As everyone involved in food processing knows, modern manufacturing needs a lot fewer bodies to get more product out the door than it used to, thanks to automation. But that isn't stopping local economic development groups from pitching lucrative incentives to food companies to build a plant or stay put in their towns, all in the name of jobs.
Development boards are falling over each other and usually fighting each other to lure food and beverage companies to their communities. Competition for a new Sanderson Farms' poultry plant in North Carolina last year was so acrimonious that, 11 weeks after announcing it would build the facility in Nash County, Sanderson pulled the plug on the deal. At least five lawsuits challenging the $95 million project were filed, most from neighboring Wilson County, which also competed for the project. Two suits challenged the legality of Nash County's purchase of 145 acres to site the plant.
Some incentives come as a quid pro quo for staying put. JM Smucker announced in 2010 it would shutter its Memphis jams & jellies plant this year. The city fished around and came up with a $6.3 million tax break, and last month Smucker reversed course and said it would invest $55 million to convert the facility to peanut butter production, or $50,400 per job saved.
The big bucks are in greenfield or, best of all, brownfield projects. In December, the Indiana Economic Development Corp. said it would pony up $5.8 million in tax credits to Phoenix-based Café Valley for a $48 million bakery the company wanted to build in Marion, the Indiana hometown of James Dean. Additional aid from the federal New Markets Tax Credits program also is sought, but that's small change compared to what the town of 30,000 is bringing to the party. The city agreed to issue two bonds worth $26.5 million, including $4.2 million to purchase the land and demolish a defunct electronics company's building, to make way for the bakery. The plant is expected to open next year with 100 workers, with as many as 400 employees by 2018.
Most state and local development boards want industry to know that the welcome mat is out and they're ready and able to help build the food facility of the future…..and then there's Idaho. The state doles out about $800 million each year in tax credits and waivers to projects like JR Simplot's $330 million frozen potato-processing plant in Caldwell, Ida. The 380,000 sq. ft. facility will come on line next year and will create 250 new jobs, Simplot says. However, the high-tech plant will produce as many frozen French fries as three existing facilities, including an existing Caldwell plant originally built in 1941. Those three plants will be closed, resulting in a net loss of 500 jobs.