Chapter 7

I've always had a natural curiosity, and I'd be the first to admit that isn't necessarily a good thing to have. It took me until Wednesday afternoon to convince myself that I really should contact Earle Towns myself to find out what he wanted with me.

Nancy and I were nearly living together, ever since I told her that night that I loved her. Our only remaining obstacle to achieving complete togetherness was my continued insistence on moving away from the area. So far, we had kept this from becoming an insurmountable problem, but only because I had been willing to push back my departure date until some indeterminate time, probably shortly after the new plant was up and running.

I placed the call to Earle as soon as I decided I'd done enough sales calling for the day. I'd gotten five new accounts, and had made three stops at different industrial parks, to make deliveries on some phoned in orders, as well as to sell my products to anyone who saw and recognized my truck, or had come over to me wanting to buy something. Business was very good. When the receptionist answered, I identified myself and told her that Earle had asked for me to get in contact with him.

"Ralph, good of you to call me, son. I've been hearing some exciting things about you from the family. It sounds to me like we might soon be related, if all I'm hearing is true."

"Well, Nancy is definitely the woman for me, and I hope she feels the same way. Nancy said you told her you had something I might be interested in?"

"That's a fact, I do. Something I'd need to show you. Is there a chance you might be able to come by here any time soon?"

"Over to your plant?"

"Yes, that's right. What I have needs some explanation, and you have to see what it is and how I produce it."

"It wouldn't be that Nugget product, would it?"

"Who the hell told you about that? Damn! Well, since somebody already let that cat out of the bag, I'll have to admit that you guessed pretty damn close, but not quite exactly. You remember them steak pieces that our pal J.C. Crawford used to make up for you?"

"I sure do. They tasted pretty good when you first opened them, but they didn't keep very well. I sold a bunch at first, but the repeat demand wasn't all that it should have been. It needed something, but people I talked to couldn't tell me what it lacked."

"They were right, and I found out just what it needed, and that was a whole different cure. The meat he was using really does take a cure, but J. C. and me, we were both barking up the wrong tree by trying to use maple flavored brown sugar to cure our product. We should have used honey right from the start. When it finally came to me, I almost wanted to kick myself. It was right there in front of me, the whole time, and I just couldn't see it. It was the expense of the honey that always threw me off it, but I wasn't thinking about it the right way, like I am now."

"Honey is still very expensive. I'm not sure I understand."

"Ratio's, Ralph. I don't blame you for not thinking of it right off the bat. I've been doing this for near on to forty years, and I didn't catch on to it until about a month ago myself. Three hundred pounds of the cross cut meat will only use up about four pounds of clover honey in the cure. Plus, it is a whole lot quicker to take a cure than the other stuff was. Thirty six hours, instead of five whole days. I'm not saying we don't use sugar in the new cure, because we definitely do, but it is the honey that makes up the main part of the cure now, and the meat shrinkage is reduced almost as much as it was doing things the old way. With the plastic wrap, along with the infused gas, for eliminating all the moisture and preservative problems, the new product has an unopened shelf life equivalent to any other jerky product."

"What is the cost for the same sized piece that J.C. put out?"

"What are you getting quoted on that steak piece from Davis? Thirty cents is what I'm hearing. I can match that if you show me enough sales volume. It would cut me kind of close to have to do that, but after you try what I'm producing, you won't mind it, even if I have to bump you up a little bit, later on. One other thing for you to consider, and this is real important, is that I won't have any problem with pushing up my production to meet all your needs. You just tell me what you need, and I'll get it right out to you. Four days, start to finish. We can sit here jawboning all we want to, Ralph, but we both know nothing will get done without you coming over and seeing and trying this new product for yourself. How soon can you make it over here?"

"Well, first of all, you heard wrong about my cost on the steak pieces. Try a quarter per piece, delivered too. Second, I wouldn't mind looking at your new product, but you can mail out some samples to me more easily than I could drive all the way over there to see it. I already have a very reliable source for the product I'm currently selling. Third, I made a mistake once, but I'm not likely to repeat it. People who smoke meat don't like it if you put them in direct competition with another producer. You didn't like it when I started selling J.C.'s product, and I didn't like it when you sent that fool of a nephew of yours out poaching on my sales territory. We both know that Jim Davis wouldn't like it if I started selling this new product of yours. You taught me a tough lesson, Earle, and I'm proud to tell you that I've learned it."

"If you already had your mind set on not doing business with me, why did you bother calling me?"

"A matter of courtesy, Earle. Nancy still thinks highly of you, and she's told me of all the good you've done to help out your relatives. Since I love her, I didn't want to be rude to anyone she cares about."

"You don't seem to mind picking my pocket, but you're worried about being rude?"

"How is my selling Jim's products picking your pocket? You told me yourself that I'd never sell another one of yours. I had a living to make, and customers who wanted a good tasting, fair priced, product. They never cared about who was making it, just that it met their needs. If you hadn't decided it was okay to dick me around, you and I would still be doing business. So, don't accuse me of taking anything away from you, because you threw it away yourself. Do you have anything else you still want to tell me, Earle?"

