A new report is injecting uncertainty into the future of a Columbia factory. The Wall Street Journal reported Monday that international conglomerate Kraft Heinz is considering selling meat producer Oscar Mayer.
Oscar Mayer's iconic "wiener" hot dogs are manufactured at the Columbia factory off of Route B. Kraft Heinz is applying for a tax break to help invest more than $92 million to replace three production lines and invest in "decarbonization" technology.
The renovation is part of a company-wide effort to reduce its carbon footprint globally by 2050, according to a company presentation reviewed by KOMU 8. The factory is the "backbone" of the Oscar Mayer brand, according to the presentation.
However, Kraft Heinz said it is considering moving all or part of the plant's operations to another state or country because of lower profitability compared to other sites. In its application for the abatement, Kraft Heinz said further investment in the facility is only achievable "through a strong public/private partnership."
"State incentives, such as retention withholdings/tax credits, will be factored into the company's overall business decision to both move forward with Project Lightyear and keep Oscar Mayer hot dog production at the Columbia, MO facility," the company wrote.
The investment would strengthen Oscar Mayer's ability to retain the factory's 447 full-time employees, according to the company. The decarbonization efforts, called Project Lightyear, would include installing solar energy to produce electricity and steam on site. It would also include assets to recover waste heat.
The company is asking for up to a 75% personal property tax abatement — or tax break — on new equipment it purchases to upgrade the facility. The abatement would last 10 years, or as long as the equipment is functional. Kraft Heinz is also asking for a 100% sales tax exemption on building materials for the project.
The abatement has the support of county leaders, including Boone County Presiding Commissioner Kip Kendrick, who said he hopes the company's jobs can stay in the county.
"We hope that the end result is that Kraft Heinz remains a significant employer here in Boone County," Kendrick said. "And remains an important part of the community for years to come."
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Kendrick said there will likely be ongoing discussions about how to move forward in the wake of the Wall Street Journal report. He said it shouldn't have any impact on the abatement itself but would likely influence the performance agreement between the county and Kraft Heinz. The performance agreement stipulates conditions for a company to receive an abatement, including maintaining a certain level of employment.
Regional Economic Development Inc. (REDI), is helping to shepherd Kraft Heinz through the abatement process. REDI is a quasi-government organization that helps promote economic development in Columbia and Boone County. The county administers the abatements through its Chapter 100 Policy, which establishes a process for companies to apply for property tax abatements.
A majority of the tax jurisdictions impacted by the abatement have to approve it. Each jurisdiction has a representative on the Chapter 100 Review Panel. Impacted jurisdictions include Columbia Public Schools, Boone County and the city of Columbia, among others.
Columbia School Board President Suzette Waters is the district's representative on the board. On Monday, the School Board unanimously directed Waters to vote in favor of the abatement. Kraft Heinz gave a presentation on the abatement during the meeting, according to School Board member Blake Willoughby.
Willoughby said he supports the abatement because of the value the factory brings to Columbia. The school district will receive an estimated $1.1 million in tax revenue over 11 years as a result of the improvements, according to a company presentation. Willoughby pointed out the factory has deep ties to the community, including a partnership with City of Refuge. The company said it plans to hire between three and four City of Refuge clients this month.
"The other thing is, let's say the factory does leave, right?" Willoughby said. "There would be a reduced set of property taxes we, the district, and other taxing entities would be receiving."
The Columbia factory was first built in 1985. Oscar Mayer expanded the plant in 1991, adding a packaging line and the ability to make bun-length hot dogs. The plant was expanded two more times, in 1998 and 2016. Most recently, the company added a fourth packaging line and replaced its raw meat processing systems, according to a presentation from the company.
The review panel and Boone County Commission still need to sign off on the abatement before it is approved.
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