Kraft Foods considering $20 million Fort Smith expansion

Kraft Foods may invest up to $20 million in its Planters Peanuts operation in Fort Smith to add new equipment and a 28,000-square-foot addition to the 389,000-square-foot plant.

No new jobs will come with the investment, but Kraft’s Fort Smith Plant Manager Lisa Grenier said in a letter to Fort Smith City Administrator Dennis Kelly that the expansion would make the “Fort Smith location more competitive when Kraft Foods considers internal sites for future expansion that may include job creation and additional capital investment.”

Kraft is seeking from the city approval of the standard industrial revenue bond agreement that would allow Kraft to cut by 50% its property tax bill on the new equipment and addition. The payment in lieu of taxes (PILOT) mechanism would be in place for 12 years, at which time the tax obligation would return to 100%. Kraft is solely responsible for payment of the bonds, but state law requires the governing municipality to approve of the financing option.

Grenier said PILOT approval is critical.

“Our Fort Smith facility is currently being considered for capital investment of approximately $20 million over the next two years. PILOT funds are requested to improve the financial justification of the expansion project and the likelihood that the project will be approved internally,” Grenier noted in her letter to the city.

The Fort Smith board of directors on Sept. 7 are expected consider an ordinance approving the industrial revenue bonds.

Kraft, the world’s second largest food company posted $40.386 billion in revenue in 2009, now employes more than 350 in Fort Smith with an annual payroll of more than $40 million.

A 72,000-square-foot warehouse was added at the Fort Smith operation in 2003.

If Kraft approves the Fort Smith investment, it will be the second significant announced in recent months by an outside corporation. Gerber Foods approved in July work on a $89.9 million expansion of their Fort Smith plant that will create up to 50 new jobs on a new baby cereal line. Officials with company, owned by Switzerland-based Nestle, said the work will be the “most significant expansion and re-design” of the Gerber plant since its 1964 opening. The Gerber Fort Smith production plant is located at 4301 Harriet Ave., and employs more than 650 people.