In 2007, organic prepared food producer Really Cool Foods announced that it would be building a multi-plant production complex in Cambridge City, Indiana and investing over $100 million in the area. The announcement was met with great joy and significant incentives from state and local governments:
The Indiana Economic Development Corp. offered Really Cool Foods up to $3.05 million in performance-based tax credits, up to $165,000 in training grants and will provide Cambridge City officials with a $200,000 grant to assist in off-site infrastructure improvements needed for the project. Wayne County officials offered the company 50 acres of land, $165,000 in grants and a 10-year property tax abatement.
The facility opened in October of 2008 with 250 of the projected 1,000 jobs to start, and over the last few years the company has had numerous challenges reaching initially estimated milestones of investment and jobs created.
Today, the company told workers who showed up for their morning shift that the facility was closing, and in a press release sent after 9 AM, announced the company is shutting down.
A couple of initial thoughts and questions about this unfortunate announcement:
First, if the reports are true, what a crummy way to treat your employees. Even if there had been layoffs in recent years and even if the economy is bad, short of natural disaster I don't think there's ever a good reason to have an entire workforce find out about the end of the company when they show up for work that day. (Not to mention the timing of right when the weather turns really cold, right before the holidays, etc.) Yes, it's harder and maybe even risky to share the news in advance, but I think employees deserve the respect of being a part of that conversation well before the rest of the world knows.
Second, I'm sure there might be a lot of finger pointing going on around this announcement, but it really is important to investigate why a company so well received in our area and so generously supported by taxpayer dollars has to close after only three years in operation. Yes, the economy is bad, but it was bad three years ago too. Is this a case of bad planning, excessive optimism and hype, poor management, problems with the location...what caused this, and how can we stop it from happening again (especially on the taxpayer dime)?
Speaking of the taxpayer-funded incentives, the local Economic Development Corporation likes to talk about the role of clawback terms in their offers to businesses wanting to locate here. Does such a clause allowing us to recoup these subsidizations exist in this case, and are they "on it" when it comes to being a registered creditor for any sale of assets or bankruptcy proceedings? What percent of lost revenue and outright grants does Wayne County and the state of Indiana stand to get back? What will we do differently next time in vetting a potential recipient?
Lastly, Really Cool Foods has often been cited in our region as a success story of the conventional model of economic development, using taxpayer dollars to sell the area to large employers in hopes of landing significant long-term investment in the community. More and more, the evidence points to this as an outdated and unsustainable model, and when the success stories turn into nightmares, we have to pay attention to that. I personally hope we turn toward job creation at a more human scale, but whatever we do, we need a model that's sustainable when you look at the big picture - global economic trends, fuel costs, climate change, etc. - and not just what makes for a good headline over one, three or five years.
My heart goes out to everyone involved with Really Cool Foods - especially the workers and their families but even the people who worked hard to bring them here in the first place and the management who had to wrestle with a foundering enterprise along the way.
But one way to honor their pain and misfortune is to make sure it's not repeated in the future, and that we find ways to be better stewards of the people and resources in our region.
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I am very interested to see what the cause of this is as well Chris. Some are saying management, some are saying economy. It is also interesting to see what type of provisions were done to allow taxpayer money to be recaptured in the asset sell off. One of the questions I would raise is did the EDC do anything to help the continued evolution of the business or was it all an upfront effort?
And as far as "clawback" clauses go, does it provide for any transparency in accounting practices of the business, including payroll?
How much did the top executives of the company make? What benefits did they receive, including company-paid trips, vehicles, etc.?
And I agree, we shouuld we hold these companies responsible when their businesses fail (or they fail their businesses). With a failure rate of 3 years on this particular company, taxpayers deserve to know what happened.
If the entity dies and there is no continuing legal business, can our county council place a lien on the bldg?
As a former owner of a small manufacturing corporation in So. California I use to deal, directly and indirectly, with companies small, large and everything in between! I would see companies such as Really Cool Foods with lots of capital, some great dreams, ready to light the world on fire! I choose to never make sales calls on such companies because more times then not you wouldn't get paid on time or perhaps not at all! Within a few years they would usually be gone, either bankrupt or bought out! Once in a while one would succeed! This was in good economic times! Most people think I am a little off when it comes to investing and business so I guess that is why I am not shocked we people act so surprised when a pipe dream such as Carbon Motors or Really Cool Foods collapse!
Often times the officers would suck money off the top and bury it so deep the courts or investors can't touch it under bankruptcy protection! After all the smoke clears they walk away with far more then they came with! I truly hope this isn't the case this time around! Maybe it is the collapse of an honest dream. I certainly don't know enough about them to say! At any rate, in the end the people that usually get hurt the worst are the employees. This is a sad day for them and the Dream!
The timing is bad, but no one should be surprised by this.
I agree Shelia! But yet I have talked to a few that should know better who seem to be! I think they want job creation so badly for or community, they will follow a dream rather then reality! Sorry reality always wins! It takes a great idea and an even better business philosophy along with lots of blood sweet and tears to succeed!
It was very sad to see what happened with Really Cool Foods. As a business owner in Richmond, I am never happy to see a company die. However I can say that locally we seem to run to the assistance of any outside business who plans to locate here, but be a local business and you never hear from anyone.
We've needed a curb fixed in front of my business, and have asked, for years now. On a Saturday we have put out signs for a one day sale, only to have the City sign police show up and say we will be fined if we don't take them down. We have been selling Retail in an M district for years, so the City wants us to seek a rezone, but we don't want to change as it provides more flexibility for our property and its value. The best was being sued by the County over an agreement they made with my predecessor and received a huge capital investment - but then wanted out of.
Not only do I agree with more oversight on companies brought in, but maybe we should turn an eye on our current businesses and see how seeds can be sown to help them grow and hire. A bird in the hand generally is worth two in the bush.
I couldn't agree more Dave. There are many small businesses here locally that could use the same considerations that the city and county give to new businesses coming in that could potentially spark a growth in the job market. It would be nice to see some of the possibilities for small businesses advertised more by our local government. I have been working with small business owners and have been a small business owner myself and I didnt know until a year ago the city has a fund that they are able to loan small business startups money to help fund their business. You would think that would be something to allow small business owners know about since up-front funding is the number one killer of small business in the first 5 years
@ Ed Fry: The food business, as any business I suppose, is a very difficult one to succeed in. I cannot tell you how many times I've seen people who had no experience sink their life savings or lump sum retirement money into opening a small restaurant, only to fail and lose everything because they did not know what they were getting into. I think the same goes for wholesale food businesses. I had a feeling for a long time that the people behind Really Cool Foods were hopping on the organic foods bandwagon without really understanding what they were getting into. I still can't figure out how they were able to open and operate without having a proper sewage disposal system. I'm very sorry for the employees and hope that they can find other jobs.
If anyone *does* look into this, I would be really curious to know:
- When the subsidies (tax credits and grants) were set to expire; the property tax abatement was 10 years
- Whether they were negotiating to re-up those grants / credits.
Wal-Mart, for example, has closed down stores when a community refuses to re-up its tax abatements / tax credits; I imagine other large businesses have done similar things; I'm not saying that RCF did that here, but it would at least be worth looking into.
That said - I'm really sorry to hear this. I remember all the excitement about RCF coming to the area back in 07 and it's really sad that they're closing their doors and all those people are joining the ranks of the unemployed. Was it just this particular establishment that was closing down, or was RCF as a whole shutting down?
Good questions, for which I have no answers. 🙂
Anyway, I was under the impression that Really Cool Foods moved whatever operations it had--in NY state, I think--to Cambridge City . It may have been only an office or something. I think that they are finished.