Policy Watch Investigates

As plant closes, 950 face uncertain future, stricter unemployment rules

House-of-Raeford-2

Turkeys arrive at Raeford plant for processing.

Oscar Squalls doesn’t know what’s in store for him, with only two weeks of work left of his job preparing turkey for slaughter at the House of Raeford turkey processing plant.

Squalls and more than 950 of his colleagues are expected to lose their jobs by the end of the month, with the Hoke County plant slated for closure after years of declining interest from the American public in serving turkey for meals other than Thanksgiving.

I’ve given a lot of myself,” said Squalls, 41, about the four years he’s worked in the plant to support his four children.

He spoke on a recent afternoon as he smoked a cigarette on break, his work clothing splattered with feathers and body parts from the live turkeys he readies for slaughter.

The House of Raeford closure will be one of the larger plant shutdowns the state has seen in recent years, and the first large-scale test of new unemployment rules that reduced how much people can collect and for how long.

The company is processing orders for this year’s Thanksgiving season and has not set a final closure date, expected to be by the end of the month.

There’s little optimism from those in the area that there will be available jobs for the soon-to-be displaced workers, in this southeastern part of the state that already has unemployment rates higher than the 8.8 percent statewide rate.

It was like I got punched in the gut,” said Don Porter, Raeford and Hoke County’s economic development director about the May email he received from the House of Raeford owner about the closure.

He’s grateful that the company will keep a cook plant where chicken and turkey are processed for ready-to-eat products open, leaving nearly 400 jobs intact.

Porter said he knows the decision to close was one the company had to make, but is also well aware of the area’s high unemployment and few existing opportunities for the low-skill workers that toiled at the slaughterhouse.

Two small hospitals currently being built in the county will bring some jobs, but higher-skilled jobs than what most slaughterhouse workers get hired on to do.

If they were qualified to work in the hospitals, then they probably already would be,” he said.

The effects of the plant closure will spread far beyond Hoke County, he said.

Company officials estimate half of the turkey slaughterhouse’s employees come from Hoke and Cumberland counties, while the rest drive in from Scotland, Richmond and Robeson counties or from neighboring South Carolina. Farmers in the area who had contracts to raise turkeys for the company will also be without income.

The company is also the city water system’s biggest customer, accounting for $1 million in revenue, a third of the system’s total sales. City Manager Mike Wood said to compensate for the sudden loss, residents water bills will rise by $5 a month.

Sharon Decker, the Secretary of the N.C. Department of Commerce, said in comments she made to reporters last week that it will be tough to find companies to replace the jobs being lost with the House of Raeford.

We’ve been losing jobs in agribusiness faster than we can grow them,” Decker said.

Tough work at turkey plant

Few would call the House of Raeford jobs easy work, with the grueling task of butchering the large birds taxing workers who work day in and out at the plant. Workers gathered on break at picnic tables outside the factory show some signs of the tough labor, turkey feathers and poultry parts affixed to clothing and rubber boots while the heavy smell that accompanies operating slaughterhouses hangs in the air.

The company has not been without controversy, with both labor and environmental issues in the past. In a 2008 series on the poultry industry the Charlotte Observer found workers suffered significant injuries while worker safety was underreported at the company’s Greenville, S.C. plant and a raid that year at that plant by federal officials found numerous immigration violations in the company’s hiring. Then, a federal jury convicted the company last year of dodging the Clean Waters Act in 2006 by sending wastewater clogged with blood, grease and turkey parts into the Raeford city water system.

The jobs at the House of Raeford were low-skill, and low-wage positions, but were steady paychecks for many in a four-county area that has unemployment rates in the double digits. The company also regularly hired workers many employers reject – those without high school degrees or with criminal pasts.

The nearly 1,000 without jobs will unwittingly become the first large-scale test of controversial new rules governing the state’s unemployment insurance system. The unemployed, as of July 1, saw their maximum weekly benefits cut from $535 to $350 a month, and instead of six months of coverage will now have between 12 to 20 weeks of benefits.

