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Merger: Combining two businesses into one.—Merriam Webster Dictionary

If you are a member of South Dakota Wheat Growers or North Central Farmers Elevator, you likely have already voted on the proposed merger.

Though the boards of directors of both organizations favor this consolidation, it’s fair to point out that not all mergers are made in heaven.

Remember the merger of Chrysler and Daimler back in 1998?  How about AOL and Time Warner? Or Sears and Kmart?

Largely incompatible unions.

Yet, many consolidations of agriculture cooperatives have been successful. CHS Inc., comes to mind, and it resulted from a number of mergers over the years.

Call them mergers, consolidations, or simply centralization of resources, they are part and parcel of capitalism. Bigger is better.

Well, isn’t it?

When President Coolidge (who spent three months at the South Dakota Game Lodge in 1927) said the business of America is business, he was spot on, and his observation explains why business is continually looking for ways to be more successful.

Back when many communities in South Dakota boasted two hospitals, consumers had a choice. There was competition for patients and for staff. However, the health care business was successful in selling the idea that while competition was good for everyone else, it simply wasn’t true for hospitals. Consolidations, mergers, and acquisitions followed. The promise of efficiencies may have been partly true, but in general was not reflected in what patients paid for services. Yet it no doubt was good for the large entities that own the hospitals. South Dakota now basically has three hospital health systems.

In the newspaper world, mergers and acquisitions flourished in the 1970s, 1980s and into the 1990s. Consolidate, the gurus of the industry said, and be more efficient. Reduce overhead, centralize operations, cut waste, improve profit margins. Rarely was it heard that these takeovers would improve the newspapers and better serve the reader or advertiser. Turns out the primary beneficiaries of consolidations were the owners, not the consumers.

Both the Wheat Growers and North Central Farmers Elevator say the merger will save $44 million over the next four years, and there is little doubt about the outcome of the vote.

As the nation continues its trend toward consolidation and centralization, it remains to be seen if bigger really is better — or simply bigger. And that goes to this question: Better for whom?

June 17, 2015