Basic American Foods has announced plans to close its manufacturing plant in Shelley and its ingredients plant in Blackfoot, phasing out production at both facilities over two years.
However, the company intends to significantly expand and improve its Rexburg facility, company officials announced Tuesday.
BAF, which is a division of Basic American Inc., intends to keep its recently expanded main dehydrated potato facility in Blackfoot open. A BAF official, Jennifer Anderson, said the Rexburg expansion will more than offset the lost output from the closure of the Shelley dehydrated potato plant, which currently employs 200 workers.
The Blackfoot facility planned for closure, which manufactures flavorings and other ingredients, employs about 100 workers and was purchased from Nonpareil in 2013, she said.
The company is a global leader in manufacturing “shelf-stable” potato and bean products. It has brands including Brilliant Beginnings, Potato Pearls, Golden Grill, Classic Cassserole, Santiago and Idaho Spuds.
In a press release, the company said the closures in Shelley and Blackfoot will “ultimately allow BAF to grow and optimize its business for the future.”
“As with any project that impacts people, these are difficult decisions. We are very mindful of the impact these changes will have, particularly on our employees. As our employees and others would expect from BAF, we will help those who are impacted through their transitions,” BAF CEO Bryan Reese said in the press release.
A large portion of the closures of both plants are expected to occur toward the end of February 2020, and packaging operations should continue in Shelley through mid-2021, officials said. The company also expects to continue using its Shelley warehouses into the future.
BAF will offer severance pay and coordinate local services to help displaced employees through the transition, according to the press release. Shaun Young, BAF chief supply chain officer, said in the press release the company regrets any negative impact the closures may have on workers and the two communities.
“This consolidation was necessary for the overall efficiency and long-term stability of our supply network,” Young said.
Bryan Searle, a 58-year-old Shelley potato farmer who serves as president of Idaho Farm Bureau Federation, said the plant has been a cornerstone of his community for as long as he can remember. During his childhood, it was operated by R.T. French & Co., and later it was a Pillsbury plant, prior to being run by BAF.
“In Shelley, our mascot of our high school is the russet. It’s been the potato king of the world,” Searle said. “To see that news is just devastating.”
Shelley Mayor Stacy Pascoe had no advanced warning of the news, but he said the company has been discussing the possibility of closing the two facilities and expanding in Rexburg for years. Stacy said the company has had a hard time of finding workers. As recently as Monday, he said BAF had people standing by the roadside with signs soliciting workers for the Shelley plant.
“I look at the people who have been at Basic American for years. A lot of those people are retiring, so their workforce is getting probably close to retirement,” Pascoe said.
Pascoe noted that GPOD and Shelley’s new Golden Valley Natural facility are always looking for workers.
Regarding the tax ramifications for his community, Pascoe isn’t too worried. He explained Shelley created a tax increment financing district to accommodate the new Golden Valley plant, which employs about 600 workers. Revenue resulting in new development within a TIF district is diverted from the normal taxing roles for a period of time to pay off infrastructure improvements made to accommodate that growth.
Pascoe said the Golden Valley TIF is scheduled to retire in 2021, which is also when the Shelley plant will close.
The news came as a shock to many of the state’s potato farmers. James Hoff, a fresh potato grower who farms east of Shelley, had heard about the Rexburg expansion but didn’t anticipate the planned closures.
“On the field-run contracts, you’re responsible for transportation to the factory,” Hoff said. “It’s going to add some transportation costs back to the growers that are located in Idaho Falls and south.”
Searle said the Shelley plant closure will also affect growers who sell fresh potatoes to GPOD, another major employer in town. Searle explained a large percentage of area growers’ potato production doesn’t make standards for selling on the fresh market, and GPOD ships those spuds to the BAF dehydration plant. Once the Shelley plant closes, Searle expects shipping costs of those off-grade spuds will increase, and the difference will be passed on to the growers.
Searle said the community will also be losing a devoted supporter of local events, schools and organizations in BAF.
“This hits pretty close to the heart being a farmer and seeing the effects it has on the community,” Searle said.
Nick Blanksma, the incoming chairman of the Idaho Potato Commission, acknowledged businesses have to find ways to increase their efficiency to stay viable.
“Inevitably, if you get more efficient, somebody loses jobs. We sympathize for the folks who will be losing their jobs. Hopefully, job loss will be kept to a minimum as they restructure,” said Blanksma, who farms in the Glenns Ferry area.
University of Idaho Extension economist Ben Eborn explained rising wages and a tightening labor supply have likely driven the need for the company to improve its efficiency. He said wages for farm laborers, for example, rose by 7 percent in 2018 and are on pace to jump another 13 percent this year.
“They’re going to be able to manufacture and process more with more automation and better technology,” Eborn said. “There isn’t any labor available.”