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October 25, 2009
ASHEBORO - For all the positive signs emanating from the stock market of late, the idea that an economic recovery may soon follow is obscured by a simple fact.
Until companies begin to reinvest in their businesses and hire workers, any recovery will be hollow.
In Asheboro, a city plagued by manufacturing job losses, the cereal maker Malt-O-Meal shows how economic benefits can flow when a company decides to invest in a community.
More than 1,200 people have applied for jobs with Malt-O-Meal, which has promised to hire 164 people within six years. The plant, which opened in June and began operating at full capacity late last month, has already hired 133 people. And Malt-O-Meal has spent $140 million to take over and expand a closed Unilever plant that once made dried soups.
About half the people Malt-O-Meal hired had been unemployed. Others, like John Sheville, 47, had textile jobs that they feared would soon disappear.
"There was a lot of pressure taken off me when I got this job," said Sheville, who has two children under 10 and was working for a Greensboro textile company that has since cut back on jobs. "I was just happy to get back in Randolph County, not to mention getting out of textiles."
When Sheville applied for his job he didn't expect a call back. The unemployment rate in Randolph County was 11.4 percent in August, a figure that masks the uncertainty most people feel about the jobs that do remain.
The county lost nearly 1,000 jobs over the last two years. Over the past 10 years more than 13,000 jobs in the textile and furniture industries have disappeared in Randolph and nearby Guilford and Davidson counties.
Paul Perry, 32, was mowing grass along highways for $8 an hour before Malt-O-Meal hired him a year ago. Perry got laid off from the textile manufacturer Universal Fibers in 2005 and then used a state grant to go back to school and get a degree in industrial systems technology.
"I couldn't find a job," Perry said. "It was extremely hard. It killed me to have to borrow money from my parents."
The incentives debate
Malt-O-Meal received $5 million in state and local incentives to open its first East Coast plant in Asheboro. The practice of luring employers to North Carolina with generous incentive packages came under heavy criticism earlier this month after Dell announced that it was closing its Winston-Salem plant and laying off its 905 workers.
Dell's decision means it will forgo most of the nearly $280 million in state and local incentives that helped lure the company to Forsyth County in 2005.
Randolph County officials view Malt-O-Meal as the kind of company that will be a reliable corporate partner for years to come.
"They are committed to making their products in the United States and they sell them in the United States," said Bonnie Renfro, president of the Randolph County Economic Development Corp.
Unlike Dell and Unilever, Malt-O-Meal is privately owned.
"We don't react to monthly, quarterly blips," said Dale Ducommun, the Asheboro plant manager.
Based in Minnesota, Malt-O-Meal has 1,100 employees across the country. The company makes inexpensive hot and cold cereals, 10 of which rank among the 50 best-selling brands in the country.
In addition to its namesake hot, wheat cereal, its brands include Tootie Fruities, Honey Nut Scooters and Coco Roos. The Asheboro plant makes Frosted Mini Spooners and Frosted Flakes.
Founded in 1919, Malt-O-Meal prides itself on growing conservatively and having a low employee turnover rate.
Jobs at the plant pay, on average, $36,000 a year, and include profit sharing and the chance for employees to go back to school at the company's expense.
The average annual salary in Randolph County is $31,928.
The company hired most of its employees a year ago, months before the plant was scheduled to begin production. The new hires took courses at Randolph County Community College and were sent for two-week training stints at one of the company's plants in Minnesota or Utah.
Keeping others afloat
Malt-O-Meal's corporate fastidiousness is best exemplified by its approach to hand-washing. Those entering the Asheboro plant floor are required to lather their hands with soap for 20 seconds, the time it takes for a series of colored light bulbs placed over each sink to flash.
Malt-O-Meal has made its corporate presence known by sponsoring an annual chamber of commerce breakfast and taking out an ad at the local baseball park. More important has been the company's effect on local businesses that are struggling to survive.
Malt-O-Meal executives booked 30 rooms a week at the local Hampton Inn while they were preparing the plant to open. Although many hotels have seen business drop as much as 20 percent, the Hampton Inn has had just a 3percent drop, said Stacey Senters, regional director of operations for BPR Properties.
"They've really, really kept us afloat during the recession," she said. "It's helped us not have to lay people off."
To show its gratitude, the hotel added Malt-O-Meal cereals to its breakfast menu and urged motorists on its sign on U.S. 64 to "Try Malt-O-Meal."
One of the main reasons Malt-O-Meal chose Asheboro was that it could take over a plant where Unilever once employed 150 people to make Lipton brand dried soups. Unilever closed the plant in 2006 when it moved its soup production to Canada.
Malt-O-Meal doubled the plant's size to 350,000 square feet and created hundreds of construction jobs at a time when such work was hard to come by.
"Malt-O-Meal probably had a greater number of indirect jobs than many companies who might locate here," Renfro said. "It was a sea of cars and trucks and vehicles over two and a half years as they were constructing that building."
The activity at the site spilled into surrounding restaurants like Burrito Brothers.
"When they started the construction they'd come here seven days a week for lunch and dinner," said Arturo Servando, 29, a co-owner.
Servando said business is off 30 percent since he and his two brothers purchased the restaurant in July 2008. About the only large groups who eat at the restaurant these days are from Malt-O-Meal. Servando knows because he's come to recognize the company's blue-and-white logo.
Needed: more new plants
As important as Malt-O-Meal has been to Randolph County, the area needs a lot more companies to make similar investments just to offset the plant closings and job losses that have already occurred.
Renfro said a number of other food processing companies have expressed interest in the county. Thanks to all the textile plant closings, she points out, Randolph has plenty of water and sewer capacity to offer food companies.
Jim Patterson, Malt-O-Meal's human resources manager, said the company wishes it could do more.
"We'd love to be able to hire everybody but you just can't," he said. "You just can't help but be sympathetic to what the region is going through."