Eagle Grove Prestage Foods pork processing plant

EAGLE GROVE, Iowa (AP) — Teacher Stacy Osborn reads her student Esther's writing assignment, a short tale about her family playing with water balloons.

“It was fun, fun, fun. Let's do it again,” Osborn reads, asking her kindergarten students, “Who has a question for Esther?” And, “Who has a compliment?” Hands fly up.

For the first time in years, Eagle Grove classes like Osborn's have new students — about 75 this year, with more expected in the year ahead, the Des Moines Register reported. The district expanded its elementary and is considering adding more middle- and high-school space.

The surge comes from Prestage Foods’ new $320 million pork processing plant about 6 miles south of this town of 3,600 residents.

Prestage's North Carolina owners are about halfway to hiring 900 workers, which is expected to bring new families, jobs, businesses and housing to a region that hasn't yet recovered from the 2009 recession.

Recession hits

Eagle Grove is in Wright County, which has lost close to 500 jobs over the past decade, a drop of 6.2%. Its population shrank by 4.2% from 2008 to 2017, Iowa State University data show.

Nearby Hamilton County shed nearly 2,100 jobs over the past decade, the largest drop statewide at 21%, after Electrolux closed its washer and dryer plant in Webster City and moved it to Juarez, Mexico. The county population shrank about 5%.

The hard truth is that rural counties are dying, both in Iowa and the United States, said David Swenson, an Iowa State University economist. He found that 36% of U.S. metro counties captured 99% of the jobs and population over the past decade.

In Iowa, half of the state's 99 counties had fewer jobs than a decade ago, and 70% had fewer people.

Prestage will help “stem but not reverse” the region's losses, potentially for the next two decades, Swenson said. “It's a reasonably good anchor for that regional economy.”

Swenson estimates Prestage's economic impact at $574 million, while Ernie Goss, a Creighton University economist, puts it closer to $1.7 billion, spread out across nine neighboring counties.

Goss's study shows Fort Dodge's Webster County snagging most of the people and economic impact at $607 million.

Already, Fort Dodge is seeing its greatest housing boom in three decades.

Only five homes were built in 2017, a number that's expected to balloon to 140 this year.

Prestage is spinning off work for warehouses, transportation companies and other businesses.

“That's money that was never here before and will circulate through the region. This will create new wealth,” said Dennis Plautz, CEO of Greater Fort Dodge Growth Alliance.

Competitive jobs

Drive south on Iowa Highway 17 from Eagle Grove to Prestage Foods' pork processing plant, and you'll see a Tyson Foods billboard that advertises “top dollar” pay at its Storm Lake plant: $16 an hour for beginning production workers.

Head the other direction, and the back of that billboard promotes Prestage opportunities. Prestage's production pay starts at $15.50 an hour, moving to $16 and higher after three months.

Ron Prestage, who leads the North Carolina family's hog and turkey business, acknowledges healthy competition for workers between the two food processing companies.

Is it a war for labor? “Absolutely, but not in a bad way,” says Prestage, a veterinarian. “People who are skilled in those jobs are highly sought after.”

A battle over workers is good, potentially driving up wages, Swenson said.

County pay has climbed nearly 15% in the past five years, said Growth Alliance's Plautz, and the group's economic development director, Kelly Halsted.

The Prestage plant, which opened in March, has hired about 500 workers, most of whom come from the region. The company said 60% are white, 25% are Hispanic and the remaining 15% are Asian, African and black. Forty percent are female.

The company is taking its time ramping up production. It's processing about 4,200 pigs daily at the plant, and eventually will process 10,000 animals.

Tax incentive

It makes sense for the facility to be in northwest Iowa, experts say.

The state is the nation's largest pork producer, raising about 50 million hogs annually, and of the 10 largest pig-producing counties in the nation, five are in northwest Iowa. The region raises about 9 million hogs each year.

That's why Swenson disagrees with the state's $11.5 million tax incentive package for Prestage. The county also is providing $8 million in tax rebates.

“The plant was going to locate somewhere in that region,” he said. “There was no other place that plant would go to be profitable.”

Experts say the industry needed the additional processing capacity. Seaboard Triumph built a $330 million plant in Sioux City, opening in 2017, and recently added a second shift.