Swift’s Imprint: Nothing to Laugh About

By Maria St. Louis-Sanchez, Greeley Tribune, Colo.

Mar. 15–For years, Swift & Co. has been known as that big plant out east that many people on Greeley’s west side try not to acknowledge — except on windy days.

Even then, it’s only with a wrinkle of their noses.

Though the all-too-familiar smell is the butt of thousands of jokes, the company’s future is nothing to laugh about, Greeley business leaders say. The economic fate of Greeley and Weld County in many ways is tied to the fate of the plant, and one needs to look back to the early 1980s to see how.

This January, Swift’s parent company, HM Capital Partners, a private equity firm, announced that it had hired JP Morgan Chase to explore all possibilities of unloading the meat industry giant from its portfolio. The plant and Swift headquarters in Greeley have more than 2,000 employees in Weld.

Speculation about what will happen has varied widely. There have been rumors that Swift’s corporate headquarters and the meatpacking plant — which houses the majority of the jobs — will close. But in February, Swift & Co. CEO Sam Rovit told the Tribune that if the company is not sold, it would like to add a second shift to the plant. About 300 jobs were lost when the plant consolidated from two shifts to one in 2006.

Though the future of the company is still up in the air, business leaders say one thing is for sure: When the biggest employer in town takes a step in either direction, the shock waves will reverberate around the county.

Those same shock waves were felt in the early 1980s when the plant closed.

A June 1981 Tribune editorial declared the impact in these words: “There are few people in this area who have escaped the impact of a major industry closing its doors.”

What happened when the plant closed?

In the late ’70s and early ’80s, tension had been rising between union organizers and management at then Monfort Inc. A 1979 strike had shut down Greeley’s meatpacking plant for 73 days. Securities and Exchange Commission filings by the company showed declining profits quarter after quarter.

Apparently, enough was enough. On March 28, 1980, the company mailed letters to employees at the Greeley plant: It was shutting down. In the end, it would stay closed for about two years.

“It was a shock because no one really anticipated that it was going to happen,” said Bonnie Dean, who took over as chairwoman of the Greeley Chamber of Commerce the day before Greeley learned of the plant’s closing.

Figuring the potential impact, she and then-mayor George Hall immediately went to owners and asked if there was any way to reopen.

“It was pretty clear that they did what they felt was necessary to do,” she said. “I don’t disagree with them. But I was worried.”

Morale in the town became so low that the city and businesses launched a campaign to boost spirits called “Greeley Feeling.” For the campaign, people were interviewed and asked to describe reasons why they liked Greeley and their answers were published around town.

Mayor George Hall was pictured in the Tribune wearing a tight-fitting “Greeley Feeling” T-shirt, sporting a mustache and an index finger making the No. 1 sign.

Greeley administrators had some clues about what to expect. During the 73-day strike, the unemployment rate in Greeley rose from 2.9 percent to 4.5 percent.

The two-year closure, however, was much more severe. About 900 jobs were lost with a payroll of about $15 million.

“It’s an economic disaster to Greeley and Weld County,” Hall told the Tribune at the time.

Tax increases

Greeley administrators knew the city would be taking a hit.

“We felt like the main way it would affect the city was in the amount of revenues we collected,” said Pete Morrell, then-city manager. “We anticipated what the amount would be, and then got the department heads together to look at their budgets and where we could cut back.”

From the plant’s closure until the end of 1980, the city estimated it would have a $600,000 decline in sales tax. And 1981 would put Greeley even more in the hole. The city froze employee salaries and $900,000 in projected 1980 expenditures.

Times were so tight that a Tribune story reported the city council facing tough decision to raise taxes or consider some other cuts such as a reduction in the number of hours libraries were open, increased fees in youth recreation programs or the elimination of school crossing guards.

While the city made many budget adjustments in those years, one other source of funds took a major hit.

Monfort was one of the biggest water purchases in town, which resulted in millions in losses in water revenue.

That loss in water revenue was combined with the fact that because of the job losses, more people were not paying their water bills. Whereas the city usually had about $250,000 in delinquencies in unpaid water bills, that year it had more than $1 million, said Leonard Wiest, a former Greeley city manager who was director of finance for the city at the time. Because of those losses, water and sewer rates increased 36 percent. Part of the increase was a normal scheduled increase, but it was higher than normal because of the shortfalls, Wiest said.

