Date: Mon, 8 Aug 2011 22:16:29 -0400
From: Mike Fox
Subject: Charges and counter charges on the Townshend plant’s closing
In the last chatlist, Tom Glendenning insinuated that the state wouldn’t permit Omton, the chicken plant’s owner, to import cheap Ukrainian grain using North Carolina ports. He insinuates somehow we should blame David Price for that by saying we should contact him. This seems odd since David Price doesn’t have authority over NC’s ports, and furthermore doesn’t even represent the area where either doomed chicken plant is located, or even the area where the ports are located. Why would he try to pin this on David Price? Heck he might as well blame Rene Ellmers or Richard Burr — either one would be just as logical.
Then on Brian Bock’s Facebook page (which you must get permission to join and post to) Tom repeated the same claim more directly, saying he heard from a guy he knows that had happened. Bock’s supporters then took this and ran with it and on the BBS tried to pin the blame on Bev Purdue.
But I can’t find any evidence to back up this claim. Can someone provide something besides “this guy I know said it”?
In fact the N&O article covering the purchase of the plant said that Omtron had consulted with NC about using the ports to bring the corn in, before they made the purchase. (see the article here:
http://www.newsobserver.com/2011/02/25/1012610/ukrainian-buying-townsends.html#storylink=misearch.) Note it also says the owner was planning to seek incentives from Chatham County to keep the plant open. Anyone know how those talks went?
Then the article covering the closing only discusses the grain market and says absolutely nothing about any trouble getting permission to use the ports (article here:
http://blogs.newsobserver.com/business/new-owner-of-chicken-processor-townsends-plans-to-shutter-nc-operations-lay-off-700#storylink=misearch)
So there is no documentation that I can find that backs up Tom’s claim. Perhaps someone else can provide some.
That claim may not be documented but here is what is documented:
The market price of corn, which is used to feed the chickens, has only increased 4% since Omtron bought Townshends. In February, when Omtron bought the plant, corn was $293 per metric ton. Last Friday it was $305. That’s a 4% increase. Chart here:
http://www.indexmundi.com/commodities/?commodity=corn. Was Omtron’s business
plan so fragile that a 4% increase in the price of corn ruined it? I figured a guy who made billions in the energy sector in the old Soviet bloc would be more savvy than that about commodities. So I doubt the “corn increased in price” explanation. At least not on its own.
But wait. The initial N&O article I cited above suggested that Omtron was going to make this work by getting cheap corn from Ukraine.
And oh by the way, as of July 1st, Ukraine slapped a 12% export tariff on corn, causing Ukraine corn to become uncompetitive in the market, and causing an approximately 75% drop in Ukraine grain exports. See the story here:
http://www.bloomberg.com/news/2011-08-03/ukraine-grain-exports-fall-to-an-unprecedented-low-group-says.html.
Is it just a coincidence that Omtron decided to shut their plants just about three weeks after that, citing unaffordable corn?
So it seems likely that this action by the Ukraine government ruined Omtron’s business plan more than any alleged action by David Price or Bev Purdue. Are local Republicans REALLY trying to blame David Price and Bev Purdue for the actions of the Ukraine government?
Mike