Kentwood, Mich. — With ConAgra shutting down its operations in Kentwood, Michigan Works!, the City of Kentwood and The Right Place economic development agency are working together to try to find opportunities for the 260 workers who will be without a job.
Kepley said he was surprised when the call came in at around 4:00 pm Tuesday.
“Anytime this happens, it is a shock,” said Stephen Kepley, the Kentwood Mayor. “We received a phone call from the plant manager saying they had started to notify employees.”
ConAra was promised $9 million in tax break incentives in 2010 to operate through an agreement that was brokered by The Right Place in 2010.
A press release dated May, 19, 2010 stated that the company would be, “investing approximately $73 million and creating more than 200 jobs in the next five years.”
However, just about four years later, they are closing.
The agreement the company had with Kentwood stated in part, the “Company is considered to be in default…” if it “…moves the jobs created or retained at the Project Site to a location outside of the City…” or the “Company ceases operations at the Project Site.”
Kepley says the decision by ConAgra to close the facility doesn’t mean that they were dishonest in their original dealings.
He said the business climate can change quickly.
“I wouldn`t say dishonest. I mean, business happens. You know, businesses are sales driven and you plan. You have the sales and contracts can be lost.”
Kepley says the company is now legally obligated to pay back some of the tax breaks.
He says the city is calculating how much they will require to have returned based on a number of factors.
“Whenever we have an announcement like Con-Agra, of course in our business you would be disappointed,” said Birgit Klohs, President and CEO the Right Place. “We helped the company four years ago make an over 100-million dollar investment and create over 200 jobs. So, we were not pleased with it.”
Still when making deals like this, Klohs says she wouldn’t call it a gamble.
“Oh no, it`s not a gamble. The gamble is no, of course not. If you believed it`s a gamble, you would never do it. You have to trust that the deal you`re making is for the long term and in 99.9% of the cases, it is for the long term. The company made a corporate decision and only they know what went into that decision.”
She said she also wouldn’t consider those type of deals an agreement that isn’t a “sure thing”.
“Um, that`s not correct either. There are over 2,000 companies in West Michigan. If you have one that happens like this, that`s not much.”
Kepley said although there are challenges ahead to seek jobs for the workers and to find a company to fill the facility, this situation wouldn’t make him shy away from similar agreements because the tax money is being returned.
“Not at all,” said Kepley. “Because, we are guaranteed through this contract and this agreement that we will be made whole. So, we are business partners and when you are in business, you take risks.”
Klohs said that the silver lining in this situation is that ConAgra invested $100 million into the facility, which she said was much more than the anticipated $73 million promised in the original press release.
As for exactly why the plant is closing, Kepley said that a plant manager told him that there were other similar production facilities across the country that made the same energy bar product.
“From the plant manager, he told me that there’s two other manufacturing facilities in Con Agra’s manufacturing portfolio that manufacture this type of product,” said Kepley. “One is in California. The other is in Minnesota and those facilities aren’t running at 100% utilization. One was at 70% another was at 30%. This one here in Kentwood was at 30% also.”
He wasn’t sure why the Kentwood facility was the place that ConAgra decided to close.
“Why Kentwood and not the other at 30-percent?? You know, it’s a business decision,” he said.
ConAgra released this statement from the offices in Nebraska:
Yesterday, ConAgra Foods announced that the company will close its Grand Rapids, Mich. facility, located at 4490 44th Street SE, Grand Rapids, Mich. Production will cease in May 2014 with the plant scheduled to officially close in July 2014. Research and Development activities are scheduled to continue at the plant through February 2015.
This announcement impacts about 260 employees at the Grand Rapids bars plant, located at 4490 44th Street SE, Grand Rapids, Mich. Those employees have been notified. ConAgra Foods is committed to providing benefits and services that will help employees transition from the company or to other manufacturing plants within the company.