Esskay, Baltimore's financially beleaguered meatpacking plant, announced today that it is closing and plans to move to Indianapolis. Esskay's announcement comes only months after the firm won concessions from its unionized workers and promised to remain in Baltimore.
The transfer of the 126-year-old company to Indiana will result in 460 layoffs in Baltimore during the next two to three months, said Esskay president LeRoy Joseph.
Although Joseph stressed that Esskay definitely will not continue to operate in Baltimore, he said the move to Indianapolis still depends on completing financial arrangements there. "We intend to go out to Indianapolis, and if all aspects of the proposed move are put together, the time frame is two to three months," he said. "But all details of the move have not been completed."
Esskay, the area's second largest producer of pork products, decided to relocate after failing to assemble a $15.5 million package that would have financed a new plant in East Baltimore.
"We simply and truthfully ran out of options," Joseph said. "Our local financing package did not work out and we were faced with a processing plant that could not keep us competitive."
The struggling pork packing plant, which supplies ball park hot dogs to Orioles fans and processed meat products to supermarkets, has been losing money for the past three years. In 1984, the firm lost $1.86 million, which followed losses of about $600,000 in 1983.
The Baltimore mayor's office said that Esskay's move will have a substantial impact on the city's economy. "It will put a lot of people out of jobs and on the street," said the mayor's spokeswoman Pat Bernstein. "Esskay has been an institution in Baltimore for over 100 years. It will be a significant loss for the city."
Esskay, which is short for the Schluderberg-Kurdle Co., will not give severance pay to any of its laid-off workers, according to Joseph.
"Esskay employes are shocked, dismayed, extremely disappointed and worried," said an Esskay employe who asked not to be named. "Those feelings will be translated into bitterness and anger because, after all the sacrifices we have made in the last few years, this company has decided to turn us out in the cold."
Esskay officials said they expect to return the company to profitability within 60 days of start up at the Indiana operation, which will be housed in a vacant processing plant.
Labor costs for Esskay will be cut substantially, Joseph said, because the Indianapolis plant is nonunionized.
Esskay officials said that their outdated plant, which was built in the 1920s, is the primary reason for the company's continuing losses. Esskay also has been plagued by the larger problems facing the industry nationwide.
Ewen Wilson of the American Meat Institute said that the meatpacking industry has an extremely low profit margin.
Last fall William G. Hupfeldt, Esskay's chairman, reaffirmed his commitment to keep the company in Baltimore even when the company was warning that it might have to leave Maryland if it did not get concessions from its unions.
After intervention by Baltimore Mayor William Donald Schaefer, the unions made concessions in October. Esskay's three unions agreed to extend their current contracts and stretch out wage increases for five more years.
Since then, Esskay, in conjunction with city and state officials, has been trying to assemble a financial package to build a new plant. The $15.5 million package included $9.2 million in industrial revenue development bonds, a $3 million federal Urban Development Action Grant and $3 million in city and state loans and guarantees.
But the plan fell through when Esskay's financing stalled because it was unable to find a bank that would buy the industrial revenue bonds. "It was because of the company's poor track record in the last few years and the problems with the industry itself," said an Esskay official. Without a bank commitment, the federal government wouldn't approve the urban development grant.
Esskay, which currently has 630 employes, plans to maintain sales, marketing and distribution personnel in Baltimore.