Twenty-seven years ago, as the farm economy around this northeast Iowa town began to wither, local businesses dipped into their own pockets and raised $285,000 to lure Sara Lee Corp. to build a bakery here.
Two years ago, with Sara Lee threatening to leave, New Hampton and the State of Iowa came up with another $1 million to help it renovate the bakery. Sara Lee executives said they would stay for five years at least, and the overjoyed town threw a celebration beneath banners proclaiming, “Here Comes More Sara Lee Love.”
In New Hampton, at least, the company slogan–“Nobody doesn’t like Sara Lee”–was perfectly accurate.
These days, almost nobody in New Hampton has a good word for Sara Lee. Michael K. Kennedy, a scrappy Notre Dame graduate who is the town’s senior attorney, wrote a letter to Sara Lee headquarters in Chicago that said what many people here are thinking:
“Sara Lee has been a part of New Hampton’s history. So was the Ku Klux Klan. . . . We overcame our experience with the Klan. We will overcome our experience with Sara Lee.”
Kennedy got no answer from Sara Lee, but nobody else has, either. Everyone in town wants to know exactly if and when Sara Lee plans to close the big baking plant on the north edge of town, or whether it would be willing to sell the bakery and, if so, for how much.
But Sara Lee isn’t saying anything, other than it wants out.
On April 29, after a month of rumors, plant managers told union leaders Sara Lee would announce within 30 days that it would close the plant unless the union found an alternative.
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“We had 30 days to come up with quote something unquote,” says Mary Rosonke, the business agent here for the Bakery, Confectionery and Tobacco Workers union, which represents about 470 of the 651 workers at the bakery. “We tried to figure out what `something’ was.”
In New Hampton and surrounding Chickasaw County, a Sara Lee closing would be a disaster. The 651 Sara Lee employes earn an average of $11.25 per hour, good pay for the region, with plenty of opportunity for overtime.
New Hampton has 3,600 residents and there are only 13,000 in the county. In other words, Sara Lee’s work force is equal to 5 percent of the county’s population. The Cook County equivalent would be a factory closing that threw 250,000 people out of work.
According to the union, Sara Lee said it needed to save money by closing one of its three U.S. bakeries. Part of New Hampton’s output, it said, would be shifted to a plant in Traverse City, Mich., but most would go to a non-union and lower-wage bakery in Tarboro, N.C.
The union, working fast, contacted the University of Iowa, which put it in touch with the Midwest Center for Labor Research in Chicago, which hired a consultant, David Pfleger, who came up with a potential buyer named Robert Kallen, a member of a Chicago bakery family, who went to New Hampton.
Kallen told Sara Lee he needed more time to explore financing and come up with a marketing plan to sell the millions of pies, croissants, Bavarian pastries and other caloric products after Sara Lee leaves New Hampton. Sara Lee gave him an extra seven days.
The union recruited political muscle from Iowa’s congressional delegation and the state government. Sara Lee agreed to another 30-day extension, reportedly after Republican Sen. Charles Grassley personally contacted Sara Lee Chairman John H. Bryan.
That deadline expires Friday.
What you hear about Sara Lee depends on who you talk to.
Kallen, whose family used to own Bake-Line Products in Chicago, said that “from my point of view, they’ve shown good faith. They’re more than willing to work with anybody that puts something on the table.”
Pfleger said that Jack Shewmaker, the Sara Lee Bakeries division vice president who is leading the sale talks, “has been very forthcoming, a very decent guy.”
Kallen and Pfleger, of course, have to do business with Sara Lee. Pfleger said he thinks the “likeliest outcome is that the plant will close,” but Kallen predicts an announcement of some sort this week.
In New Hampton, too, city fathers don’t want to burn their bridges to a company that still commands 600 jobs.
“Had New Hampton not had Sara Lee here (during another farm downturn in the 1980s), there would have been a lot of farmers in dire straits,” said Herman Meyer, the town’s enthusiastic economic development director. Mayor Ray Klenske said that, over the years, Sara Lee was always ready with a check and free cakes for any public drive or function.