"I've been going easy on you, because of Nancy, boy, but that ends right now. You're asking for trouble, and I'm just the man to give it to you."

"My father told me that trouble was a two way street, Earle. Are you sure you want to start something with me right now? Word on the street is that you've been having some credit line problems with your banks. Something about a big bankruptcy back east tying up a bunch of money you're owed? I've been laying off all your grocery chain accounts up til now, but I'm pretty sure I could contact their buyers and give them a low ball bid to replace your entire jerky and pepperoni line, if I ever got mad enough to want to do something like that. So far, I've been content to take a live and let live attitude with you. Even if you managed to keep all those grocery accounts, I'd be willing to bet you'd have to at least match my bids. Is that what you want?"

"I don't know where you've been hearing those lies, Rudd, but if I ever hear that you've been spreading them around to people, I'll haul your ass into court, and tie you up in litigation for twenty years. Don't you dare get started up with me by messing with any of those accounts of mine either. If you do, you'll find out there is a lot more than just me involved there."

"See what happens, Earle? One of us gets just a little bit rude, and then the next thing that happens is that everything starts to go down hill from there. I've been considering the idea of investing in other businesses too. I just heard about a local chain of dry cleaners that came on the market sometime last week. Nancy's father is in that business, did you know that? I wonder if he could help me find out if buying them would be a good investment to make or not?"

"Those are my businesses, and I can do whatever I want to with them. I've had them listed before, but it is mostly for accounting purposes, so we can mark them to current market value. I'm not really planning on selling them. If someone was to make me a full price offer though, I guess I'd have to sell then."

"The man at the bank that told me about them, he was of the opinion that the bank would soon be the new owners. I guess he didn't know you only had them listed for accounting purposes. Nancy told me a few months ago that your wife told her it was hard making money when your profit margins on all those private label sausages were so tight. I think I heard two or three percent gross margins, because of all the competition. I guess a liquidation in bankruptcy, on a debt of more than eight hundred thousand dollars, something like that would eat up a big chunk of those profits?"

"More damn lies. My business is sound, god damn it. You won't get very far making those irresponsible allegations. It won't make me want to take it any easier on all of you either. If that's what you were hoping to accomplish, you and Davis can forget it, because it won't work."

"You know I told Jim we shouldn't discuss any of this with you. I even told him to go ahead and let you buy up that smokehouse equipment and take on the lease over in King City, but he wouldn't listen to me. I told him we'll probably be able to get a real good deal on your plant from the bankruptcy people, but he said you'd probably find some way to refinance everything, and end up coming out of it with everything intact."

"For once the little gremlin is right about something, because I will."

"You might, but only if your enemies don't get together and plot to undermine your real profit base. You have real decent margins on the jerky and pepperoni sticks that you distribute through the grocers. I think your wife told Nancy that you produce your jerky for around seven bucks a jar? I have to wonder how much of a cash flow disruption your company could stand right now though? If someone, say your good friends over at Tillamook, ever thought you were in a vulnerable position, cash flow wise, you don't suppose they'd deliberately cause you problems with that grocery chain business of yours, do you? Your grocery people might not take a bid from me that seriously, but those other people, that would be an entirely different matter, wouldn't it?"

"Tell me what you want, Rudd."

"Live and let live, just like I told you earlier. All you need to do is quit trying to make things difficult for Jim over in King City. If you'll do that, then I won't have to call my friend, Steve Chambers, over in Tillamook, and ask him if he's heard the same rumors I did. You don't have to control everything, you know. Give someone else a chance to make a little money too."

I knew, if I mentioned a name high enough up in the other big smokehouse organization, someone in a position to make or alter company policy, that Earle would be a lot less likely to call the bluff I'd been trying to run past him. I did have several conversations with one of the executives who worked at a bank that Earle did most of his business with. He'd mentioned quite a few tidbits of information he probably shouldn't have, but I was feeding him free steak pieces the whole time I was encouraging him to give me the dirt on Earle's current business problems.

There was a grocery chain back east that had filed for bankruptcy owing Earle's company over eight hundred thousand dollars, but Earle was probably going to get back at least eighty cents on every dollar he was owed from them. The seven dry cleaners that Earle owned were a different story though. I had no doubt at all that he was trying to sell them off to raise some cash. According to my banker friend though, he owed as much on them as they were probably worth. The bank would be very pleased if Earle found himself a buyer. I didn't think Nancy's father would be pleased though. He'd poured a lot of years into making something, after starting out in that first little dry cleaners location that Earle had bought and put him in charge of, twenty six years before.

"If that was what you wanted, all you had to do was ask me. Consider it done. Live and let live, right?"

"Absolutely, and I feel badly now. Ed told me that you would agree to back off if I just called you and asked you to. I should have listened to him I guess. He's going to laugh at me when I tell him he was right all along."

