Would it fly?

 When Worthington lost a major poultry processor, AURI joined the drive to put the abandoned plant back in business 

 

 By E. M. Morrison

When a New Jersey entrepreneur wanted to buy a mothballed Worthington chicken plant, there were plenty of skeptics.

Campbell’s Soup Company had shut down the processing plant nearly two years earlier. Tesfaye Mitslal, a chemical engineer and businessman, wanted to revive the abandoned plant to process spent hens, a byproduct of the region’s egg-laying industry. Mitslal’s venture would put the poultry facility back on line, restoring several hundred jobs and using less water than the old Campbell’s operation. The proposal seemed like a perfect fit for the community and the region.

But would it fly?

Was there a profitable market for processed spent hens? Could the region supply an adequate workforce? Who would finance the venture?

To answer these and other questions, AURI helped pay for an independent feasibility study, which examined Tesfaye Mitslal’s proposal in detail. “We took Tes’s business plan and put it to the test,” says Glen Thuringer of the Worthington Regional Economic Development Corporation. The study was instrumental in moving the $4.5 million deal forward, says Steve Olson, former AURI manager in Marshall.

Soup’s out

When Campbell Soup pulled out of Worthington in 1997, 42 years of production and more than 400 jobs came to an end. The community began searching for a buyer for the plant, which had undergone an $18 million expansion just two years before.

“We got together and looked at the facility and what we wanted,” says Thuringer, who led efforts to recruit a buyer. “We wanted someone who would utilize the whole facility, including broiler barns, feed mill, rendering plant and freezer.” Worthington also wanted a company that would employ the region’s skilled poultry processing workers and use less water than Campbell’s operation had. “When you put all that together,” Thuringer says, “it was hard to find a fit.”

Worthington embarked on an aggressive marketing campaign, pitching not just the plant but the community’s amenities and workforce, Thuringer says. Many food processors took a look — including a cereal manufacturer, pizza company and poultry companies Jennie-O and Gold’n Plump. “There was all kinds of interest,” Thuringer says, “but always, there was some hindrance.”

New life from spent hens

In November 1998, Thuringer was approached by Tesfaye Mitslal, 52. Mitslal, president of Awra Doro, Inc., was interested in processing spent hens — birds that no longer lay eggs.

Although the region has an extensive egg-laying industry, few plants process spent hens, which are usually sent to rendering plants and spread on cropland. Although flavorful, older hens aren’t as meaty as broilers and don’t bone off as easily, so companies like Campbell no longer use them for soup or other prepared dishes.

Mitslal, a native of Ethiopia, planned to process spent birds for overseas export. In Third World countries, they are in demand as an inexpensive protein source. He also planned to process broilers.

A group of potential investors asked AURI to evaluate the proposal, says Olson, who worked closely with Thuringer. AURI helped pay for a market analysis, which was later used to obtain financing.

Financing was one of the biggest hurdles, Thuringer says. It took 18 months for investors, lenders, and public development officials to put together a deal. In March, Mitslal announced that his company had purchased the plant from Campbell’s and would begin production this fall.

Since the word has spread about the refitted plant, “more people have come knocking for spent hens,” Thuringer says. He’s been contacted by distributors in domestic markets such as Arizona, Texas and Florida as well as overseas. The birds will primarily be sold whole in ethnic markets. Next year, Mitslal will add broiler chickens to his product line, Thuringer says.

Bring back the jobs

Awra Doro’s value-added processing venture will bring substantial economic benefits to the Worthington area, Olson says. The company expects to create more than 300 full-time jobs in the next two years, pumping an annual payroll of $6.5 million into southwest Minnesota. Related economic activity, such as taxes, retail trade and business services, will exceed $40 million, the company estimates.

“This was a unique project for AURI,” Olson says. “We worked with a public economic development agency to help assess a project. That’s something we haven’t done before. It’s another way we can work on value-added agriculture in Minnesota.”