Sager Creek Vegetable Co. sold, Siloam Springs production facility closed

Del Monte Foods of California announced Wednesday (Sept. 20) it has sold its Sager Creek Vegetable Co. business based in Siloam Springs to McCall Farms of South Carolina, a food processing plant that cans and dehydrates vegetables.

Terms of the deal were not disclosed.

“The Sager Creek brands do not align with the long-term business strategies and growth opportunities for Del Monte Foods,” Del Monte Foods COO Dave Meyers said in a statement. “This divesture allows us to focus our energy and resources to strengthen our core business, driving innovation and exploring new products and experiences that meet the evolving needs of today’s consumer.”

Del Monte Foods says the sale will immediately close a Sager Creek production facility in Gallatin, about three miles east of Siloam Springs, which has a population of about 16,500. Sager Creek produces specialty vegetables for the foodservice and retail markets, and manufactures several brands including Veg-all, Freshlike, Popeye, Trappley’s and Allens.

Del Monte Foods will continue to be the point of service for all retail and foodservice customers of Sager Creek through early 2018, and will work with McCall Farms during the transition.

A Sager Creek warehouse in Springdale and two others in Siloam Springs are not affected by the sale, according to a news release, and will continue to support the ongoing logistics needs of Del Monte Foods and its retail and foodservice customers.

In a statement, the city of Siloam Springs said the following about the plant closing:

“The City of Siloam Springs was made aware of the Del Monte plant closing On Wednesday, September 20. While we know 238 people have lost their jobs, the City will work with the Chamber of Commerce to help those displaced workers find employment opportunities. Between factories and industries in the immediate surrounding area, there are 150 plus available jobs currently. Additionally, the organizations will work with Arkansas Workforce Services, local employment agencies and directly with company HR representatives to fill jobs.”

LOST JOBS
Siloam Springs Chamber of Commerce CEO Wayne Mays says the Sager Creek facility on Logan Cave Road — known to locals for years as the “Country Plant” — employs about 300 238 people. He said his most recent visit to the facility was in May, and termed it “fairly positive,” with  concern being the possibility of moving the local headquarters operation to Rogers.

“This is what you do [working in] economic development,” Mays said. “You take the highs and the lows. We’re not shrugging this off by any means, but we will react to it and go on the best we can.”

Mays said the next step for the chamber is to reach out to the city’s larger industries — Simmons Foods, La-Z-Boy and Gates Corp — to determine their workforce needs and how those might match up with displaced Sager Creek employees.

“They are always looking for good people, and they are large enough employers, but when you have unemployment at 2.5% to 3.0%, that’s virtually full employment,” Mays said. “But I am looking at it optimistically and I think these [Sager Creek] folks have a good chance of finding something in our large industries in Siloam Springs.”

Mays said it was a possibility McCall Foods could ultimately decide to keep the Siloam Springs facility open, but he wasn’t optimistic about it.

In 2015, when Del Monte acquired Sager Creek for $75 million in cash, Mays said McCall Farms also showed strong interest in acquiring the vegetable company.

“At that time, [McCall Farms] made it pretty clear if they bought Sager Creek, they would not be keeping a presence in Siloam Springs,” Mays said. “Unless their plans have changed a lot, that’s what I would expect.”

Sager Creek is the successor to the one-time family-owned Allens Inc., of Siloam Springs. Allens was founded in 1926 and owned and operated by multiple generations of the Allen family

Sager Creek purchased Allens out of bankruptcy in 2014 for $124.78 million.

GROWERS PERSPECTIVE
Dave Chamberlain of Maysville told Talk Business & Politics this was his 23rd year to grow green beans for Allens/Sager Creek/Del Monte, but it may be his last.

Chamberlain said he sells his beans through Razorback Farms, who contracts with Del Monte and other food companies. This year Chamberlain sold about 1.5 tons of green beans to Razorback, which were then processed by Del Monte in the Siloam Springs plant. He said the overall crop was three tons and Del Monte has been cutting back on its local purchases.

“Razorback sold the other half of my beans to Pictsweet Farms in Tennessee,” Chamberlain said. “This is first year my beans have sold that far away. I know it makes more sense to buy close to the growers to cut down on transportation costs. I don’t know what the closure of the Siloam Springs plant will mean for me and other growers. We were not directly notified from Del Monte about this sale and plant closure.

“I hate that Siloam Springs is losing another manufacturer, especially one that supports local farmers.”

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EDITOR’S NOTE: Talk Business & Politics reporter Kim Souza contributed to this story