Mocksville chicken plant to close, eliminating 476 jobs; Siler City closing brings total job losses to 1,156

The 476 employees of Omtron USA's chicken-processing plant in Mocksville were bracing for bad news when they went to work Friday.

Word had gotten out that Omtron was planning the second restructuring of its North Carolina operations since buying them from a bankrupt Townsends Inc. in February. Employees knew the surging cost of corn was slamming poultry operators small and large.

What employees were handed was a sheet of paper representing the worst-case scenario: The plant at 251 Eaton Road — part of Townsends' Crestwood Farms division — is closing and all jobs are being eliminated by Oct. 4.

In the notification, David Purtle, the chief executive of Omtron, said the plant was closing because "revenues have not kept pace with costs."

Just like that, a plant that appeared to have been given new life — with 200 employees added in the last three months — became destined for shutdown after all.

Omtron also said it was closing its poultry operations in Siler City, cutting 680 jobs in the same time frame.

The N.C. Commerce Department said it expects to deploy its rapid-response team — which provides unemployment and job-searching assistance — to both plants in the next week.

Omtron, though operating in Davie County for only seven months, likely has become the largest single-event business closing in Davie County history. Thomson Crown Wood Products Co. had 708 employees in Mocksville in 1992, but the workforce was whittled down by job cuts until the plant closed in December 2003.

"We're really shocked by the news since we had thought they were improving, despite the tough conditions for the chicken market," said Terry Bralley, president of the Davie County Economic Development Commission.

"I believe the news took the local Omtron management just as by surprise, as well."

Townsends supplies pre-cooked chicken products to the domestic and international food service and retail markets.

Omtron is a U.S. corporation created by Oleg Bakhmatyuk, a billionaire Ukrainian businessman who owns food, transportation, real estate and financial companies. It was the only bidder — at $24.9 million — for the North Carolina operations and Townsends' headquarters in Georgetown, Del.

Omtron officials and management at the Mocksville plant declined to comment.

Dave McGlamery, manager of the Siler City poultry complex, said being stunned by the decision "is a great understatement." He said he came to the Siler City complex as part of the ownership change.

In December, Townsends cited the impact of "record high feed-ingredient costs on the one hand and low chicken pricing on the other" for its bankruptcy filing.

"If they (Omtron) had not stepped in when they did, I believe the plants here and in Mocksville would have shut down shortly," McGlamery said. He felt the company went into the purchase "with good faith, which gave employees a good feeling about the future."

Omtron did close Townsends' plant in Pittsboro in May, cutting 140 jobs, although Mocksville gained 70 jobs as part of the consolidation.

Omtron spent about $8 million on plant upgrades in Siler City, said Charles Johnson, the mayor of Siler City. Bralley said Omtron spent at least $2 million on upgrades in Mocksville.

Despite the high hopes that employees, as well as Mocksville and Siler City officials, had for Omtron's growth initiative, the high cost of corn and regulatory issues eventually made the plant another recession victim.

The price of a barrel of corn has climbed from $3.41 in June 2010 to $6.58 in June 2011, according to the N.C. Agriculture Department.

Just since Omtron made the bankruptcy deal, the price had gone up 96 cents a bushel — a cost increase that McGlamery said was worth about $200,000 a week. Bralley said he heard higher corn costs had added about $1 million a month to the Mocksville plant's operational expenses.

"Our Ukrainian owners made the decision to cease operations in North Carolina, and we're proceeding with their wishes for the company, as painful as it is," McGlamery said.

"They told us the business climate was not favorable for them to continue. They just decided to cut their losses and move on."

Although Bralley said he was stunned by the suddenness of Omtron's decision, he also understood how financially challenging it is for the poultry industry.

For example, Pilgrim's Pride said Friday it was closing a chicken-processing plant in Dallas by late September, eliminating 1,000 jobs, as it targets more cost cutting.

The plant-closing news was issued the same day Pilgrim's reported losing $128.1 million in the second quarter. It said its total feed-ingredient purchases through June were more than $400 million higher than a year ago.

According to The Associated Press, boneless skinless breast meat averaged $1.34 per pound in the quarter compared with $1.61 per pound a year ago. Chicken wings averaged 77 cents a pound compared with $1.23 per pound in the prior-year period.

Bralley said he understood that one reason Omtron was interested in the North Carolina plants was the ability for the company to import corn from Ukraine, which at one point had been at nearly half the U.S. bushel cost.

McGlamery said Omtron was not able to put that strategy into effect because of regulatory changes in Ukraine served to raise the price of corn there.

"Whatever cost advantage importing the corn had just went away," he said.