The Tyson processing plant in Glen Allen. (Sarah Vogelsong / Virginia Mercury)
Tyson Foods will continue to be eligible for millions in state economic development grants linked to a facility it’s constructing in Pittsylvania County despite its announcement it will close a major plant in Hanover County that will lead to the loss of 692 jobs, said the Virginia Economic Development Partnership.
In 2021, former Gov. Ralph Northam’s administration announced Tyson would receive $8 million in incentives, in addition to tax credits, to site a new plant in Pittsylvania. In return, the company promised to invest almost $300 million and create 376 new jobs.
Incentives offered to Tyson included a $3 million grant from the Commonwealth’s Opportunity Fund, a $3 million Virginia Investment Performance Grant — which “encourages continued capital investment by existing Virginia companies” — a $500,000 grant from the Governor’s Agriculture and Forestry Industries Development Fund and $1.5 million in grants and loans from the Tobacco Region Opportunity Fund.
Tyson was also eligible for state job creation tax credits.
More than $6.5 million of those incentives will remain available to Tyson even as it shutters its Glen Allen plant because the performance agreements for the Commonwealth’s Opportunity Fund and Virginia Investment Performance grants linked to the Pittsylvania project “are solely based on the investment and jobs performance at that particular facility,” said VEDP spokesperson Suzanne Clark in an email.
“The closing of the Hanover plant is not related to the opening of the Pittsylvania plant and the two facilities produce different product lines; therefore, the COF and VIP incentive contracts that VEDP has entered into for the Pittsylvania County project are not impacted by the closure,” Clark said.
Jordan Butler, a spokesperson for the Tobacco Region Opportunity Fund, also said Tyson remains eligible for TROF funding. The $1.5 million offered to the company was a combination of a $707,000 grant and an $821,000 loan, and Tyson opted not to use the loan portion, said Butler.
Clark said Tyson has not yet received any payments from the Commonwealth’s Opportunity Fund or Virginia Investment Performance grants. Butler said the $707,000 Tobacco Region Opportunity Fund grant has also not yet been issued, since “funds are to be awarded post-performance … and will not until performance is verified.” The facility is expected to open later this year.
The Pittsylvania plant will produce cooked chicken nuggets and other products. The Glen Allen plant hatches and raises broilers and then processes them.
In 2015, the Pittsylvania Board of Supervisors visited the Glen Allen plant as part of a “fact-finding mission” to determine whether they should try to recruit a poultry processor to their county.
The Glen Allen closure was first publicly announced Monday by the United Food & Commercial Workers Local 400 Union, which represents the plant workers and said it had not received advance notice from Tyson.
“These men and women risked their lives and the safety of their families to keep this plant operational during the pandemic, and this is the thanks they get?” asked Local 400 President Mark Federici in a statement. “This is not how we show gratitude to essential workers in Virginia.”
Federici also criticized Tyson for “continu[ing] to reap the lavish benefits of taxpayer dollars while Virginia will have 300 fewer jobs.”
Virginia law says that money from the Commonwealth’s Opportunity Fund “shall not be used for any economic development project in which a business relocates or expands its operations in one or more Virginia localities and simultaneously closes its operations or substantially reduces the number of its employees in another Virginia locality” unless the Major Economic Incentives Commission has approved the project.
The MEI Commission is made up of lawmakers from both the House and Senate money committees, as well as the secretaries of finance and commerce and trade.
In 2015-16, state officials under former Gov. Terry McAuliffe approved almost $2 million in state incentives from the Commonwealth’s Opportunity Fund for Norfolk Southern to move jobs from Roanoke to Hampton Roads. Internal communications from the Virginia Economic Development Partnership obtained at the time by The Roanoke Times showed discomfort among some agency officials over the decision.
However, Clark said the Tyson case is different because it doesn’t involve the simultaneous closing and opening of facilities, and the law about use of opportunity funds “does not apply to situations that emerge well after a grant is awarded and a contract is signed.”
“The closing of the Hanover plant is not related to the opening of the Pittsylvania plant, and the plan was not to replace the Hanover plant with the Pittsylvania plant,” she said. “Given the multi-year lag between the Pittsylvania announcement (August 2021) and the Hanover closure announcement, they were not simultaneous or related, and therefore an exception approval from the MEI Commission was not needed.”
A spokesperson for Tyson did not respond to questions about the closure or grant eligibility. A March 13 notification from the company of the pending closure and associated layoffs obtained by The Richmond Times-Dispatch says that “as part of the Company’s business strategy to operate more efficiently, Tyson Foods has determined that it must eliminate all jobs at its Glen Allen processing complex.” The last day of work is expected to occur “on or about” May 12.
This story has been updated to provide details about the Tobacco Region Opportunity Fund incentives.
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