A major beef processor has halted its eastern Iowa expansion.
Blaming increased construction costs, Iowa Premium spokesperson Marcy Johnson said Thursday that the company has "indefinitely paused" building a new factory in Tama. She said the company will decide whether to resume the project later and will continue operating its current factory in town, where 830 employees work.
"We thank the city, county, and state leadership, our Iowa cattle suppliers, and the Tama community for their enthusiastic support for the project," Johnson said. "We will continue to invest in our employees, our existing Iowa Premium production facility, and this community."
Iowa Premium announced plans in March 2021 to replace its current factory with a bigger plant. In a filing with the state, the company disclosed that it would hire 400 workers there by the end of 2024, bringing its total employment to more than 1,200. The larger factory would double the company's production capacity in Tama, to 13,500 head a week.
The news was a promising sign for a county of about 17,000. The expansion also was welcome news for Iowa's cattle producers, who have complained that buyers in the concentrated beef-packing industry aren't paying enough for their livestock.
The Iowa Economic Development Authority awarded Iowa Premium up to $14 million in tax incentives in December. The city of Tama planned to give Iowa Premium a three-year property tax abatement, according to the IEDA.
At the time, Iowa Premium disclosed that it planned to spend $562 million on the project, including $230 million on construction and $293 million on machines. The company said in December it planned to start construction this spring.
When he voted to approve the incentives in December, then-IEDA board member Chris Murray said the new factory could boost the small community of Tama, which is halfway between Ames and Cedar Rapids, and has a population of about 3,000 people. Neighboring Toledo has about 2,400 people
"It's going to potentially drive workforce housing and other economic development in those communities," he said.
Companies do not receive the state's tax incentives until they hit certain targets, such as spending amounts and hiring increases. IEDA spokesperson Staci Hupp Ballard said Thursday that Iowa Premium never signed the incentive contract with the state and has not received any public money.
Tama County Economic Development Director Katherine Ollendieck said in an email Thursday that community leaders are still working to improve the area, in case the company eventually builds a bigger factory.
"Iowa Premium is a valuable part of our business and industry community," Ollendieck said. "We plan to continue efforts to provide more affordable housing options for local workers, build the main streets in Tama and Toledo stronger and provide any support we can to help Iowa Premium move forward in the future."
Iowa State University economist Lee Schulz has said there is plenty of room for more beef slaughtering facilities in the area. In a 2017 report, he wrote that farmers in the state send about 6,800 head of cattle to processors outside of the state every day. The three biggest Iowa beef packing plants slaughtered about a quarter of that amount every day.
Increasing construction prices have recently upended major projects in other parts of the state.
Citing increased prices for steel and concrete, as well as challenges figuring out when suppliers could give them materials, the developers behind Des Moines' planned pro soccer stadium on Monday announced a delay of at least a year.
This article originally appeared on Des Moines Register: Iowa Premium halts new beef processing factory, citing rising costs