Lopez Foods receives $500,000 IEDA monies

Friday, December 27, 2019

The Iowa Economic Development Authority (IEDA) last week approved $500,000 in direct financial assistance, plus tax benefits, to the Lopez Foods plant in Cherokee for a major renovation project. 

Lopez Foods purchased the former Iowa Food Group plant for $9.3 million in July. The Oklahoma-based company paid $5.8 million for the real estate and another $3.5 million for equipment and personal inventory. 

IEDA also approved tax benefits through the High Quality Jobs (HQJ) program. Lopez had requested nearly $1.86 million in state incentives, including a $1 million investment tax credit and $855,000 in a "sales, service, use" tax refund. 

The plan is to remodel and install new manufacturing equipment, computer hardware and furniture and fixtures at the 285,000-square-foot plant, according to documents filed with the state. Upon completion, the plant will produce Canadian-style bacon logs, as well as fresh and frozen patties and other new product lines for an undisclosed international restaurant chain.

The first phase of the project, which includes equipment for cured, smoked deli meats, is expected to be completed in June. The last phase is set to be finished in September. 

According to Lopez officials, the plant will begin operations in April 2020 producing Canadian bacon for McDonald’s Corp. An estimated 50 employees will man beginning operations, according to Lopez Foods V.P. Kevin Nanke. 

Contractors have been working on renovations at the plant since October, including installing stainless steel interiors and asbestos mitigation. Lopez reported that portion of the upgrades totaled $25 million, with an estimated $50 million pegged for needed equipment going forward.

According to the IEDA, the Lopez Foods project at full operations will generate more than $29.5 million in new capital investment and will create 386 jobs, 171 of which are set at a qualifying hourly wage of $17.40. Six jobs will be retained at the same hourly wage. 

Tyson Foods, which inherited the Cherokee plant when it acquired IBP Inc. in 2001, closed the plant in 2014, taking with it some 450 jobs. At the time Tyson cited the facility's age and the "prohibitive cost of renovation," plus changing consumer demands, as justifications for closing it. 

Iowa Food Group, led by a group of Texans, purchased the plant for $2.35 million in September 2018. The company planned to initially hire 100 workers to process beef, chicken, pork and lamb slaughtered elsewhere for retail or food service, but the startup company soon ran into financial trouble. Only six weeks after production at the plant was restarted, IFG announced it had temporarily suspended production to raise more capital.

The temporary suspension became permanent; Iowa Food Group never resumed operations, and its approximate 40-45 workers lost their jobs. 

Speculation revolves around whether IFG purchased the plant to flip it for profit by testing and proving it could function as a meat processing facility, or if financing woes shut down the plant as listed owners Mack Zimmerman and Jeremy Robinson claimed.

Lopez, meanwhile, traces its history back to Wilson Foods, the company that built the Cherokee plant in 1965 to slaughter cattle and hogs. The company "originated as a spinoff of Wilson Foods, a major force in the meat packing industry until the 1980s," according to Lopez' website.

Named for John C. Lopez, who purchased a controlling stake in the firm in 1992, Lopez was originally called Anderson Meats; it produced beef patties for McDonald's as early as 1968. 

Lopez Foods operates two other plants, a 200,000-square-foot facility in Oklahoma City and the Dorada Foods Plant in Ponca City, Oklahoma. Dorada is a joint venture between Lopez and Tyson Foods, supplying products to McDonald's.

Lopez also has purchased a plant in South Carolina similar to its Cherokee plant acquisition.

Tyson Foods, which inherited the Cherokee plant when it acquired IBP inc. in 2001, cited the age of the facility and the "prohibitive cost of renovation," as well as changing consumer product demand.

For more than four years, Cherokee's efforts to recruit a new tenant for the plant were stymied by Tyson retaining a lease on the property that was originally set to run through 2020. Under pressure from state and local leaders, the Springdale, Arkansas-based company eventually agreed to pay $400,000 to the owner to end its interest in the building.

Respond to this story

Posting a comment requires free registration: