Tuesday, July 22, 2008

One Lives On--Another Slowly Dies

On Friday Theresa Schackmann, who heads our facilities at Agracel, and I took Alexi Giannoulias, the State Treasurer of IL, and Julie Vahling, his regional coordinator, on a tour of Pinnacle Foods. Alexi is young (32) and dynamic. We had a spirited but brief discussion of our state’s business unfriendly reputation and he promised to have lunch with me in the future to discuss in more detail. He’s an impressive young man who is a rising political star.

Pinnacle Foods is a client of ours. They manufacture food products like Duncan Hines Cake Mixes, Vlasic Pickles, Log Cabin Syrup, Armour Franks and many other products. We recruited them last year into an old manufacturing plant that we’d purchased empty a couple of years prior. In this case the plant was about 550,000 sf when we purchased it but Pinnacle required more room so we added on 100,000+ sf and also added about 50 truck docks.

Buying these old manufacturing plants (we call them our dinosaurs because they are big, old and often virtually obsolete) has become part of our three prong approach to creating new manufacturing jobs in rural America. The Pinnacle plant started out as a printing plant in the early 70s when World Color Press moved to town with their newest plant and later their headquarters. It was state of the art and at the time the largest pressroom in the world. There were a dozen or so massive printing presses lined up with rolls of paper bigger than pickup trucks flying through them each day. At its peak over 1,600 local citizens made a very good living at the World Color Press plant. Union issues, falling productivity and excessive workers comp costs led to the company’s decision to close the plant in 2004.

When we purchased the vacant facility in 2005, we found that there was a great deal of delayed maintenance that hadn’t been done. Theresa and her team quickly found themselves up to their elbows in everything from electrical problems to roof leaks. They tore into everything to try to bring the facility back to a semblance of its prior glory. By the time they were done we’d invested over six times what we bought the plant for to bring it up to Pinnacle Foods’ exacting needs.

There is a sister plant to the one we purchased located 40 miles south in Salem, IL. It was built a few years after the one in Effingham but was closed a few years before. Unfortunately, the delayed maintenance issues and the length of time that it has sat vacant, now makes it virtually impossible to resurrect. I’m afraid that it has gone over the “tipping point” of being salvageable.

One dinosaur plant is up and functioning with people employed…another slowly dies. Both delayed their maintenance and repairs. One was rescued in time. The other one not.

Tomorrow, how this story relates on a macro scale to the USA.

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