The Emporia Gazette

November 23, 2008

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The president of the Norfolk, Neb., Chamber of Commerce took time Friday to look back at the city’s experiences after Tyson Foods announced in 2006 that it had decided to close its beef processing plant in Norfolk. He had only a brief bit of advice as Emporians wonder what lies ahead.

“Not to overreact would be the advice I’d give a business — not to cut back because you’re afraid the sky’s going to fall,” said Dan Mauk, Chamber president. “You still just run the business like you normally would.”

Mauk talked about the effect of the Tyson closing as the city neared the second anniversary of the announcement.

Norfolk lost about 1,300 jobs in that closing, while the tiny town of West Point, near Norfolk, saw 365 jobs leave when its Tyson slaughter division closed at the same time.

Norfolk, with a population of 23,000, is similar to Emporia in size and number of jobs, Mauk said. Beyond those numbers, the similarities are not widespread. Emporia, however, may find that some of the experiences of working through a massive layoff may parallel those of Norfolk.

Mauk said he had spoken this week with Kent Heerman, president of the Regional Development Association of East Central Kansas, and learned of the efforts that already are under way to help this area through the crisis.

“I’m sure you’ll do fine. Kent told me some of the things they were doing,” Mauk said.

Bringing in agencies, organizations and educational facilities that can provide needed services, and consulting with representatives of other cities is a good start to solving potential problems.

“That gets you through the first wave; then it evens out,” he said.

Unlike Emporia, Norfolk in Madison County is in feedlot country, with easy access to a plentiful supply of cattle to slaughter, Mauk said.

Norfolk’s Tyson plant was for processing only. Because it sat within the city, it could not be licensed for a slaughtering operation and building outside town was not possible.

That situation may have contributed to Tyson’s decision to leave.

Real estate

“The biggest sector that got hurt were the landlords that had a lot of housing that was attractive to the Tyson workers,” Mauk said.

The housing, primarily apartments, had not been popular with long-time Norfolk residents, but they looked like havens to the refugees from Sudan and Somalia.

“They went from being full to being completely empty in a matter of just a few weeks, and they’ve not yet filled them back up,” he said. “... Our vacancy rate when the plant closed was 5 percent and it’s 15 percent now, so we’ve got a lot of empty housing.”

Traditional one-family dwellings are faring better.

Many of the Tyson workers, including Hispanic immigrants, owned homes and did not want to move.

“We saw the Africans just up and left,” Mauk said. “They got their last paycheck and they were gone. But the Latinos stayed here. ... I think the Latinos, a lot of them, are second generation. They own their own homes, they’ve got kids in school.”

They took jobs in plants in Dakota City, Schuyler, Grand Island, and Madison.

As a result, there was no jump in the number of homes offered for sale.

“The regular housing market of owner-occupied homes was good,” he said. “It wasn’t affected noticeably” and the homes that were for sale did not take an unusual length of time to sell.

“The world still turned,” Mauk said.

Education

Approximately 157 students left the Norfolk public school system when Tyson closed its doors, Mauk said. Each of those students was worth approximately $6,000 within the district’s budget.

A change in state law went into effect about the same time, however, and the district was spared significant loss.

“Coincidentally, the legislature up here closed a bunch of country schools, so ... they brought those kids into town and they brought their money with them,” Mauk explained. “So the school system got hurt, but it wasn’t a horrible hit.”

Unemployment. crime

Because of the number of people who were willing to commute out-of-town to jobs and because of the Africans who left quickly after the closing, Norfolk’s unemployment rate stayed somewhat stable.

The city population dropped about 3,000 with the Sudanese and the Somalis leaving.

“But those folks weren’t on unemployment because they left,” he said.

Existing companies absorbed a few employees with internal growth, and Norfolk also managed to attract a few new smaller companies employing 40 to 50 people. Those companies paid only $9 to $10 per hour instead of the $13 to $15 average hourly wage Tyson had paid.

“We managed to replace those jobs,” Mauk said; “we haven’t managed to replace the payroll.”

The unemployment rate had been about 3.1 percent when the Tyson plant closed. The rate peaked at about 4 percent, then returned again to its lower level, he said.

“So the sky didn’t fall. We thought it might, but it didn’t,” Mauk said.

And, as a bonus, Norfolk enjoyed a reduction in its crime rate, he said.

Business and taxes

The number of businesses closing also was not significant.

Businesses who relied totally upon Tyson for income — like a cleaning service — were forced to close. Auto parts stores felt the pinch when workers who did their own mechanic work left town, but none of them closed.

“A few used car lots disappeared,” Mauk said. “We had way too many of those.”

New car dealerships stayed relatively stable and improved, in some cases. A dealer near the chamber office reported exceptional sales in 2007.

“This year was the best year he had and he’s been in business 26 years here,” Mauk said.

Retail sales had held steady or dipped but now seem to be on the rise.

Sales tax distribution, however, tightened the city of Norfolk’s budget for a time, he said.

“The city was affected because they were counting on an increase and they didn’t get it,” Mauk said.

City Administrator Mike Nolan disagreed.

“Our sales tax had nothing to do with Tyson’s closure,” Nolan said.

Nolan said he believed the sales tax was flat before Tyson left Norfolk.

He attributed the lack of increase on increased Internet sales and “some impact from the flat construction market. That’s gone on, I don’t know for how many months. ...

“From my standpoint, I don’t think that the fact that Tyson Foods left Norfolk has hurt our community whatsoever,” Nolan said.

Mauk, from a different standpoint, is beginning to feel more confident that a recovery in retail sales actually has begun.

Sales tax revenues had been flat or increased 1 or 2 percent for about 18 months, with small, sporadic spikes that retreated the following months, he said. Recently, revenues have been improving.

“Retail sales for October (2007) were $38,300,000,” Mauk said. “It reflects a 6.8 percent increase over the previous year. So we’ve got two months in a row” of sales tax revenue increases.

Norfolk differs from Emporia in that it pulls in shoppers from miles around. While Norfolk’s population is only 23,000, the trade area population is about 100,000, Mauk said.

He could not predict the validity of results of the Buxton psychographic study. The study by the Texas-based company of retail prospects and needs in Emporia was contracted for cooperatively by the City of Emporia, Emporia Area Chamber of Commerce, Emporia State University, Lyon County, Main Street, the Regional Development Association, and the Convention and Visitors Bureau.

The study was begun before the Tyson announcement and is expected to be completed by March 3, according to an earlier report.

“It may have a shelf life of maybe zero minutes,” Mauk said.

Prospects

Mauk said that he was preparing to announce some good business development news Friday afternoon in Norfolk, but could not reveal yet what it is.

“We’ve got something that’s going to be real nice,” he said.

And Norfolk continues trying to interest other companies in the old Tyson plant, with its 190,000 square feet.

“It’s huge. There’s two freezers in there that you could drive a (semi tractor-trailer) truck in circles in. It’s huge, huge, huge,” he said.

“There was a lot of money invested here — but it’s not being used right now.”

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