The changes were passed by the Republican-led legislature and signed by Gov. Pat McCrory to pay back more than $2.5 billion borrowed by the system, which is funded by participating businesses, during the height of the recession. The July 1st start date also prevented 70,000 long-term unemployed from receiving federally-funded benefits, making North Carolina the only state to reject the federal money.

McCrory and lawmakers defend their actions by saying the system needed to quickly pay back the borrowed money while critics contend that workers, and not businesses, will be the ones to absorb most of the pain of the new changes.

Unemployment figures based on May 2013 data.

Unemployment figures based on May 2013 data.

 

Those reductions will hit the Raeford workers hard, with little cushion to help the hundreds that will find themselves jobless by the end of the month, said state Rep. Garland Pierce, a Democrat from the area.

We can’t absorb those types of numbers,” Pierce said. “If it were in Raleigh, Durham or Winston-Salem, maybe it would be okay. But down here, there’s already a shortage of jobs.”

Hoke County’s unemployment rate, at 9.1 percent in May, is slightly higher than the state rate of 8.9 percent. Surrounding counties, where many of the plant’s employees draw from, range from 12 percent in Richmond County to 16.2 percent in Scotland County, according to estimates from the N.C. Commerce Department’s Division of Employment Security.

The line workers at the Raeford turkey plant are also largely African-American, and the loss of 1,000 jobs in the rural areas comes as black workers in the state already contend with higher unemployment rates than their white counterparts. Statewide, 17 percent of black residents were looking for jobs at the end of 2012, compared to 6.7 percent of the white labor pool, according to the national Economic Policy Institute, a national think-tank focused on low-income and middle-class families. Hispanics in the state had an unemployment rate of 7.4 percent during that same period.

The company plans on coordinating a job fair for workers shortly after the plants closure, said Dave Witter, the House of Raeford spokesman. Other meat processing plants in the area have reached out to House of Raeford since the closure announcement with job offers, he said.

A rapid response team coordinated by the N.C. Department of Commerce for massive lay-offs has already met with workers, handing out folders with information about how to avoid foreclosures and where to access help.

Included in the state hand-outs was a dislocated worker informational packet that incorrectly informed workers they’d be entitled to up to six months of unemployment, with the possibility of more benefits through federal programs.

That’s not the case, given the recent changes to the unemployment system that will leave workers entitled to far less time.

Michael Ramey, with the Lumber River Council of Government, who provided the incorrect information for the hand-outs, said he dropped off 1,100 updated displaced worker packets at the plant this week reflecting the recent changes to the unemployment system. He made the changes after an N.C. Policy Watch reporter pointed out the inaccuracies to him. 

King Love, a 69-year-old from Laurinburg earning a $12 hourly wage after 22 years with the company, said he’s doubtful he’ll be able to find anyone else to hire him on at his age and expects he’ll have to retire. He worries about colleagues who have young families to support.

I hate it,” said Love about the upcoming closure. “But there’s nothing I can do about it.”

It’s a sentiment shared by many.

Hoke County, where the plant is located, has few jobs to come from and there are no big employers waiting in the wings.

I wish I could tell you where they’re going to go,” said Alan Duncan, the assistant dean of continuing education at Sandhills Community College. “There are limited numbers of those kinds of jobs out there and there aren’t 960 jobs in this area, period.”

Duncan said the community college is offering to help educate workers and train them for new jobs, but carving out time for a one to two-year academic program isn’t feasible for most workers in need of immediate employment.

I can’t offer them any type of training when I know there isn’t a company waiting there to take them,” Duncan said.

The question Porter, the economic development director, gets asked most often these days is who will come in behind the House of Raeford.

He hopes someone will want to buy the 50-year-old building, but acknowledges it will be a tough sell given the age of building and retrofitting a company would need to do.

It’s a fair question, but one that can’t be answered,” Porter said.

He, like the 950 to 1,000 workers at the plant, said he has no other choice but to wait and see what happens.

Questions? Comments? Reporter Sarah Ovaska can be reached at (919) 861-1463 or sarah@ncpolicywatch.com.