Frito-Lay seeks $585,000 break on water bills
City council's consent would help company make investments at Fruit Valley plant
Monday, December 5, 2011
Frito-Lay is asking Vancouver for $585,000 in water bill credits over three years, which the company says will help it make $15 million to $25 million in investments at its Fruit Valley plant.
The company wants to install automation and water efficiency measures that will help it keep competitive in today’s snack-making environment, Alisa Pyszka, Vancouver business development director, told the city council Monday.
But the deal outlines a complex chain of cause-and-effect: city leaders don’t dispute that
installing automatic packaging equipment at Frito-Lay would cause layoffs at the 500-employee plant. However, without the equipment, the plant claims it will lose its competitive edge and possibly close, eliminating all the jobs there.
“That’s the way it is with manufacturing, if you want to be successful and stay in the business,” Pyszka said. “It’s about keeping them sustainable.”
The Frito-Lay plant, at 4808 Fruit Valley Road, makes Doritos, potato chips, Cheetos and popcorn, going through 6,000 pounds of Washington and Oregon potatoes an hour, she said.
If approved, the agreement would credit the utility $195,000 in water bills a year for three years. After three years, the company would pay its water bill in full, which is expected to be about $150,000 to $200,000 a year after installing water efficiency equipment.
City Manager Eric Holmes called it a three-year bridge to get the company to a place where it is able to expand in Vancouver.
“It’s encouraging investment in their business model to keep them as competitive as possible,” Holmes said.
The resolution, set for a public hearing and vote before the city council on Dec. 19, would be a continuation of a development agreement approved in 2002. The original deal kept the plant from putting in a private well, which would have siphoned $495,000 a year from the city’s water billings.
That deal gave Frito-Lay $195,000 to $225,000 in water credits a year, a discount on their approximately $345,000 annual water bill. But it also required the company meet several criteria, including a $700,000 one-time contribution to the city; keeping wages above $33,000 (today the actual pay is $43,000); investing $7 million in the plant (they’ve invested $33 million); and keeping a payroll above $15 million (today’s payroll is $23 million).
“We’ve had a great relationship with Frito-Lay already, and they’ve gone above and beyond the original agreement,” Pyszka said.
While there may be layoffs initially, the deal sets the stage for future development and job growth, she said. Just how many jobs might be lost due to automation isn’t clear, Pyszka said. Representatives from Frito-Lay attended the meeting but did not speak to the city council.
“If continual improvements don’t happen, including cooperation on finding ways to help keep them competitive, jobs very likely would go away,” Councilor Jeanne Stewart said.
Mayor Tim Leavitt also signaled support for the plan.
“I think it is certainly a worthy partnership for consideration,” he said. “It’s another example of public-private partnership that helps maintain jobs in the community.”
Councilor Bart Hansen, however, said he still had skepticism about the development agreement.
“We’re asking for a (utility) rate increase over here,” Hansen said, referring to a workshop also held Monday afternoon about potential city utility rate hikes, “and working with another company to keep their rates stable and low. This is going to need a lot more discussion.”