Communities feel impact of shrinking meat-packing industry

Minnesota/South Dakota State Roundup

Published July 1, 1998  | July 1998 issue

Over the past year two Ninth District communities have felt the impact of meat industry consolidation: Huron, S.D., and Luverne, Minn. And like other communities in the region whose economies largely depend on a singular industry, these cities are realizing the importance of diversifying their economies.

Huron rebounds from plant closing

When Dakota Pork processing plant closed last September, putting more than 850 people out of work, the outlook for Huron's economy was grim. The city lost 8 percent of its employment base and 11 percent of its payroll. Unemployment rose to 7.9 percent, and some local businesses, like trucking and marginal retailers, were affected.

What made the closing all the more dramatic was that Huron had experienced a growth spurt over the previous five years, according to Rick Daugherty, executive director of the Greater Huron Development Corp. The population had increased by about 13 percent since the 1990 census.

However, a local initiative has given a promising future to this South Dakota city of 14,000. Huron—Project 20, which began as a communitywide effort to find a new owner for the plant, evolved into an eight-goal, multifaceted economic recovery plan. With the clock ticking from last September's closing, by the end of 20 months, community leaders intend to:

  • create 600 new jobs,
  • create 100 secondary jobs,
  • establish six new industries,
  • expand 3 existing industries,
  • explore the feasibility of a new meat processing facility,
  • develop industrial park infrastructure,
  • design a site plan and place footings for two spec buildings in the industrial park, and
  • provide a reporting process to Huron citizens to encourage a positive attitude.

Project 20 has already accomplished some of its goals and is on target to reach all of them, Daugherty says. Huron residents are updated through frequent local newspaper and radio announcements.

Although the program has a long way to go, a measure of the city's progress is that three new businesses and three expansions have already produced 374 jobs, Daugherty says. In addition, Beadle County's unemployment rate dropped to 3.3 percent in May.

Huron was a packinghouse city for 70 years, with up to four plants operating at once, Daugherty says. "Now, looking two years out," he says, "the community is stronger and more diversified. We've reached a major milestone and turning point."

Luverne shares similar story on a smaller scale

When IBP closed its Luverne beef slaughter plant March 7, the town of 4,600 lost its largest employer. About 370 people lost their jobs, and a 32-year-old plant became an instant white elephant.

When the dust settled, businesses in Sioux Falls, S.D, about 25 miles away, coping with a tight labor market, hired some former IBP workers; some were shifted to a Nebraska IBP plant; and some immigrant workers left town. But about 90 remained unemployed.

That situation may change. Ellison Meat Co., a meat packer in nearby Pipestone, Minn., has offered to buy the IBP slaughter plant and reopen it as a packing operation with about 150 workers. Ellison may get some help from the state to modify the plant, and the city, which assumed ownership of the plant, will pass it on to Ellison at a below market value. While there are still details of the deal to be worked out, Ellison is planning a Sept. 1 startup, says Tony Chladek, economic/community development director for the city of Luverne.

Nevertheless, Luverne is not resting on the comeback of its main industry, Chladek says. The city aims to diversify its economy. A new ethanol plant will open in late August with 30 workers and is expected to eventually employ about 50. And the city wants to build its tourism trade, Chladek says. Currently under way is the development of a gallery that would feature the work of well-known nature photographer and Luverne native Jim Brandenburg. This project could "create the engine that would bring outsiders to downtown," Chladek says. And with Luverne's location on Interstate 90, Chladek says, there's a steady flow of traffic to tap into.

Kathy Cobb