A Mississippi poultry processing company is becoming a major economic engine for Eastern North Carolina.
Sanderson Farms already is building a massive poultry processing complex in Kinston its first operation in this state. That $121 million project is expected to open next year, eventually employ up to 1,500 people and create new business for hundreds of chicken farmers in the Lenoir County area.
Late Monday, Sanderson also announced it's considering construction of another facility near Goldsboro, in adjacent Wayne County. The $94 million plant would produce boneless chicken breasts and other products and could employ another 1,100 people if it opens as planned in 2012.
The news is a bright spot for the state's beleaguered chicken industry, which has been hurt by a glut of supply in recent years, surging costs and weaker overseas demand. In 2008, Pilgrim's Pride closed its processing plant in Siler City, throwing hundreds of employees out of work and hurting chicken farmers in that area. The poultry industry employs more than 20,000 people statewide, according to the N.C. Poultry Federation.
Sanderson's planned expansion "will be well-received," said Tom Vukina, a professor at N.C. State's Department of Agricultural and Resource Economics. "The labor market improves and it has a positive impact on growers and other businesses."
The proposed Wayne County facility is contingent on the company "obtaining satisfactory state and local incentives, locating suitable property" and other factors, Sanderson wrote in a statement.
The state awarded Lenoir County and Kinston $1.5 million for infrastructure improvements to support the initial complex and the jobs it will create. Local officials also provided financial support for that project.
Discussions in Wayne
State and Wayne County officials are just beginning to discuss options, including possible incentives, said Joanna Helms, president of the Wayne County Development Alliance. Adding 1,100 jobs would make Sanderson one of Wayne County's largest employers. The largest is the Seymour Johnson Air Force Base.
"We're working through all the various parts and pieces to see if this project would work," she added. "They are looking at other places in North Carolina and other states. We are just one consideration."
A spokeswoman for the N.C. Department of Commerce declined to comment on possible incentives.
The two facilities would increase Sanderson's processing capacity by 30 percent. Sanderson's customers include Sysco, which supplies food for restaurants, hospitals and corporate cafeterias, and Darden Restaurants, which owns Olive Garden and Red Lobster.
"This planned expansion in North Carolina will support our growth strategy," CEO Joe F. Sanderson Jr. said in a statement. "We are pleased that our strong balance sheet and financial performance have put us in the position to continue to grow our company."
The plans are a dramatic turnaround from June 2008, when Sanderson postponed expansion plans in North Carolina amid soaring feed and fuel costs. Last summer, the company revived plans for the Kinston complex, including a new feed mill, poultry processing plant and hatchery. That facility is under construction about 90 miles southeast of Raleigh.
Acute need for jobs
Lenoir's jobless rate was 12.4 percent in January, without adjusting for seasonal effects, above the state average of 11.2 percent. Wayne County's was 9.9 percent in January.
Sanderson also announced late Monday it plans to sell up to 2.3 million shares to pay for construction of the North Carolina processing capacity.
On Tuesday, the company's shares fell $2.29 to $53.85. Based on that price, Sanderson could raise as much as $124 million before expenses in the stock sale.
The stock has climbed nearly 50 percent in the past year, as demand for processed chicken increases and costs for feed and other expenses retreat.
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