Agribusiness  February 16, 2007

Closures can be devastating, but not always fatal

Because of the labor demands of the meatpacking industry, such facilities have a big impact on the communities in which they operate.

When the plants are operating at full or near capacity, their influence on local economies can be easily overlooked. But social, industry and economic changes often spark changes in the operations of such facilities, and the effects are undeniable.

Greeley’s meatpacking sector has been through a number of ups and downs – ownership changes, a strike, a temporary shutdown and, most recently, an immigration raid. Despite all the changes and challenges, Swift & Co. remains a big economic driver in Northern Colorado. Not all communities have been so lucky.

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Slow recovery

East St. Louis, Ill., used to be home to several meatpacking facilities – Swift, Armour & Co. and Hunter Packing Co. From the 1960s through the early 1980s, these plants closed, along with a number of other large employers in the area. A nearby stockyard town once called National City folded about the same time. The result was the loss of thousands of jobs – 1,600 from the Swift closure alone. The city has yet to recover from the loss.

Billie Turner was born and raised in East St. Louis. She remembers going to the downtown area as a child with her grandmother. They’d make a day of shopping, dining and people watching. Now, however, the downtown has fallen into disrepair.

“As I got older, I saw that the city was changing,” she said. “The stores were leaving.”

Turner is now the community liaison for the East St. Louis Action Research Project, a consortium of academics from the University of Illinois with the goal of revitalizing East St. Louis. Only now with the help of a concentrated effort is the city seeing some economic upturn.

Turner, who remembers people coming from neighboring cities to shop at the large Sears Roebuck store in her hometown, is encouraged by the recent addition of a Walgreen’s in the community. The Walgreen’s store, she said, is attracting others, including a discount grocer and a Phillips 66 gas station.

Spamtown USA

Not many communities have suffered as many consecutive losses as East St. Louis, but some have powered through more high-profile issues.

Austin, Minn., is also known as Spamtown because it is the home of Hormel Foods Corp.

“Hormel is the very big fish in a very small fish bowl,´ said George Brophy, president and CEO of the Development Corp. of Austin, the local economic-development organization.

In the southern Minnesota town of 23,000, Hormel employs around 4,000 at its packing facility and headquarters. For a year and a half in the mid-1980s, Hormel’s packing plant was shut down by a labor strike.

“It was a devastating strike,” Brophy said.

The impact was less about lasting economic impacts – of which there were few – but more about the union conflict. Brophy said that Hormel had been viewed as a model for union contracts due to the success of prior negotiations. The conflict drew national attention.

“Even to this day, it’s a big deal,” Brophy said, adding that site selectors who inquire about bringing companies to the city often bring it up. “Twenty-two years later, we’re still getting that question.”

Monfort strike led to closure

Greeley has also dealt with the temporary closure of a meatpacking facility in the past. In 1980, just months after the end of a 73-day strike, Monfort closed its Greeley meatpacking plant and put 1,200 workers out of their jobs. Two years later, the plant reopened, without a union.

The two years during which the facility was closed is remembered by most as a very low time for the city, which at that time was home to about 50,000 residents. Greeley not only had to contend with the closure of one of its major employers, but it also had the added stress of the economic recession that was weighing on the nation.

George Hall, president of construction company Hall-Irwin Corp., was mayor of Greeley in 1980. He remembers the strike preceding the plant closure as a surprise to the company and to the workers.

Overall, he said there was not too much worry that the plant would remain closed. Hall, a friend of the Monfort family, said that the Monforts have always been very committed to the Greeley community.

But for the two years that the plant was closed, Greeley’s economy was suffering.

“It was absolute devastation,´ said Joe Tennessen, now a senior vice president at New Frontier Bank in Greeley.

Tennessen, known in the community as Mr. Greeley, owned KFKA radio station when the meatpacking plant closed. He said that the plant closure had a big effect on many aspects of the city, almost closing the radio station. Tennessen pointed to the fact that retail sales in the city actually declined for two consecutive years, and if retailers aren’t making money, they aren’t advertising.

While he feels that the impact of the plant closure had a major impact on Greeley, Tennessen said that the city was quick to rebound when the plant reopened two years later.

The good news for Greeley and all of Northern Colorado is that since the Monfort closure, the area and the economy have become increasingly diverse. The region has shown – with the previous plant closure and more recently the high-tech sector downturn – that it is capable of repairing, rebounding and thriving.

Because of the labor demands of the meatpacking industry, such facilities have a big impact on the communities in which they operate.

When the plants are operating at full or near capacity, their influence on local economies can be easily overlooked. But social, industry and economic changes often spark changes in the operations of such facilities, and the effects are undeniable.

Greeley’s meatpacking sector has been through a number of ups and downs – ownership changes, a strike, a temporary shutdown and, most recently, an immigration raid. Despite all the changes and challenges, Swift & Co. remains a big economic driver in…

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