One of the nation’s leading pet food manufacturers proposes to invest around $80 million in a Dubuque facility and create more than 270 full-time jobs.
Simmons Pet Food, based in Arkansas, aims to buy the former Flexsteel Industries plant at 501 Seippel Road by the end of this year.
The company proposes hiring 138 workers by the middle of 2021 and increasing that total to 271 full-time employees in the next three years. It also would make a series of sizable investments in order to acquire the building, retrofit the facility, install equipment and eventually expand the structure.
Details of the proposed project, which remains contingent on city and state approval of incentives, were contained in documents released Thursday afternoon in relation to the announcement of a special meeting of the Dubuque City Council tonight.
Rick Dickinson, president and CEO of Greater Dubuque Development Corp., framed the proposed project as a major win for the community.
“It has been one of the most challenging years in memory for the economy and for our citizens,” he said. “Most communities are whimpering up to the end of 2020, but not Dubuque. This is a great announcement that should buoy our confidence that 2021 is going to be a better year.”
The development offers a silver lining to one of the most devastating blows the local economy absorbed in 2020.
Furniture manufacturer Flexsteel announced in April it would shut down its Dubuque manufacturing operations, resulting in the loss of more than 200 jobs. The move was a stunning reversal for the company just three years after it announced it would stay in the city and invest $28 million to construct the facility on Seippel Road.
Flexsteel Chief Operating Officer and Chief Financial Officer Derek Schmidt said he is excited to see a new company show interest in the building.
“Flexsteel is delighted that Simmons Foods chose Dubuque for their expansion and feels they will be a wonderful addition to our community,” he said. “This project serves as a great example of how individuals from both the public and private sectors leaned in together, generating a success for Dubuque.”
EYEING DUBUQUE
Simmons Pet Food is the sixth-largest pet food manufacturer in America. The company creates both dry and wet pet food products, the latter of which would be made in Dubuque.
The company emailed a statement to the Telegraph Herald Thursday afternoon, in which President Scott Salmon expressed his enthusiasm for the project.
“Dubuque is an ideal location to service our customers across the U.S. and Canada,” he said in the statement. “We are excited to work with community officials to finalize the details, and we look forward to growing our workforce and our capacity to serve our customers with this expanded footprint.”
Simmons Pet Food operates under the umbrella of Simmons Foods, a family-owned business founded in 1949 and headquartered in Siloam Springs, Ark. Simmons Foods is also a leading supplier of poultry and animal nutrition products.
In its application for state incentives, Simmons Pet Food breaks the Dubuque project down into two phases.
The first involves purchasing the building, retrofitting it for pet food manufacturing and buying the necessary equipment to begin production. This should be completed by July.
In the second phase, the company would buy needed equipment for a second pet food canning line and construct a 75,000-square-foot addition on the existing building, which would be used as a distribution center and warehouse. The second phase is slated for completion during the second quarter of 2023.
The company plans to hire 138 workers in the first phase and a total of 271 new workers over the next three years, with the plant operating 24 hours per day.
The average hourly starting wage for these employees will be $22.18, according to documents submitted to the state.
Dickinson suspects that these high wage rates will have a ripple effect in the local economy.
“It will raise the bar, and it will put pressure on our market (to possibly increase wages),” he said. “I think it will also put Dubuque on the map as a place to commute to or to move to. It could bring more people and more talent into the labor market.”
MOVING QUICKLY
By all accounts, the deal came together quickly.
Officials with Simmons Pet Food initially visited the Seippel Road facility during the first week of November.
John Gronen, of DBQ Property Group, said it soon became apparent that the business could be a nice fit.
DBQ Property Group served as the broker for the sale of the former Flexsteel property. Multiple characteristics of the facility — including its vast space, floor-to-ceiling heights and access via loading dock — convinced Gronen that the property would be appealing to a production company.
Although he was excited, he knew finalizing a deal wouldn’t be simple.
“We knew we were competing with several communities,” he said. “But I think everybody involved realized this could be a great opportunity for Dubuque. We didn’t know if our chances were 10% or 60% (to land the company), but we realized we needed to try to make this work.”
City documents state that the company gave “serious consideration to three locations” before picking Dubuque.
Gronen praised the “all hands on deck” approach that allowed local stakeholders to quickly and effectively piece together a development package that attracted Simmons.
Mayor Roy Buol believes the city’s previous commitment to updating its infrastructure played a critical factor in the company’s decision. He noted that Simmons is a big user of water and sewer utilities and emphasized that the company wouldn’t be coming to Dubuque if not for the city’s capacity for those services.
“To me, it just confirms we are doing the right things and preparing so we’re in the running for projects like this,” he said. “This business was looking for a quick turnaround, and we have everything they needed.”
City documents state that the use of that infrastructure should be a revenue stream for Dubuque.
“Water usage is anticipated to produce revenue of $600,000 to $800,000 annually in Phase 1 and up to $1,000,000 annually in Phase 2,” they state. “And the city anticipates revenue of approximately $300,000 annually in Phase 1 and $600,000 annually in Phase 2 for sanitary use.”
While Simmons officials were sizing up Dubuque, local officials also did their due diligence.
Dickinson paid an anonymous visit to the company’s plant in Emporia, Kan., to see — and smell — how the company conducted business on a normal day. He acknowledged that many people associate pet food with foul odors but said that was not an issue at the Kansas operation.
Meanwhile, he said that the company’s neighbors and employees alike had positive things to report.
“They are a preferred employer in Emporia, Kansas,” he said.
SWEETENING THE DEAL
Simmons Pet Food’s arrival in Dubuque is ultimately contingent on the approval of state and local incentives.
That process will start tonight when City Council members will hold a special meeting. They are expected to vote on whether to endorse the company’s application to the Iowa Economic Development Authority.
If approved locally, that application will make its way to the IEDA later this month.
The company is requesting an $800,000 forgivable loan, a $3 million investment tax credit and a $300,000 sales, service and use tax refund from the state. The company also seeks $2.15 million in state job training funds.
City Council members will also consider setting a Dec. 17 public hearing for the approval of a development agreement between the city and the company.
The agreement includes tax-increment-financing rebates that are estimated to be about $3 million in value. Through this arrangement, incremental increases to the property taxes at the facility would be rebated to the company.
Council members also are expected to vote on a land acquisition grant exceeding $500,000 that would be issued to the developer at closing. These funds will effectively cover half of the $1.01 million purchase price for two parcels of adjacent land, totaling about 8.4 usable acres eyed by Simmons. The land is for “parking/staging purposes as well as to provide room to add warehouse space,” city documents state.
These various incentives are tied to specific actions by the company.
These actions include making an investment in the existing building, construction of a new warehouse and the purchase of new machinery and equipment. The company also must create 271 jobs in the next three years.
Pending local and state approval, the project will continue to proceed at a fast pace.
The purchase of the building at 501 Seippel is slated to close by year’s end, and building improvements are slated to commence in early 2021.
To local officials, the deal is cause for celebration in a year defined by struggles.
“This would be great news any year,” Gronen said. “It is particularly great given what we are going through.”