GILSTER-MARY LEE GROWING AT ILLINOIS, MISSOURI SITES

The largest manufacturer of food products in Southeast Missouri is growing, but slowly.

Gilster-Mary Lee, maker of cereals, cake mixes, popcorn and other food products, has found itself held back by a good economy and the lowest unemployment percentage in Southeast Missouri in Perry County.

"We can't experience a lot of growth right now because of the tight labor market," said Donald Welge, president of Gilster-Mary Lee.

The company, based in Chester, Ill., has two facilities in Perry County, one in Stoddard County and others in Illinois and Colorado. It employs 1,200 at its Southeast Missouri operations.

After Ralcorp Holdings, Gilster-Mary Lee is the largest maker of private-label cereals in the country.

In Southeast Missouri, Gilster-Mary Lee private label cereals are distributed through Wal-Mart, Sav-A-Lot and AWG stores, Welge said.

Welge's great uncle founded the company in 1895 as a flour mill. Expansion came in the 1950s when it began making cake mixes.

It has continued to expand over the years. Gilster-Mary Lee began making 17 years ago, and it became the first company to produce private label mircowave popcorn for national distribution in 1985, Welge said.

Gilster-Mary Lee's venture into popcorn has been one of its fastest growing sectors, Welge said.

The company has continually enlarged its infrastructure alongside efforts to go into new markets. Gilster-Mary Lee has its own truck gararge in Perryville, and a 80,000 square-foot factory for making corrogated shipping cases in McBride. The garage has operated for 15 years, while the shipping case facility was built in 1992.

It remains a family company, having Welge as president, with sons Robert and Michael in charge of human relations and finances, respectively.

Several members of Gilster-Mary Lee's management team started in the company with entry-level jobs.

Allen Verseman, superintendent of the cake plant in Perryville, was a dockworker in Chester, Ill., when Gilster-Mary Lee bought out the company where he was working.

When Gilster-Mary Lee started its cake plant in Perryville, Verseman made the switch to dock foreman and started working with 16 others. Now he oversees 75 employees and a tractor-trailer fleet that has grown from five tractors and 10 trailers to about 200 and 500, respectively.

In nearly 35 years with the company, Verseman has never thought of working anywhere else.

Allen Crowder began working with Gilster-Mary Lee when he graduated from high school in 1977. From the position of machine operator trainee, he moved up to superintendent of the Perryville cereal plant, only recently leaving that job to work in the corporate office.

Crowder has overseen his company's steady growth in private label cereal sales. Private label brands are attractive to retailers such as Wal-Mart because it gives businesses and consumers an option if they don't want to pay national brand prices, he said.

In recent years, some clients of Gilster-Mary Lee have asked for better quality along with the lower price, Crowder said.

"We do have some customers who want us to make something that tastes better than national brands," he said.

Although he would not name brands, Crowder said in some taste tests his company's product has beaten name brand cereals.

The company produces almost every kind of cereal made under brand names at facilities in Perryville and McBride, Crowder said.

Gilster Mary-Lee continues to operate internationally, maintaining a steady stream of sales to Canada, Crowder said. Some bulk sales do go out to South America, and in the past products have been shipped to Japan, South Korea and the Middle East, he said.

During the 1998, Gilster-Mary Lee had a reported growth of $483 million. Last year's figures were not made available.

The company has 90 or so stockholders, made up of employees, family members, and business owners. Stock is privately held.

Gilster-Mary Lee did not have a trouble-free 1999. In April it recalled 11,280 cases of macaroni and cheese dinners that it manufactures for Safeway grocery stores. The product was recalled after eight customers in Northern California reported finding small pieces of glass in the product. The 7.5 oz. boxes were distributed to stores in northern California, western Nevada, Hawaii, Colorado, Wyoming, Nebraska, New Mexico, South Dakota, Virginia, Maryland and the District of Columbia.

Then in August, 37 illegal aliens were arrested at a company plant in Steeleville, Ill., with four being indicted in federal court with falsifying immigration documents and socials security cards to gain employment. Federal prosecutors did not find any basis make charges against the company.

The overall outlook for Gilster-Mary Lee remains positive. The company's president anticipates continued slow growth, depending on movement within the labor market.