County announces $85.5 million Smithfield Packing expansion
Staff Writer / Kinston Free Press
Smithfield Packing Company, a subsidiary of Smithfield Foods and the world’s largest pork processor, is expanding — and it is doing it in Lenoir County.
On Thursday, Lenoir County Economic Development Director Mark Pope announced the deal, along with the economics incentive package, at a special meeting of the county commissioners. The commissioners approved the agreement 5-0 — Tommy Pharo and Linda Rouse Sutton could not attend the meeting — to expand the $100 million facility, which opened in Kinston in November 2006.
Smithfield Packing Company, founded in 1936, specializes in fresh pork, smoked meats, bacon, cooked hams and hot dogs for retail, foodservice and deli channels. The company exports products to approximately 30 countries.
Commissioner Eric Rouse called the expansion and the company’s consolidation of its packaged meats production a win-win for the county.
“I just think it is important to note that this doesn’t place a burden on the taxpayers,” he said. “It is structured in such a way that … in no way is the taxpayer on the hook and they are not losing any money.”
The deal, laid out by Pope, includes a $3.3 million economic development grant from the county. The City of Kinston will provide an additional $2.7 million.
Smithfield’s performance is measured by employment creation and meeting capital investment goals. The average of these two qualifications will represent the percentage of grant funds paid out over the next 10 years.
“I think it is important noting that there is no upfront money required from the county,” County Attorney Bob Griffin said. “And the county will not make its first payment until September of 2013, at which point the plant will be built and listed for taxes.”
In total, more than $16 million will be provided by state and local agencies for the construction of the 210,000 square foot facility — which will “mirror” the Kinston facility, officials said.
“(Smithfield) has been very vital to our community for (more than) 40 years,” Pope said. “We’ve talked a little bit before about regional projects … it’s 13 counties, is where (Smithfield) will draw from. It’s a regional project that will affect a lot of people and a lot of communities and it’s very valuable to (Lenoir County).”
In March of 2008, Smithfield announced the closing of its Vernon Ave. manufacturing plant. Although some of the 476 jobs transferred to the current facility, the closing delivered a big blow to the local economy.
Company officials blamed the age of the West Vernon Avenue facility as the primary reason for the shut down. Parts of the building — now demolished — dated back to 1948, and officials said it would be difficult and “too costly” to modernize.
Smithfield’s expansion announcement in Kinston came as Smithfield employees in Virginia learned the company would close its 41-year-old Portsmouth plant.
The Wall Street Journal reported the plant closure will affect approximately 425 hourly and salaried employees.
“We deeply regret having to close this facility,” Tim Schellpeper, president of Smithfield Packing, told the WSJ. “We recognize that layoffs and plant closings are difficult for everyone concerned. But at the same time, we believe this is a necessary business decision.”
Attempts to reach Portsmouth Economic Development Director Patrick Small were unsuccessful Thursday.
While Pope did not mention the Portsmouth, Va. plant closing during the commissioners meeting, he did say the state had “deep competition” from locations in Virginia and Tennessee. Pope credited Gov. Bev Perdue for her positive role in bringing the expansion to Kinston.
“I can’t say enough about what our governor does for the state,” he said. “Until our governor and the CEO (of Smithfield) talked this past Friday, we were unsure where this project was going.”
Schellpeper said transfer opportunities will be available and added the company looks forward to expanding in Eastern North Carolina.
“From a local economic development standpoint, we are pleased that this project will bring additional jobs to North Carolina and add revenue to the local economy,” Schellpeper stated. “North Carolina is a great place to live and work, and we are delighted to contribute to the growth of this region.”
Commissioner J. Mac Daughety said the return on investment for the $3.3 million is going to benefit the entire county.
“It’s all about jobs,” he said. “This creates revenue, and any time you can invest $3 million and get back roughly $10 million, that’s a pretty good return on your money and I applaud Mark (Pope) on his work with this.”
Pope said the project was fast-moving and construction should begin soon. The expansion is expected to take 12-18 months. The performance goals, provided to the commissioners, show the 330 employees should be hired during the 2013 fiscal year — which begins September 2012.
“We need to say thank you … to all of the players that came to the table and made this project possible,” Commission Chair George Graham told Pope during the announcement. “As soon as you put this one to bed, get busy on another one.”
Justin Hill can be reached at 252-559-1078 or email@example.com.
Follow him on Twitter @mjhill.
By the numbers
$85.5 million — total investment into the expansion
$16 million — total statewide incentives package
$3.3 million — economic incentive grant from Lenoir County
$2.7 million — economic incentive grant from the City of Kinston
$700,000 — grant from the One North Carolina Fund
$27,644 — average annual wage for the new jobs
330 — jobs created over the next three years
30 — countries the company export products to
12-18 — months needed to complete the project
Source: Lenoir County economic development