But now, “the reaction here is we feel we’ve been let down,” said Willis M. Hansen, president of a local bank, the State Bank of Lawler. “How else could we feel?”
The problem seems to be yet another public relations gaffe by Sara Lee. The company stonewalled the press and public last winter when a fatal outbreak of listeria was traced to a company meatpacking plant in Michigan. Indeed, Bryan has yet to utter a word about the contamination.
In the New Hampton case, Sara Lee may be dealing openly with potential purchasers like Kallen, but has kept the town in the dark.
Meyer, who calls New Hampton “a town that leads with its pocketbook,” is eager to subsidize a purchase of the plant and help keep its jobs here. But Sara Lee executives have refused any information, including its price tag on the plant. They have not even told the town officially that they might be moving out.
Sara Lee reportedly has ruled out a sale to at least one close competitor. But it has been vague about the possibility of outsourcing its production to the New Hampton plant, which is considered essential to give a purchaser time to find new markets.
Sara Lee refuses all interviews or any statement on the New Hampton plant, other than to say it is “not going to comment about any rumors or speculation.”
To New Hampton, this hurts.
“They never told us when they’re going to close, how much they want for the building, are they going to knock the building down, whether they’re going to leave the refrigeration,” Mayor Klenske said.
“We’re just a little bitty community,” he said, “but this is half of our industrial workforce. That is a hell of a dent. For what we’ve given them, we’re entitled to a phone call from Chicago.”
There are more than just jobs at stake. The Midwest Center predicts the loss of another 581 jobs in the region through the “ripple effect,” and a total cost to government of $9.6 million through lost taxes and increased welfare costs over the next two years. New jobs should be relatively easy to find, given the local unemployment rate of only 2 percent, but they are unlikely to be as well-paying and steady as the lost jobs at Sara Lee.
Many Sara Lee workers from other towns do their shopping in New Hampton. Others own stock in Sara Lee: Organizers of a recent $1.8 million drive to renovate St. Joseph’s Catholic church say there was “a ton of Sara Lee stock given to the cause.”
For New Hampton, the ties with Sara Lee are personal. Not only has the town twice subsidized the company, but James A. Schlindwein, who was president of Sara Lee when it opened the bakery here, is a native of New Hampton.
Schlindwein, now retired and living in Houston, is scathing about Sara Lee’s plans to move out, about company arguments that the plant is outdated and about its backhanded treatment of New Hampton.
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“Something’s silly here,” he said. “The equipment there is great. I visited the plant in 1997 and it looks like it was just built in the last five years.
“I think Sara Lee has a lot of responsibility to the community,” Schlindwein said. “Any time Sara Lee wanted anything, the city was already there. I think they owe them a hell of a lot. It’s horrible that they’re not talking to them.”
Some people in town think Shewmaker is the villain. Others think he is just carrying out orders from his bosses, including Bryan, the chairman. Schlindwein thinks Bryan, like New Hampton, is in the dark.
“I don’t know if this is getting to Bryan’s level,” he said. “I don’t think he’d do this. He comes from a little town in Mississippi himself.”
The plant closing, though, is part of what has been called Bryan’s “Nike strategy,” in which Sara Lee is selling off plants and outsourcing production, to concentrate on marketing. The company has called this three-year program “doing more with less,” and says the policy, aimed at saving $3 billion, is a reaction to globalization and the demands of global capital markets.
For New Hampton, this is a new and strange world. Like many Midwest farm towns, it sought industry 20 or 30 years ago to combat the decline of farming. Now it finds itself at the mercy of outside global forces that are becoming ever more distant and impersonal.
Both workers and townspeople believe the plant is profitable, especially after the renovation two years ago, and are convinced that Iowa employees, imbued with the Midwestern work ethic, can outproduce North Carolina workers any day. They are baffled that this cuts no ice with Sara Lee.
“One role of small towns now is to subsidize Corporate America,” lawyer Kennedy said.”We’re so terribly vulnerable, when the bean counters are not located in New Hampton.”