"I won't ever underestimate you again, Rudd. That was what this was all about, wasn't it? You wanted to show me you could stand up to me if you needed to. I got your message, and I'm willing to play nice if you will too."

"Great. When we set a date, we'll invite you to our wedding. I hope you will send me out those samples of that new product. Maybe we can work out a deal for some barter. You put Ed's steak pieces in your grocery stores, and we could then sell your new product in all our commercial outlets. We just passed a hundred outlets today, and I'm expecting to double that in the next three months. After that, I'm planning to go south, and open up Los Angeles. Can you imagine what the sales volume will be from down there?"

"Talk to Ed. Tell him I'd be willing to meet with him and at least discuss the possibility. I never did much care for direct selling. I prefer to ship product out by the railway car load, not by the case."

"I prefer to sell it whichever way makes me the most money. Tell me, how much free cash were you hoping to take out of selling those cleaner locations? Over and above what you owe on them."

"I told you the reason I listed them for. I don't want to sell them. Merle would have a total fit if I did."

"Merle would go along with the deal. He'd come out of it with some long overdue ownership. He knows more about that business than you or I do now or ever will."

"I owe a lot, maybe a million on that one note all told. There are some other properties tied into it though, things I really do want to hold on to. I could get that note split in half, if I asked them to do it. I could take the other properties and one of the notes for half a million, and you and Merle could keep those cleaner locations, leases, or buildings and land included, and that other note. If the bank goes for it, would that work for you?"

"I don't really have any idea if it would or not. Is it all right with you if I ask your brother about it? I'm not even sure if he wants to keep working. He doesn't have that good of an opinion of me yet either."

"He likes you fine. Merle is one of those glass half empty people. If he didn't like you, he wouldn't have let you within a mile of his daughter. I heard what you told him when he asked you about how you liked Nancy's pie. I thought that was about the funniest thing. Merle said he spit up when you said it to him. Wish I'd been there to see that."

We had started the conversation with false cordiality, but when I got off the phone with him, I was feeling better about things. I really did hope he sent me some samples, because, from what he'd described to me, I could almost taste the new product. I was always a sucker for honey too. My next problem would be going to Nancy's father and trying to figure out if Earle was trying to stick it to me with his offering price for those seven dry cleaners, or if he was actually making me a sound business proposal. I didn't know how many of those cleaners were leased buildings, and how many were free standing stores, or where the land and building were that were owned by Towns Cleaners.

"Who told you my cleaners were for sale?" Merle wasn't too happy with my first few questions. In fact, he wasn't too happy to even be seeing me again, especially at his place of business. I'd driven over to where he had his office after first calling Nancy and finding out she didn't know much more about her Uncle's dry cleaning business than I did. She hadn't known there were seven of them even. She said she thought they only had three locations, because that was all she'd ever seen.

"I was talking to Earle earlier today, about an hour ago, in fact. He told me that he was considering doing some restructuring. He was saying he might spin off the dry cleaners from some other properties he has, but only if you could find yourself a financial partner to help you with the deal. I have a little extra money and I was thinking about investing it in something besides the smoked meat business. Don't want all your eggs in one basket."

"How much did he say he wanted for all of it?"

"I think half a million dollars for all seven, buildings and leases included."

"Really? Why would he sell out for so little? The company is worth at least half again as much if we just sold off all the capital equipment, vehicles, and buildings. Something isn't right here. I'm going to phone him. You wait right here."

"You can do that if you want to, Merle, but I've got a feeling that Earle hasn't kept too close a track of what you've been doing with the business. I doubt he has a good idea of what this is all worth. From what Nancy tells me, all he does is collect the money you've been sending him. Maybe he based the value on how much profit he was getting from it?"

I was glad to see that Merle hadn't left to go make his phone call. After all these years of working for his brother, Merle had to harbor some feelings of resentment from what Nancy had told me had happened during all that time. It hadn't been the equal partnership he'd thought he was getting into.

"Do you have half a million dollars to invest in the business?"

"No. I have some money, but not that much. I doubt if you'll need anything like that amount. The bank has a note that your brother is going to have them split in half. How much debt, other than that, do you have?"

"Less than a hundred thousand, mostly for the delivery vans, and some pressers I purchased late last year. These are all financed through the manufacturer's financing companies. I've been making the payments on that bank note out of operating profits. I thought he owed a million on the company assets alone?"

"He said he had other things pledged on the note that he wanted to keep. Do you think he knows how the note was being paid before?"

"He might not, but his wife sure does. She was the one who told me to pay it. This was a year and a half ago that she told me that. I've been sending the bank $8,250.00 a month, but that just covers the interest on that note. I'd have to look and see when the due date is, but I seem to remember it being close to now." He reached into his desk drawer and pulled out a Manila file. It took a few minutes but he finally found what he was looking for. "Here it is. Yes, I was right November third of this year. A little more than a month from now. Look here, Ralph, I really need to call Earle to speak to him about this. How am I supposed to come up with that kind of money? There is just no way I can do it. You don't suppose he expects me to pay the whole half million out of the company, do you?"