Waste no time, say leaders of Iowa city that suffered after previous Tyson plant shutdown

The Perry community is facing a question that another Iowa city, Cherokee, knows all too well: how to fill the void after a Tyson meatpacking plant that was one of its major employers shuts down.

Tyson Fresh Meats, based in Springdale, Arkansas, plans to close its Perry plant at the end of June. With nearly 1,300 workers, it's the city's largest employer.

In smaller Cherokee, the Tyson plant, closed in 2014, was the second-largest employer, with 450 workers. Its closure marked the start of a yearslong ordeal for the city before the plant's takeover by a stable tenant, Oklahoma City-based Lopez Dorado Foods. Much of the trouble was the result of what the city described as a standoff with Tyson, which hung onto its lease for the closed plant after telling city officials it didn't want to see it go to a competitor.

Sam Kooiker, who was city administrator of Cherokee at the time and now serves in that capacity for the city of Sheldon, said he would advise Perry officials to waste no time in pressing for the plant's sale.

“Looking back, we were waiting and hoping the issue would resolve itself,” said Kooiker. “My advice to Perry would be to put together a very concerted effort as soon as possible" to find a replacement for Tyson.

To that end, officials in Perry are working to secure a new owner as quickly as possible ― though issues beyond ownership may complicate the effort.

How are Perry officials keeping pressure on Tyson to sell?

A panel discussion about the pork industry and the pending closure of the plant is set for 5:30 p.m. Wednesday, May 22, at the La Poste event venue, 1219 Warford St., Perry. The event, which is open to the public, is being sponsored by PerryNext, a collaboration among city, county and state officials and local businesses and community leaders.

Local officials recently met with representatives from Iowa’s congressional delegation to shore up support as part of the Greater Des Moines Partnership’s annual trip to Washington, D.C.

"As (Iowa congressional leaders) have conversations with Tyson, as many of them are, (they are) really keeping their thumb on them to try to encourage them to sell as quickly as possible to a good buyer," Perry City Administrator Sven Peterson told the Partnership delegation, according to the Des Moines Business Record.

Both Kooiker and Bill Anderson, executive director of the Cherokee Area Economic Development Corp., said getting elected officials involved as well as assistance from Iowa Economic Development Authority Director Debi Durham were instrumental in breaking the stalemate between Cherokee and Tyson.

Tyson Foods closed the plant in September 2014 , but it would be another two years before it released its lease and allowed the plant to be marketed without strings such as an anti-competition clause.

Kooiker said it was a 2016 front-page article about the conflict in the Des Moines Register, quoting city leaders accusing Tyson of holding the city “hostage,” that brought the meatpacker to the table and ultimately led to the plant's sale.

Peterson said local officials have been talking to Tyson by phone every two weeks, focusing on prospective buyers.

While the community has concerns about Tyson potentially not wanting to sell to a competitor, Peterson and Rachel Wacker, executive director of the Greater Dallas County Development Alliance, said they have not heard any reluctance from Tyson officials, and that the company has been open to hearing proposals from other meatpackers.

“We hope they do the right thing,” said Wacker, adding that local officials continue to meet with Tyson and have had “very productive talks."

“We are trying to be proactive in our outreach, but a lot of this is out of our control. We can only do what (Tyson) allows us to do at this point,” Wacker said.

In a prepared statement, Tyson said it is willing to listen to offers.

“We are always open to exploring opportunities and are willing to discuss a potential sale with any interested party," it said.

It pointed to a January agreement to sell its Dexter, Missouri, chicken processing plant, closed in August, to Cal-Maine Foods, which wants to convert it to an egg-grading facility.

Is plant too small for a big processor, and too big for a smaller one?

But other potential concerns surround the plant.

Sitting on the western outskirts of Perry and valued at $11.7 million, it occupies 11.75 acres, with the two-story main building encompassing 355,818 square feet, according to Dallas County assessor records. The property also includes a 24,240-square-foot office building.

Though the plant dates from 1963, it has had several updates in recent years, including to its cooker and wastewater treatment system for rendering, said Tom Berkgren of Perry, who retired as executive director of the American Association of Swine Veterinarians in 2019.

The problem may be capacity. The Perry plant is capable of slaughtering about 9,000 hogs a day, putting it in the middle of the pack among U.S. meat processing plants, said Lee Schultz, an associate professor in the economics department at Iowa State University.

The U.S. Department of Agriculture lists the Perry plant as one of 11 capable of processing 2 million to 3 million head of livestock per year. By comparison, there are 14 plants in the category that can process 4 million or more hogs a year.

Tyson plants at both Storm Lake and Waterloo fall into that category and are considered among the most efficient in the U.S., Schultz said. And unlike the Perry plant, they are set up to accommodate a second shift.

Steve Meyer, lead economist for Partners for Production Agriculture, said the Perry plant's inability to have a second shift was likely a contributing factor to Tyson's decision to close the facility.

Meyer said the Perry plant is probably too small for a packer wanting efficiencies at that scale but too large for a “niche” market company involved in specialized meat processing.

Does Perry have other advantages to attract new employers?

Still, Perry has other advantages when it comes to economic development that Cherokee lacked. For instance, Iowa’s most recent figures show the unemployment rate has hovered from 2% to 3% since 2019, with the exception of a sharp but short spike during the 2020 pandemic recession.

The unemployment rate in Cherokee County at the time its plant closed was 6.2%. So demand for workers is much higher, as demonstrated when nearly three times as many employers sought to participate in a May 16 job fair for the Tyson workers than Perry's National Guard armory could accommodate.

With many of those workers expressing a desire to remain in Perry, the city can pivot toward attracting new industry to the area, according to Peterson and Wacker. Perry also is on the edge of the populous Des Moines metro area and has a high-speed connection via Highway 141 to Interstates 80 and 35.

And even if a buyer for the soon-to-be idled Tyson plant can’t be found soon, Peterson and Wacker said Perry holds other physical assets, including a 30,000-square-foot building ready for occupancy in its industrial park, as well as other state-certified developable land where a new facility could be built. The Iowa Economic Development Authority’s website shows 134 acres of the Perry Industrial Park has Iowa certification as being "Development Ready." “We have a lot of developable land available,” Wacker said.

“I think we have a lot of opportunity. I’m optimistic,” Peterson told the Register.

Kevin Baskins covers jobs and the economy for the Des Moines Register. Reach him at kbaskins@registermedia.com.

This article originally appeared on Des Moines Register: Perry advised to move quickly to line up buyer for closing Tyson plant