Factory closure draws scrutiny of NJ’s business climate
May 14, 2011 for The Associated Press
by Josh Lederman
BORDENTOWN, N.J. — A stone embedded in the sidewalk outside City Hall commemorates the good will and generosity of Ocean Spray Cranberries, a major economic force since the farmer-owned cooperative opened a 60-acre juice-manufacturing plant here almost 70 years ago. The company is known for the truckloads of juice it donates to local fundraisers, and this city overlooking the Delaware River even hosts a cranberry festival each October.
But the sense of good will has quickly dried up as the community reacts to news that the company will close the plant in September 2013 and move its operations to a new facility in neighboring Pennsylvania. Bordentown, with almost 4,000 residents, will lose about $1 million in tax revenues and utility contributions, according to the city’s commissioner.
The factory’s 250 employees will have to decide whether to move with the company or find new jobs.
The company’s announcement in early May has underscored statewide concerns about the cost of doing business in New Jersey and incensed public officials who say they were led on a wild-goose chase to find ways to keep Ocean Spray in the state. Gov. Chris Christie has made strengthening the state’s business climate a central theme of his administration.
Ocean Spray’s decision to start anew in Pennsylvania’s Lehigh Valley region instead of renovating the Bordentown plant came down to the high cost of continuing to operate in Bordentown, the company said in a statement. It cited lower utility and transportation costs in Pennsylvania and better access to infrastructure and the supply chain.
The company said the new facility it needs can’t be built at the current site.
“This decision isn’t a reflection on our dedicated and engaged employees,” the company said. “It’s about the physical assets of Bordentown that are beyond anyone’s control.”
State and city officials said they bent over backward to make it fiscally prudent for Ocean Spray to stay. State Assemblyman Joseph Malone, who lives in Bordentown, said the state offered around $10 million in energy and employment incentives, and the county arranged for up to $40 million in stimulus bonds at a rate of 2.5 percent. And the city agreed to forego taxes on any new construction at the facility.
“It was always a one-sided conversation – us making offers to them, and them being basically nonresponsive,” Malone said. “It leaves you very disgusted.”
Bordentown Public Works Commissioner Zigmont Targonski said he hired a geologist, applied for permits and shored up hundreds of thousands of dollars to drill exploratory wells on city property to ensure Ocean Spray had enough water to make its products. He even agreed to take over the factory’s sewage pre-treatment plant. Ocean Spray never mentioned that the current facility was unsuitable for renovation, he said.
“We performed a thorough analysis of the two options, including an operational cost comparison, and the difference in savings was a $15 million gap per year,” Ocean Spray spokesman John Isaf said in an email to The Associated Press. The company declined to make the cost comparison available.
Ocean Spray has not announced the new plant’s exact location, but Jarret Witt of the Lehigh Valley Economic Development Corporation said the company is examining sites in Lower Macungie and Upper Macungie – two townships southwest of Allentown, Pa. Witt said discussions between Ocean Spray and Pennsylvania authorities have been ongoing for more than two years.
But a spokesman for Pennsylvania’s economic development agency said there has been no formal offer of a financial package, which can include grants, loans and tax credits.
“At this point, it’s just discussions,” said Department of Community and Economic Development spokesman Luke Webber.
In Bordentown’s quaint commercial district, residents expressed fear that Ocean Spray’s departure would drain the middle-class town’s energy. Fifteen-year-old Angelica Salera said her family’s ice cream shop, I-Scream, U-Scream, had arranged deals with Ocean Spray to use their cranberries in their muffins.
“People will move with their job to Pennsylvania, and the people who work there live in this town,” Salera said.
Ocean Spray said it plans to retain as many Bordentown employees as possible. Hourly employees will be offered a $25,000 lump sum bonus, Isaf said.
“I really believe there’s something we’re missing in all this,” said New Jersey Sen. Robert Singer, whose district includes Bordentown. Singer said it could have been as simple as Ocean Spray executives seeking lower income taxes or better schools. “The sad situation is we’ll really never know the truth.”
Headquartered in Lakeville, Mass., Ocean Spray does about $1.45 billion in annual sales, according to Standard and Poor’s. The Bordentown facility – one of eight Ocean Spray plants – produces 32 million cases of juice beverages every year.