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Agrimarketing : May 2009 Supplement
04 AG BIZ PROFILE:16 Thinking Outside Box 5/5/09 9:46 AM Page 6 HARDWORK YIELDS SUCCESS/continued frompage 5 are operating on very narrowmargins, itwould still require nearly a $400million investment for themto continue to operate.” In all, CHS has investedmore than $800million in two refineries since 1990. “That’s the real difference Leon brings to our industry,” says John Johnson, CHS President and CEO. “In a timewhen energy revenues were quite lowand CHSwas a small WESTBROCK’S PATH TO SUCCESS 1969: B.S. degree, St. Cloud (MN) State University 1969-1971: U.S.Army 1971-1976: English teacher,Hoffman,MN 1976-1982: Managed three co-ops inMN andND 1982-1986: Mgr, CHS Lubricants Dept. 1986-1987: Dir, CHS Retailing 1987-1992: VP, CHS Energy 1992-2000: Exec VP, CHS 2000-Present: Exec VP, COO, CHS Energy Other activities: • Chairman,National Cooperative Refinery Association. • Trustee, finance committee of St. Cloud State University Foundation. • Past Chair: Agriliance; Cenex PetroleumInc.; Cenex Pipeline; Agro Canada; Universal Co-ops; Ag States Insurance Agencies; BEST Foundation at SimleyHigh School at Inver GroveHeights, MN. • Former Board of Directors: Heartland Credit Union; Cenex Finance Assoc. Other honors: • 2004 College of FineArts and Humanities LeadershipAward, St. Cloud State University. AM 6 Agri Marketing s May 2009 player in the business,wewere faced with decidingwhether tomake these major investments. Leon had the courage and the vision to give the go-ahead for those improvements because itwas the right thing to do. And because he had faith that itwas the right thing for our company.And hewas right.” While investing $400million for ultra-low-sulfur diesel production was necessary to remain in the business, spending the additional $417 millionwas strictly elective.After years of planning and nearly two years of construction, the newcoker came online last year. It breaks down heavier oils into lighter petroleum products, allowing the refinery to squeeze 20%more fuel fromevery barrel of crude. In the same time frame, CHS also built two newpetroleumterminals atMissoula and Logan,MT, and upgraded its rail capacity in order to gain flexibility. The end result is substantially enhanced regional distribution. Leon’s vision and focus on serv- ing customers had helped put an entirely new—andmore capable— face on the CHS energy refining and distribution network. NEWINITIATIVES “One of the biggest priorities is to remain competitive among like-size refineries,”Westbrock says, “sowe can remain a dependable, long-term energy supplier for our customers. We’vemade substantial investments in upgrading our refineries in recent years, but that process is far from over.We continuemonitoring changes in regulatory standards and preparing for additional refinery enhancements,whichmost certainly are on the horizon. He says the group is also taking an active role in policy discussions regarding a U.S. cap-and-trade systemto address emission levels and global climate change, as some proposals put smaller refineries like CHS at a disadvantage. “Our goal in this debate is to help shapewin-win policies that are in the best interests of our stakeholders and our communities,”Westbrock explains. “In addition,we’re starting to refresh the Cenex Guy advertising campaign,” he continues. “Our team is looking at newinitiatives to grow awareness and preference for productsmarketed under the Cenex brand and is also exploring new ways to engage customersmore actively in the campaign.” LOOKING AHEAD “I amvery bullish for CHS,” Westbrock says. “As far as the Energy group is concerned,we are well positioned in both fossil and renewable fuel sources. I think the debate about renewables and their impact on food prices, subsidies, etc., will continue to be vigorous, but CHS iswell positionedwhichever way it goes.” Froma corporate standpoint, he is enthused, aswell. “After all, our members own and operate the land, which is the ultimate source of all energy,whether it be fromabove the ground such aswind and crops or belowit such as geothermal.” He also remains a strong advo- cate of the co-op system. “We are owned by ourmemberswho are loyal and exercise their right to have their input in howthe organization is run.Also,we can run the business for the long term, as opposed to most corporationswho aremeasured on a quarterly basis.” The only disadvantage is they can’t raise capital as quickly as private businesses. “We can’t sell stock, sowe have to live off our retained earnings and borrowings,” he reports. But the businessworld ismuch different and filledwithmanymore risks thanwhen he started in it. “For years, fuel priceswould only change one-half to one cent over a 12-month period.We noware seeing swings of 26 cents a day. Throwin increasing government regulations, advancing technologies, riskmanagement and instant communication andwe have some real challenges and opportunities ahead of us.” But like pastNAMAAgribusiness Leaders of the Year, he is up for the game. “It’s all about the people,” Westbrock concludes. “Andwe have been fortunate to assemble a real winning team.” AM (more on page 8)