Scheduled Downtime: Make Them Compete for Your Plant

Oct. 12, 2015
With economic growth still slow, states and municipalities are willing to pony up to get you.

Food processors big and small that are considering major projects are being courted furiously by state and local economic development authorities. Assistance that might have been limited to red-tape (or ribbon) cutting now goes well beyond to include job training, tax credits, outright grants and more.

Pennsylvania’s Clemens Food Group entertained offers from Ohio before accepting Michigan’s $55 million package of state and local assistance, including land acquisition. Joining Clemens in the project will be Cooper Farms, an Ohio turkey processor with hog operations. The plant, which will come on line in late 2016 or early 2017, will be the first pork processing facility for both Michigan and Cooper Farms.

Land acquisition was part of a package pieced together in Philadelphia last year to keep Dietz & Watson in the city. After a fire destroyed the deli-meat company’s facility across the Delaware River, New Jersey tried to lure Dietz to the Garden State with a $30 million deal, conditioned on relocation of the firm’s headquarters as well. Pennsylvania state, federal and local authorities acquired 20 acres and resold 12 to Dietz to allow the processor to expand operations and add a distribution center.

That assistance pales in comparison to the city of Richmond, Va., which was locked in a fight with Norfolk, Va., and Columbus, Ohio, for an East Coast brewery for Stone Brewing Co. of Escondido, Calif. The country’s 10th largest craft brewer scouted two score of potential sites before settling on the final trio. Richmond won the competition when officials agreed to issue $30 million in bonds to finance almost half of the project cost.

Workforce training assistance was a lure in Clif Bar’s decision to build in southeastern Idaho, reflects Keely Wachs, a spokesman for the company, but there wasn’t anything extraordinary about the region’s aid package. “They’re table stakes, honestly,” he says, and fairly consistent from one community to another. He also discounts the appeal of low interest rates, saying, “For us, the decision to make this investment had less to do with the current lending environment and more on the projected growth for our food.”

Sugar Creek Packing Co. recently opened its first plant in 30 years, a gut-rehab in Cambridge City, Ind. CEO Rob Daly also downplays the influence of economic development authorities.

“We didn’t run an auction, but we got great help from the state on economic development and training grants,” he says. “Interest rates are good, the investment environment is good, but we’re a private company, and part of the beauty of being private is you can act on your convictions and think in terms of a five-year horizon.”

The vast majority of food & beverage companies are private, and a large number of both private and public food manufacturers are cash-rich. When they embark on capital projects, they are driven by the opportunity those investments present.