Impact on business

The impact to the city and tax revenues were only part of the costs of the plant closure. Since sales tax is only a percentage of sales, that $600,000 really represented a loss of about $20 million from Greeley’s economy, Wiest said. And that was just 1980. Gross sales tax figures for the time of the closed plant show that March 1980 had gross sales tax figures of $123.2 million. In March 1981, those sales tax figures had plummeted to $71.5 million.

“Financially it was a big hit to the city budget but more of a hit for the businesses,” Wiest said. He said an economist at the time had estimated that for every 100 jobs lost in the city, four retail jobs also would be lost.

By June 1980, Greeley hit a historical high unemployment rate of 7.5 percent, compared to 2.9 percent before the 1979 strike. In January 2007, Weld County had an unemployment rate of 5.1 percent.

Joe Tennessen, vice president of New Frontier Bank who had owned KFKA radio at the time, remembers those years with dread.

“It was just really devastating,” he said. “The most immediate impact was on those people not working, but it just filtered down through every part of the economy.”

Since he was in advertising, his business depended on everyone else doing well. But it seemed as if no one was.

“There wasn’t any point in advertising if their customers couldn’t come in and spend money,” he said. “They couldn’t buy gasoline or even the necessities. It impacted grocery stores, clothing stores and everywhere down the line.”

Retail businesses weren’t the only ones hit. At the time, Greeley averaged about 400 permits a year for new houses. In the midst of the layoffs, that number dropped to about 100, Wiest said. Foreclosures also were on the rise because many plant employees could no longer afford their mortgages. Those foreclosures brought down even further an already sagging housing market, according to Tribune reports from the time.

Could it happen again?

While the impacts of the 1980 closing were profound, chances are that it wouldn’t be quite as bad if the plant were to close a second time. Back then, the community was much more reliant on the meatpacking plant.

“We had a less diverse economy. … The community was much more focused on agriculture at that point in time,” said Dean.

Morrell said the city survived once when the plant shut down and it would survive again.

“We don’t know what the future is going to bring, but Greeley has been one of the best-planned cities around,” he said. “Every city goes through tough times, but the ones that do the best planning and have communication are always able to deal in a positive way with things.”

Tennessen agrees that if the plant closes soon, the impact probably wouldn’t be as severe as the early ’80s. But it will still be felt, he said.

“You close any business that has several hundred people in it and it will have an impact,” he said. “At some point in time just about everyone gets impacted.”

On the next windy day, he says, remember what the wrinkle in your nose means to the community.

“Just wait. Just wait until we don’t have it,” he said. “Then let me ask you if you would be willing to put up with that very minor odor in exchange for 2,000 jobs.”

What they are saying

“Until you actually experience it, you don’t realize how intertwined we are. It’s a fragile economy. The point is, you take 2,000 people out of the economy and it would have a huge impact.”

— Joe Tennessen, vice president of New Frontier Bank

“If the plant hadn’t re-opened, it would have been a couple of more financially devastating years. Eventually we would have learned to live with it.”

— Leonard Wiest, former Greeley city manager, who was Greeley’s director of finance in the early ’80s.

“When the plant re-opened, there must have been an improvement in mood as a result of the jobs. I can’t tell you we had parades or a celebration, but I’m sure we had an improving mood.”

— Bonnie Dean, former president of the Greeley Chamber of Commerce .

How much money does Swift bring to different areas of the economy? *

$556.7 million — Money toward cattle feedlots

$25.4 million — Money toward the banking industry

$12,4 million — Money toward doctors and dentists

$12.3 million — Money toward insurance carriers

$11.1 million — Money toward eating and drinking establishments

–Based on figures from 1999 data. Current numbers may vary.

Source: “The Estimated Value of ConAgra Packing Plants in Weld County, CO” by Andrew and Stephan Weiler, Colorado State University, April 2000.

By the numbers

36 — Percent of Weld County’s economy that is based directly on agribusiness

14 — Percent of economic total economic activity in Weld County that the meatpacking plants directly account for.

25 — Percent of Weld’s economy that is linked to the meatpacking plants.

14,084 — Number of jobs directly or indirectly created by the meatpacking plants.

Source: “The Estimated Value of ConAgra Packing Plants in Weld County, CO” by Andrew and Stephan Weiler, Colorado State University, April 2000. Numbers based on figures from 1999 data. Current numbers may vary.

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Copyright (c) 2007, Greeley Tribune, Colo.

Distributed by McClatchy-Tribune Business News.

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