape Town, South Africa to Cairo, Egypt.
"It's during these times when I can test the strength of the management team," said Stewart. "Strong management teams will perform day in and day out. To me it is like assembling an orchestra. Get all the right musicians and they will make wonderful music, if you're there to listen or not."
Tom's growth strategy is anchored by three basic practices: (1) empower all company Associates to take ownership in expanding the financial value of the company sharing in increased earnings; (2) adhere to the company's core competencies in food production, foodservice distribution and real estate; (3) and execute an acquisition strategy that adds capabilities that better serve Services Group of America customers without diluting its companies.
Tom aggressively put that strategy to work through acquisitions that eliminated competition and solidified market share. Between 1997 and 2000, he engineered a total of seven market acquisitions in Alaska and other states to do just that. Along with the hard work by local teams who beat the competition on the street, Stewart's acquisitions reduced the number of players in several markets leaving Food Services of America as the dominant foodservices provider.
Early in 2001, Tom completed the purchase of Portland, Oregon-based McCabe's Quality Foods. The importance of this was to solidify the company's capability in the quick service and chain restaurant distribution business. At that time, McCabe's was ranked 8th in its industry segment.
By not folding McCabe's into Food Services of America, but maintaining its individual brand identity, Tom added another dimension to the Services Group of America Food Group.
In November 2002, he also completed the acquisition of the west coast operations of Marriott Distribution Services. Successfully folding it into the McCabe's system, which by then had increased its sales to $200 million, the Marriott acquisition significantly increased McCabe's footprint in the western U.S. It also made the company into one of the nation's largest independent systems distributors. Now, renamed Systems Services of America (SSA), the company serves customers throughout the western U.S., Hawaii, Alaska, and exports to Mexico and the Pacific Rim for marquee chains.
That same year, to protect his center-of-the-plate future, Stewart acquired custom meat processor and distributor, S&P Meats, which has since been renamed Ameristar Meats.
In 2006, Tom moved the company’s home office from Seattle to Scottsdale following Washington State’s passage of the highest and most punitive estate tax in the country. As a student of economics, he was vitally interested in the success of SGA for the long-term and told state representatives the family-owned business would not be able to survive and he would be forced to move the company if the new law was passed. A man of his word, when the law passed, he took the necessary steps to make the move to Arizona.
Strengthening another important component in the Food Group in 2009, Tom modernized and invested in GAMPAC to increase supply chain expertise and high-tech transportation management to add value to customers.
In 2010, with the passing of SGA’s founder Thomas J. Stewart, his son, Slade, took over the business and its Associates, as his father had planned. Slade’s career path, including hands-on experience at the core of enterprise operations, has given him the institutional knowledge and the experience needed to further the vision of the company. To date, Slade’s executive experience has encompassed senior leadership positions as Executive Vice President FSA, President of Amerifresh, President of GAMPAC and currently Executive Vice President and Chief Operating Officer of SGA.
During his life, he had a unique connection with his Associates and felt an obligation to them by planning for the various aspects that could affect the business. He wanted the company to grow and thrive into the future and had developed a comprehensive business continuity plan to ensure the company would continue without him.
The senior management team that Tom Stewart developed continues to move the company forward and his son, Slade Stewart, has risen along the same career arc that Tom took when he first started the business in 1972.
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