Nebraska packing plant to re-open soon
for Tri-State Livestock News
By the end of 2013, livestock owners in Nebraska and surrounding states will have one more packing plant option – this one being in Gordon, Neb., where a former plant will be re-opened.
The plant, known as Local Pride, was operated as a kosher plant by a New York Jewish family from June 2006 until 2008 when plant owners were convicted of fraud in their packing plant operation located in Postville, Iowa. The city of Gordon and First Bank Business Capital in St. Louis, Mo., acquired the Gordon facility and equipment at a 2009 trustee sale. The City of Gordon had a lien on the land because former owners didn’t meet the terms of a $500,000 state economic development grant. First Bank Business Capital, Inc. of St. Louis, Mo., had a lien on the plant’s equipment. The city and the bank recently reached an agreement to sell the facility to Open Range Beef, an investment group registered in the Omaha area.
Gordon City Manager Fred Hlava says the re-opened packing plant will provide job opportunities for local residents, increase the local property tax base, strengthen the city’s economic growth prospects, and offer area livestock owners better prices. Additionally there will be an opportunity to process specialty meats such as buffalo, organic and natural beef products and a place to sell or custom slaughter local animals.
“One of the things that makes this packing plant attractive is being mid-sized,” Hlava says. “Unlike the mega-sized plants that process between 1,500 and 3,000 animals per day, the Gordon packing plant will take 200 to 250 animals each day. That gives them great flexibility for changing operation modes at any given time, which means they can do custom slaughtering, which is mutually beneficial to both the producer and the packer.”
Gordon is a city of approximately 1,600 residents. Hlava says a labor pool for the packing plant to help fill between 60 and 70 job openings includes members of the Oglala Sioux Tribe who filled many of the jobs at the plant when it first opened.
“This will be the seventh opening of this plant since I’ve been city manager,” Hlava says. “Throughout those changes there has never been a time when obtaining employees was an issue. In the past, between 65 and 70 percent of plant employees were Native American. Hispanic and caucasian workers also held jobs there.”
Hlava notes that economies of scale in larger plants, including their need to keep as many as 1,000 employees busy, prevents them from reorganizing processing activities to accommodate specialty meats.
“When you have that size of operation and that many employees it’s difficult to reorganize the work flow to accommodate the major changes needed,” Hlava says.
With the recent shut down of the Aberdeen, S.D., packing plant, the next closest packing plants for livestock producers in the Gordon area are Lexington, Hastings (Neb.) and Fort Morgan (Colo.).
“Cattle for the Gordon plant have always come from an area that includes Nebraska, mid to southern South Dakota, eastern Wyoming, northeastern Colorado, northern Kansas and western Iowa,” Hlava says.
The Gordon plant has been up for sale for several years. Economic circumstances resulting from the 2008 financial downturn have hindered potential buyers who showed interest in the facility.
“Securing $3 to $4 million necessary for plant operations in a volatile beef market has been problematic with the state of the banking industry after 2008,” Hlava says. “Members of Open Range Beef investment group have the financial depth and more than 60 years of combined beef processing experience, as well as a successful business history.”
The Gordon packing plant is located along Highways 20 and 27 toward the center of the Gordon community.
David Blake, plant manager, will be on site at the Gordon plant to manage day-to-day operations. The facility will operate strictly as a beef processing facility with no rendering plant. At peak capacity, the plant will process 250 head of cattle per day.
With the state of the beef industry, the high cost of packer operations and maintenance of consistent cash flows and margins have caused problems for larger packing plants, leading to closure of several operations including two plants in Scottsbluff (Neb.) and the loss of a plant by fire in Rapid City (S.D.).
“Most recently, a Texas packing plant closed,” Hlava says. “Keeping mid-sized packing plants open is extremely important in supporting local and regional cow-calf operations,” Hlava says.
“Because of its size and flexibility, this plant has the potential of being a real benefit to the boxed beef and ground beef segments of the beef industry,” Hlava says. “We feel fortunate to have Open Range Beef take over the facility.”
Hay production has been reported to be 50% of average or less in many areas of Nebraska. The U.S. hay supply is at a 50-year low (Table 1). Couple this information with rising costs (Figure…