In its second major expansion in two years, Madison-based Central Storage & Warehouse Co. (CSW) in March added 1.2 million cubic feet of frozen food storage to its Pleasant Prairie warehouse.
The $4 million, 37,000-square-foot facility took four months to build and represented a 55 percent expansion to the site’s existing 2.2 million feet of cold storage. CSW also doubled its full-time, full-benefit work force to 18 in Pleasant Prairie to staff the expansion.
With seven locations in five cities, the company, founded in Madison in 1947, is the largest family-owned cold-storage business in Wisconsin, with a total of 17 million cubic feet of warehouse space.
John Winegarden, 46, became chief executive of CSW for owner Ken Williams in fall 2007. He joined the company soon after leaving the Army in 1993 and worked as the Eau Claire plant manager — as did his grandfather, Roy Goetzke, before him, for company founder Jack Williams — before becoming vice president in 2003.
As CEO, Winegarden also oversaw the company’s last major expansion, opened in Madison in October 2011, when the company’s refrigerated warehouse complex finally was made whole with a 42,000-square-foot freezer expansion. It and a prior addition replaced company property that burned down nearly 20 years previous in what became known as the “butter fire.”
The largest commercial fire in state history, it burned for three days in May 1991 and destroyed nearly half of CSW’s Madison property. It caused $89 million in losses of buildings, equipment and 30 million pounds of stored food, which melted in the fire and produced rivers of lard, meat products and butter that oozed into nearby streets and gutters, flooding storm sewers and at one point threatening Lake Monona.
The company rebuilt gradually, and today, with 60 employees and about 100 customers statewide, CSW strives to balance the need for growth with the desire to continue serving customers well, Winegarden said.
CSW works almost exclusively with the storage, transport and distribution of food products. It stores ice cream, meat, vegetables, fruit and seafood in the frozen sections of its warehouses, with mostly cheese and juice in refrigerated areas. Dry goods include milk powder used in cheese production and the packaging materials that clients buy in bulk and store at CSW to save space at their own plants for production.
This fall, a new state contract means CSW will begin providing statewide storage and distribution of USDA commodities for the National School Lunch and Emergency Food Assistance programs, including dairy products, meats, fruits, vegetables and grains.
Prior to this year, CSW typically handled the food for those programs for only about half the state.
Q: How do you like working for a small to medium-sized business, rather than something larger?
A: I’m very happy to work for a family-owned, Wisconsin-based company, where I get to interact with my co-workers and our customers as real individuals rather than numbers.
I had several job prospects at Fortune 100 companies when I got out of the Army, but I’ve always been glad that I held out for a job where building personal relationships is key and I have some stability for myself and my family in this beautiful state.
Q: Why did you expand in Pleasant Prairie?
A: We’ve seen steady growth in several of our primary customers there. So it appeared to be the right time to expand, and also we were able to take advantage of low interest rates in general. Plus we had (access to) a Midwestern disaster relief bond (issued by the village of Pleasant Prairie) that was expiring at the end of the year, to secure even lower interest rates.
We had a 72,000 square-foot-facility there before. It’s all frozen space. We do a large amount of meat products in Pleasant Prairie, and also pizza and frozen vegetables. It’s located near Kenosha and serves mainly the Milwaukee and Chicago markets.
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Q: Your new freezer space features construction materials and technologies meant to maximize performance while saving energy through remote monitoring. How does that cut your electric bill?
A: It has to do with the materials used in construction and installation and weather-proofing, and also the remote computer control of the system, so you’re not refrigerating when you don’t need to and so you’re running (freezer equipment) during off-peak hours.
In Eau Claire in 2009, we replaced an old facility with a new one and we cut our electricity use 65 percent in that transition. And we have a big electric bill, of $1 million or so a year. So that’s a big savings, and this facility will have that same kind of technology.
Q: You’ve said CSW was not really harmed by the recession and subsequent slow recovery. Why is that?
A: No. 1, it’s because of the nature of food products. People still have to eat. But also, we have a good young management team, and we’ve been real aggressive in seeking out and securing new business.
Q: So you haven’t seen a slow-down at all?
A: It has been fairly steady growth. I think we probably could have tackled more, but we have conservative roots and focus more on the slow and steady. It also takes time to find quality people, the people we need to serve those accounts, and it’s a very expensive, capital-intensive business to grow. You can’t take on loads of new debt at once.
Q: What industry trends do you expect to see?
A: Energy efficiency will continue to be a priority, with utility rates continuing to rise. It’ll make more and more sense for companies with older facilities to exit the market or rejuvenate with new buildings.
And government regulation is going to have an impact. There’s a new Food Safety Act being rolled out that will add new layers of bureaucracy and record-keeping requirements for all food handlers and warehouses.
And on top of that there’s the (federal) health care reform act that remains a concern for all small to medium-sized employers, without the huge corporate resources to administer that.
It will remain to be seen what impact that will have starting next spring. Our concern will be that we may have to curtail our health insurance to avoid a penalty.
Q: Can you explain more about that? Why would you be penalized for your current coverage?
A: We offer comprehensive health insurance at no cost to employees, so we start from a fairly high company benefit cost. Then along came the (Affordable Care Act), mandating additional coverage cost and extra administrative cost, with, adding insult to injury, a penalty for having too costly a benefit. It’s known as the Cadillac tax.
The additional cost, administrative burden and statutory liabilities will certainly force us to look at restructuring the benefit. Many businesses like ours may simply choose to get out of the health care insurance provider role altogether to avoid the issues.