How to Find American Hero Companies
Listen to my recent interview with Carter LeCraw
Carter LeCraw, CEO
I am deeply grateful for JM Smucker, a public company that stands out as a light in the American marketplace. Even though most Americans readily recognize and respect the Smucker brand, few are familiar with the solid principles and values upon which this business was founded and continues to operate. Because of the abundant evidence of authentic American values in its corporate culture, it has earned our designation as an American Hero Company and is currently held in both our American Values Equity and American Values Index portfolios. After being subjected to our rigorous Values-First Research process, which evaluates companies on four key values: Integrity, Humility, Diligence and Caring, it scored an impressive 444 out of a possible 500 points. That score ranks Smucker 4th out of a total of the 116 companies that comprise our American Hero Company Universe.
We believe companies like Smucker will, over the long term, outperform their competitors and be good investments for our portfolios. In fact, over the last 5 years Smucker stock (symbol SJM) had an average annual return of 9.7% as compared to the S&P 500 return of only .4%. But, there is a much more important reason we invest in American Hero Companies like JM Smucker; they make valuable contributions to American culture and, therefore, help build a better America. Investors holding Smucker stock play an important role in encouraging and supporting what is good in America. (Of course, financially speaking, it is normally better to own Smucker when the stock is reasonably priced.)
In 1897 there were probably many producers of apple butter and apple cider, but what made Jerome Monroe Smucker’s products different was quality. Smucker, a Mennonite from Orrville, Ohio, signed every lid of every crock of apple butter as his personal guarantee of care and quality. It was decided early on that the company was going to provide a quality product, at a fair price and follow sound principles. Using this simple, but not easy, strategy, the company grew and prospered. Today, these sound principles are described in company literature as Basic Beliefs and include the categories of Quality, People, Ethics, Growth and Independence.
Many public companies have impressive values statements like Smucker, but few have them as well protected as Smucker. A key word within their Basic Beliefs, “independence”, is a key factor in helping to protect their values. The Smucker family’s commitment to independence, by maintaining majority ownership, has been a critical strategic decision. This is extremely rare in today’s public company environment, but allows them to concentrate on long-term growth without undo pressure to cut corners on quality or ethics in favor of short term profits. Chic-fil-a is another company that has zealously guarded corporate ownership, allowing them, like Smucker, to maintain a long-term focus and values-driven culture.
Humility is a key American value/virtue and one we look for in companies. (George Washington portrayed that virtue often and even turned down the Presidency immediately following the Revolutionary War, which caused King George III to quip, “If he does that, he will be the greatest man in the world.”) One evidence of humility at Smucker is their top management structure of Co-CEO’s. This is rare in today’s corporate environment, but is, actually, the practice of another of our American Hero Companies, Stewart Information Services (STC). The CEO’s Tim and Richard Smucker, took over in 2001, and are affectionately known as “the boys”. In keeping with the virtue of humility they strive to incorporate key management practices like, “listen with your full attention, look for the good in others, have a sense of humor, and say “thank you” for a job well done.” Tonie Williams, director of marketing says she has been thanked more at Smucker than in her nine years at three other major companies, combined.
It appears the caring leadership style has been working for Smucker as evidenced by their low employee turnover of 4%, a figure well below the national average. Furthermore, they have been listed on Fortune Magazine’s annual listing of “100 Best Companies to Work For” list EVERY year since 1998 and even obtained the number #1 ranking in 2004. Employees comment about the close, family feeling being one of the best features of employment.
Smucker has preserved a long-standing commitment to quality. They strive to maintain the highest quality products in all of the markets they serve. But, quality does not stop with products. They also have a stated goal to maintain quality in manufacturing methods, marketing efforts, people and relationships. As a parent, I am personally grateful for Smucker’s commitment to quality in advertising as evidenced by their support of family friendly entertainment. As such, they were awarded the “Integrity in Entertainment” award from the Parents Television Council for being a responsible corporate television sponsor.
In the early 60’s Smucker marketing agency came up with a catchy advertising slogan, “With a name like Smuckers, it has to be good.” I submit this slogan has survived for over 40 years because of two reasons. First, and obviously, they have been able to maintain an exceptionally high level of product quality. The second, but less well-known, is that the “good” at Smucker is “spread” throughout the whole company. There is much darkness in the world, but when there are lights like JM Smucker it gives me great hope for America.