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The Construction Company That Changed the Pig Business
The livestock construction company Hog Slat, founded in 1969 by Billy Herring, has played a part in every expansion of the hog industry in the past five decades. This family-owned company, headquartered in Newton Grove, North Carolina, owns 25,500 sows (TDM Farms) in the U.S. and builds hog barns all over the world. Hog Slat is owned by Billy Herring, 82, and his three sons: Tommy, 61; David, 57; and Mark, 55.
David, president-elect of the National Pork Producers Council (NPPC), sat down with Successful Farming for a discussion of current issues in the pig business.
SF: What is the main driver in hog expansion in 2018?
DH: New packing plants. We needed more shacklespace in this country. When I ran for the NPPC board five years ago, my number one concern was that we were out of shacklespace. Since then we have four new plants.
The growth in pig numbers is about 50% due to expansion and about 50% due to increases in sow productivity. We are seeing more demand for finishing buildings than we are for sow farms. Iowa is No. 1 in expansion in finishing. As for sow expansion, most of the construction on the East Coast is modernization. There are companies tearing down old facilities and putting in new facilities.
SF: What are some trends in new hog barn construction?
DH: In the past four years, especially in the East Coast, there has been a big shift from gestation stalls to open pens. It is due to corporate pressure, not animal welfare or production issues.
The second trend is that sow farms are larger. Instead of 2,000-sow farms, the trend is to building 5,000- to 8,000-sow farms. The barns are also wider and longer. Animal health is driving that change. A lot of farms are getting filtered now to offset battles with PRRS. Ventilation systems are more efficient.
We’ve learned how to economically create a building with a bigger footprint so it can hold more animals. That helps the management of the facilities, so workers are not having to travel from one building to another. It’s more synergistic for the management team to stay inside one building.
In the Midwest, the prevalent waste system is the deep pit. As you make the footprint bigger, there is an economic savings in the foundation of that building in terms of concrete and other inputs that have to be purchased for the structure.
SF: You sell hog equipment around the world. Where is the growth worldwide in pigs?
DH: Mexico is adding more than 60,000 sows a year, but has slowed down a little because of the uncertainty of trade negotiations with the U.S. It’s very important to have a good relationship with our neighbors, and the Mexico market has been very critical to the pork industry.
Argentina has a small swine industry, with 400,000 sows, but it is growing at about 6% a year.
Russia is adding about 50,000 sows per year.
SF: What about China?
DH: China’s growth rate is uncertain, but it is huge. The best guess is there are 40 million sows in China. They raise about 60% of the world’s pork.
China is absolutely copying the United States in pig growth from 1980 to 2005. We were a fragmented and antiquated industry and then we modernized, and that’s exactly what they are doing. They are retooling the industry. The most potential for worldwide expansion is in China without a doubt.
SF: What is your company’s role in international expansion?
DH: Hog Slat does not construct barns outside of the U.S. and Mexico, but it does provide equipment, feed systems, feed bins, ventilation, penning equipment, flooring, and slats. We help with the design and furnish the products they need for equipment. Because of the weight of the concrete slats, they have to be made close to the end user.
SF: Have the threats of tariffs affected your business?
DH: We have seen about a 12% increase in steel prices.
I am cautiously optimistic that negotiations will be beneficial to everyone. When you are exporting a fourth of your production, trade is critical to the pork industry. We are hoping the situation can be solved very quickly. China is our second-largest volume market and our third-largest value market. So it’s very crucial to the industry.
This is the first time we’ve had to play defense on trade. Over the last 25 years we’ve played offense. We were a net importer in 1994. Now we are exporting about 26% of the total production. That’s incredible.
SF: Where do you see Hog Slat growing?
DH: Hog Slat also builds poultry barns and makes a full line of equipment for the poultry industry. It’s about 20% of the company’s business today, but it’s growing fast. I can see Hog Slat’s business in 10 years from now being 50-50 poultry and swine.
SF: Do you remain positive about pork?
DH: I am still bullish on the hog industry. The world population is growing and the United States produces the safest, most affordable pork in the world. We are going to have the opportunity to feed these growing populations. One thing I really love about this industry is it’s a noble industry – we feed people. People in this world demand wholesome protein and the U.S. is situated to provide it for them.
Policies come and go, but economics always wins. There will be some bumps in the road, but I’m optimistic that our administration will negotiate in good faith and keep the markets open. Governments don’t trade. People trade and businesses trade. We just need the avenues to be able to let that trade flow freely.
SF: Tell me about your hog production company, TDM.
DH: TDM Farms stands for Tommy, David, and Mark. Through TDM, we research and test every product we sell. Believe me, when our products hit the end user we’ve worked the bugs out of them. We have a specific farm in Indiana where we can run any kind of test on any feeder.
We continue to create more economical products that help you drive your bottom line, but also to help alleviate labor. We produce products that are animal-friendly, management-friendly, and labor-friendly.
SF: What makes Hog Slat unique?
DH: Our products are sold directly to the end users. There is no middle man. That is our niche. Dad started out with a $4,500 investment in 1969, and now we do business in 20 states and 11 countries. We’ve got about 80 retail locations scattered across the United States.
Even though Hog Slat has grown into a big company, it still is just a group of people working together every day to feed their families; that’s all it is. That’s why I get so frustrated when they talk about corporate America in the media, because it’s just people out trying to take care of their families. My dad always said that people were the heartbeat of this company, and good people make good things happen.
SF: Do you have a transition plan?
DH: The next generation of the Herring family is already working at the company. The younger kids coming into the business are positioned well to be able to move the company forward in the future.
SF: Tell me about your mom (Magdalene, 82).
DH: Mom is still very involved. If there is an employee with a health issue or family problems, Mom is there. She does all the little things that nobody sees. The culture that the customer always comes first was always very important to Mom and Dad. My brothers and I still try to uphold this every day.