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Organization and Operation
ASSIGNMENT No. 1.
CORPORATE ORGANIZATION ORGANIZATION OF THE OFFICE . OFFICE RULES AND REGULATIONS FACTORY ORGANIZATION MACHINERY AND EQUIPMENT FACTORY OPERATING DEPARTMENTS
N presenting this work to the canning trade I do so with the utmost confidence in its value, for during the entire ten years I have been engaged in the fruit-canning industry in the State of California I have never been able to secure a work that treated in a comprehensive, practical manner the detail of organization, administrative and operative problems that continually arise in the operation of the business, and my inability to secure such a work for my own use led me to the belief that others besides myself would appreciate access to a source of information such as I had so often looked in vain for, and this, together with my personal experience with costly, intricate systems installed by experts who were entirely unfamiliar with the detail of cannery operation, finally led me to the effort that has culminated in this work and which is an endeavor to supply the trade, and the students of the business, with a system of operation and control that can readily be adapted to the operations of any organization engaged in the manufacturing of food products and without the necessity of engaging the services of high-priced experts.
In preparing the work it has been my aim to compile a plain, everyday, simple, workable system to be studied by the director, the officer, manager, superintendent, accountant, cost expert, bookkeeper, and the young idea who would make a success of his chosen occupation.
Organizations such as the various canners' leagues, the National Canners' Association, the state universities, private universities, the agricultural departments of the various states and of the United States have all played important parts in the remarkable march of progress taken place in the canning industry during the past ten years, and I acknowledge my indebtedness to these organizations for much of the information contained in this work as well as to my friends in the business who have given their assistance and their encouragement.
In 1920 in an address delivered before the National Canners' Convention, Mr. Frank Gerber, at that time President of the National Canners' Association, outlined in brief the history of the canning industry as follows:
"Canned food was unknown on this continent until 100 years ago when Ezra Daggett and Thomas Kensett of New York succeeded in packing, in a crude way, salmon, lobster
and oysters. Meanwhile, in Boston, William Underwood and Charles Mitchell, using heat, which is now called sterilization, in 1820 succeeded in packing some damsons, quinces, cranberries and currants. Credit for the discovery of the method of keeping perishable food by heat and sealing in air-tight containers, however, belongs to a Frenchman, Nicholas Appert, who, stimulated by an offer from Napoleon Bonaparte of 12,000 francs to anyone who would discover a method of conserving fresh food so that he could improve the diet of his troops, after fifteen years of experimenting, in 1810 discovered the method of using heat to preserve food in sealed jars. Appert, however, never understood the scientific basis of his discovery, nor did succeeding canners have any clear idea of why the process worked, until after the great bacteriologist, Louis Pasteur, discovered bacteria. "Using Pasteur's discovery, Prof. H. L. Russell, of the University of Wisconsin, in 1895, found that the spoilage certain pea canners were having was due to bacteria which resisted their process and that higher temperatures of sterilization were necessary.
"In 1840, Baltimore began the canning of oysters, and in 1841, Maine started its sardine industry. It was not, however, until 1856 that canning began on the Pacific Coast. The first canning factory in the center of the country was established in 1860 for feeding troops in the Civil War.
"More than three billion cans of food, canned under modern American methods, were used to feed American troops in the late Great War. It is largely due to the American canning industry that American diet can follow the flag wherever our soldiers and sailors protect our rights, or wherever American pioneers blaze new trails for American activities.
"To the improvements developed by modern canning science every family owes its ability to get succulent food the year round; to have fish far from the fishing banks, to enjoy meats away from production, and to have milk for the babies in cowless countries, or when blizzards block the milk trains to our cities.
"Even more important is the fact that through canning the plenteous fruits and vegetables of harvest seasons, the great catches from our fishing banks during spring, summer and fall, the juicy meat of the grazing season and the flood of summer milk can be held over for winter use when production is lessened." C. KNOX.
Assignment No. 1
N this assignment is given a brief outline of the corporate, administrative and general organization of a company owning, or operating, a plant having a capacity of 350,000 cases, more or less, per season.
It is presumed that every company organized to operate a packing plant adopts the corporative form of organization. The first step to be taken, then, is the preliminary meeting at which the board of directors for the first year is appointed and the articles of incorporation drawn up for filing with the county clerk. Then, in those states having a State Corporation Department that supervises the issue and marketing of corporation securities, such as that maintained by the State of California, it is necessary to secure the consent of the commissioner in control to issue and sell the securities of the newly organized corporation. Where there is no record of previous earnings on which to base an issue of bonds, these securities are usually just an issue of common stock, though the stock can be, if desired, divided into common and preferred, the common stock to be of no par value and the preferred stock to be 8 per cent cumulative and preferred both as to dividends and assets. One share of common stock is given as a bonus with two shares of the preferred stock. This will allow the preferred stockholder 8 per cent on his holding of preferred stock and proportionate participation in the balance of the net earnings over and above the 8 per cent required to meet the dividend on the preferred stock. This method of organization will be of advantage in cases where it is proposed to offer the stock to the general public, and while the real capitalization of the corporation is the total of the preferred stock only, the distribution of the common stock to the management and employees will permit them to share in the profits of the business without detraction from the value of the preferred stock as an invest
After filing the articles of incorporation, the board of directors will meet and elect the officials of the corporation. These will usually be a president, vice president, secretary
and treasurer, or the two latter offices can be consolidated and a secretary-treasurer elected to fill both.
The amount of capital required for the corporation organized to pack 350,000 cases of product and intending to purchase the land required and to build thereon a modern factory and equip it with the latest and best machinery and equipment available, together with proper provision for the employees' health and welfare, will necessarily be much greater today than it was some years ago.
In financing the organization, provision should be made for a paid-up capital of at least one dollar and fifty cents for each case of plant capacity. A plant having a capacity of 350,000 cases of fruits and vegetables can, in California, be built and equipped for $350,000, but the properly financed company will provide enough funds to carry on the operations to the point where the most conservative banks will be glad to finance further operating expenses on short-term notes secured by warehouse receipts.
Such an organization under proper management should experience no difficulty in returning to the stockholders yearly dividends which will be very gratifying. A corporation with a paid-up capital of $500,000, packing 350,000 cases of fruits and vegetables, should in normal years earn a profit of not less than $90,000 over and above interest charges, provisions for depreciation on plant and equipment, taxes and contingencies; and this earning would pay in dividends 15 per cent and allow $15,000 to be added to the operating reserve fund; and this, by no means, is the limit of possible earnings but should be the minimum.
In selecting a site upon which to build the plant, primary importance should be given to the labor supply. Most varieties of fruits and vegetables can be brought to the factory more easily than can labor. A factory of the size being considered will employ from three to five hundred women and from seventy-five to one hundred men during the season, and imported help is not as efficient and not as satisfactory as local labor.
The most desirable location is in a town, or in a section of a city, where the population is composed chiefly of working men and their families. In such a community there are always many women, the wives and daughters of working