Palmer slaughterhouse faces staffing hurdle

PALMER — The state’s beleaguered Mt. McKinley Meat and Sausage Plant is facing another round of uncertainty this winter with a management shakeup and a reboot on potential investor criteria — all while the Palmer facility remains on the clock for a potential summer 2017 closure.

Three managers at the plant have indicated to the state that they are planning to leave their positions, but as yet have not submitted any formal resignations, according to Department of Natural Resources deputy commissioner Ed Fogels, who attended a Monday meeting of the state Board of Agriculture to address the staffing issue. The Agriculture Department falls under the jurisdiction of DNR.

With the current open-ended departure dates for longtime plant manager Frank Huffman and production managers Jim Crigger and Nate Hamelink, the state is looking to hire temporary replacements to bridge a gap between either the sale, lease or ultimate closure of the plant at the end of the current fiscal year on June 30. Along with the managers and a small number of support staff, most of the labor at the facility comes from state Department of Corrections inmates.

Fogels said Tuesday the department had “gotten some signals” from plant managers this fall about their intention to leave. The state hopes to have applicants in place in time to train with the men, Fogels said, thus preventing a possible premature shutdown of the plant.

Approval for the three positions came Thursday afternoon, according to state Agriculture Director Arthur Keyes.

“This isn’t the type of job where you can just hire someone off the street, which is why we needed to get on this now,” Fogels said. “We want to have time for them to cross-train and have some overlap.”

Fogels added the department had to convince state hiring managers that time was of the essence in getting the positions filled.

“The way state hiring works is that you have to have a letter of resignation and a date of departure before you can hire for the position, but we were able to convince the powers that be that we needed to start now,” he said.

According to the Department of Agriculture, the three management positions are currently being paid a combined $363,486 annually.

Contacted at the plant Tuesday afternoon, Huffman declined comment on the issue. Neither Crigger nor Hamelink responded to an email request for comment.

Keyes said he was optimistic that approval for the temporary positions would generate candidates that could be brought up to speed quickly. “It will be staffed,” he said Thursday.

“It is a complex situation — those guys are going to be hard to replace. I am hopeful we can attract some qualified people.”

Valley farmers have said the plant — the only USDA-certified slaughter facility in Southcentral Alaska — is essential, and its closure would be a severe blow to the region’s agriculture industry. Without federal USDA certification, producers would be unable sell their meat to grocery stores and restaurants.

The facility also serves a role in the Alaska State Fair by processing much of the FFA and 4-H livestock — cows, sheep, hogs and goats — auctioned off every year.

State funding runs through June

A $2 million appropriation from the state Legislature this summer will fund the facility through June. The same scenario played out in 2015, but the state’s $3 billion budget gap put the FY 2017 allocation in sharper focus during this year’s session.

The state acquired the plant in 1986, when private owners defaulted on a loan. The facility is an asset of the state Agricultural Revolving Loan Fund, which is subsidized by farmers’ interest payments on low-interest state-backed loans. The plant has seen few profitable years between 1986 and 2015. While 2015 losses totaled around $155,000, Department of Agriculture officials are quick to point out that the deficit was covered by the ARLF with no general fund money used.

A new request for proposals was approved by the Board of Agriculture Monday, and should be released this week, according to Amanda Swanson, the ARLF loan officer. An RFP in May resulted in one bid that was rejected by the Board of Agriculture.

A broker was contracted last month to assess the value of the property, which came in at 860,000, Swanson said. The building is around 16,000 square feet.

The new RFP will be different from previous tries, Swanson said, with the state removing a stipulation that the plant remain a USDA-inspected facility over any lease period.

“Preference will be given to the bidders who would want keep it as a USDA plant though,” Swanson said.

Lease terms also will be relaxed in the new RFP, Swanson said. Previous terms required the plant be run at a minimum lease rate of $1 per month for the first 24 months of a 60-month lease, with a $1,600 per month lease rate thereafter.

Swanson said she expected the RFP to be released by the end of the week.

The May RFP resulted in a lone bid from Inlet Processing Co., LLC, a corporation formed in June and founded by Rean and Kristi Brooks, who operate Mat-Su Valley Feeders, LLC, a farm in the Point MacKenzie area. The lone Inlet Processing bid came after Denali Meats, a consortium of local producers, withdrew from pursuing the plant.

The Inlet bid was ultimately rejected in a unanimous vote by the Board of Agriculture at an Aug. 17 meeting. According to documents released by the state, the board turned down the proposal because the company failed to show adequate financial resources to pay the short-term expenses of operating the plant. Inlet’s business plan also was based in part on the assumption that local producers would increase their stock of animals for slaughter, according to a “white paper” on the plant released in September by the Division of Agriculture.

“Although this may in fact occur, it is unlikely that any increase in production will come in time to provide the income necessary to meet the short-term expenses of the plant,” the white paper reads.

Fogels said while he was hopeful the new RFP process would end in a lease or private ownership of the plant sooner than later, the state was committed to keeping the facility open until the end of the fiscal year June 30.

“Hopefully this (RFP) will work out,” he said.