Oregon farmers cooperative NORPAC notified more than 900 Salem employees Wednesday that it plans to lay them off after plans to sell the bankrupt organization collapsed, according to letters filed with state employment officials.
The new layoffs are in addition to 485 job cuts in Stayton the cooperative announced in September, which means the total number of Oregon workers slated to lose their jobs now exceeds 1,400. NORPAC also has a facility in Quincy, Washington; its future wasn’t immediately clear.
NORPAC plans to close a plant and a separate repack facility in Salem. Seasonal employees will lose their job when processing season wraps up Friday, while year-round workers will lose their jobs beginning in January.
After filing for bankruptcy in August, NORPAC arranged to sell its assets to Oregon Potato for $155.5 million. But the buyer pulled out of that deal last month, complaining that NORPAC hadn’t provided the necessary documents to complete its due diligence on the transaction.
“While NORPAC has continued to have discussions with companies about purchasing some or all of NORPAC’s assets, as of today NORPAC does not yet have a buyer,” NORPAC CEO Shawn Campbell wrote to employees Wednesday. “Additionally, NORPAC has attempted to secure additional financing, but as of today has not been successful.”
NORPAC is continuing to explore other funding options and seek possible buyers, but Campbell said it must issue the layoff notice under federal law since it doesn’t have any assurance it will find a way to keep the facilities open.
The company did not immediately respond to a message seeking additional details.
The Capital Press reported Wednesday that NORPAC is reviewing four offers for portions of its assets. The organization listed more than $165 million in debts and The Capital Press wrote that creditors are demanding their money.
Oregon’s jobless rate has been at a historic low near 4% for 36 months and newly revised employment figures issued Wednesday show that the state’s job market has remained strong in 2019, albeit slower than in recent years.
Manufacturing appears to have cooled, though, with production employees working fewer hours. Oregon economists have said NORPAC’s troubles may be one reason for the apparent slowdown.
The 1,400 pending NORPAC cuts represent a huge share of the food processing workforce in the Salem area, which numbers about 4,500 on an annual basis, according to Oregon state economist Josh Lehner.
“The Salem economy is about to have another 1,000 job seekers with similar skill sets searching for employment during the holidays,” Lehner wrote in an analysis published Thursday.
The cuts may be easier to bear given Oregon’s current economic strength. Farmers should be able to find other options for processing and packaging but the transition could be costly and time consuming.
Workers may have other opportunities given the tight labor market, too, but Lehner those who suddenly have to change jobs often start back to work with wages lower than at the job they lost.
Oregon’s food industry has been growing quickly over the past 20 years and Lehner said the larger question from Thursday’s news is whether NORPAC’s problems signal broader issues.
“As always in these types of situations, the question is whether or not the closure is a firm specific issue, an industry specific problem, or a harbinger of macroeconomy problems,” Lehner wrote. “I won’t pretend I have the answer right now.”