Salisbury beef plant closes Royal Quality Foods operation was lured from Baltimore in '93

November 16, 1995|By Ross Hetrick | Ross Hetrick,SUN STAFF

A beef-processing operation lured from Baltimore to Salisbury with $4 million in low-interest state loans and generous tax incentives has shut down after two years of operation.

"Our sales effort could not generate enough volume to justify keeping the plant open," said David L. Pogge, president of Mountaire Corp., which owned the Royal Quality Foods plant in the Eastern Shore city of 25,000.

The plant, which had 120 workers, had taken over the former Campbell Soup Co. factory that closed with the loss of 800 jobs in mid-1993. While the work force was much smaller, there were hopes that Royal Quality might expand to employ 200 to 450 workers.

But Mountaire, based in North Little Rock, Ark., decided to close the operation to concentrate on its much larger poultry business. Sales were hurt by the loss about a year ago of a customer that accounted for nearly half the plant's production of roast beef, corned beef and pastrami for food service businesses and delicatessens.

"It was losing money," Mr. Pogge said of the 270,000 square-foot plant that closed down last Friday.

Mountaire, which had sales of $170 million last year, moved the Royal Quality operation from Baltimore to Salisbury in late 1993, enticed by a package of incentives that included $4 million in loans to buy and renovate the plant, a $150,000 training grant and exemptions from property and other taxes worth about $180,000 annually.

The Maryland Industrial Loan Authority (MILA) made a 6 percent, 25-year loan of $2 million, which was funneled through the Salisbury-Wicomico Economic Development Corp. for the purchase of the building. Another 3 percent, 25-year loan, was granted by the state's "Sunny Day Fund," to renovate the plant.

At the time, company officials said that without those benefits, the company might have moved to Delaware.

Charles Porcari, a spokesman for the Maryland Department of Business and Economic Development, said yesterday that the department is discussing repayment of the loans with the

Mountaire's chief financial officer.

While the MILA loan would probably be repaid when the plant is sold, the Sunny Day loan may be assumed by a new owner, Mr. Porcari said. Mr. Pogge said the company is talking to two prospective buyers of the plant. "We're fairly positive about being able to have an occupant and run the plant and potentially with more people than what we had hired," he said.

Mr. Pogge said the company hopes that 10 percent to 15 percent of the laid-off workers will get jobs with Mountaire poultry plants in Princess Anne; Frankfurt, Del.; and Selbyville, Del.

Workers who have not found other jobs will be paid through Dec. 2, he said.

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