SIOUX FALLS, S.D. (AP) — The new owners of an Aberdeen beef plant that closed in 2012 have fired up the equipment and are processing dozens of cattle a day, the city's mayor said.
That's welcome news for ranchers in the region who are tired of having to truck their animals hundreds of miles south to Nebraska.
Aberdeen Mayor Mike Levsen said he's not sure of exact production numbers, but that New Angus LLC is slaughtering somewhere between a couple dozen and 100 head a day during its initial phase of training employees and testing equipment. The 420,000-square-foot facility is capable of processing 1,500 head of cattle per day at full capacity.
"They contracted with a number of producers around the area some time ago anticipating this would be their startup time," Levsen said. "So they've got the cattle set to be delivered on a daily basis. They've got a fairly sizeable crew that's been hired that they are training."
New Angus is owned by San Francisco-based investment firm White Oak Global Advisors, which bought the shuttered Northern Beef Packers plant for $44.3 million in a 2013 bankruptcy auction.
New Angus CEO Doug Cooper has told the Aberdeen American News that the plant was to open in mid-November, initially processing 25 head per day for packaging under the brand name DemKota Ranch Beef. He also told the newspaper that the plant wouldn't reach half capacity until the second quarter of 2016.
Several phone messages left for Cooper by The Associated Press for have not been returned.
Levsen said the new owners have spent millions of dollars in upgrades.
"This group is very, very methodical and has things very well planned out, and they are just determined not to get ahead of themselves," he said.
Rancher Todd Wilkinson spends at least $1,300 to haul a truckload of cattle from his feedlot west of DeSmet to beef plants in the Nebraska towns of Dakota City, Grand Island or Schuyler. He said having a processing facility in nearby Aberdeen will help boost profits for him and other ranchers in the Dakotas and Minnesota, especially as diesel fuel costs rise.
"We're all looking for any closer market that we can get, just simply because it cuts down on the expense of having to ship them this far," said Wilkinson, who's also president of the South Dakota Cattlemen's Association.
The failed Northern Beef Packers plant had homegrown roots. In 2006, Aberdeen livestock businessman Dennis Hellwig became its largest investor in response to a state initiative that hoped to get ranchers premium prices by allowing consumers to track animals from birth to slaughter.
But when local financing tightened up, the plant opted to look for investors through the federal EB-5 immigration program, which exchanges green cards for investments. Hellwig was bought out, and Northern Beef became 41 percent owned by businessman Oshik Song and dozens of Korean investors.
The plant opened on a limited basis in 2012 but struggled to ramp up production and had to lay off its employees. Northern Beef had $138.8 million in liabilities and just $79.3 million in assets when it filed for Chapter 11 bankruptcy protection.
Levsen said locals know the new owners have no affiliation with the old crew. "They basically were the lenders of last resort who ended up with the plant and now are going to try to make it work," he said.
South Dakota Gov. Dennis Daugaard said he hopes the plant will be a resource for the state's ranchers.
"I'm hoping they'll get up and running and demonstrate that they will be a good resource for cattle feeders in the Aberdeen area within driving distance," Daugaard said.
