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Why Seneca Foods is closing its Modesto plant, leaving hundreds out of work

Seneca Foods Corp. says it will close its Modesto plant in the Beard Industrial District. The packaging and warehousing operation has 265 full-time employees.
Seneca Foods Corp. says it will close its Modesto plant in the Beard Industrial District. The packaging and warehousing operation has 265 full-time employees. jfarrow@modbee.com

Seneca Foods Corp. announced Friday that it will close its Modesto plant, which has 265 full-time employees.

A news release from the Marion, N.Y.-based company said, "Production operations at this location will cease prior to the 2018 production season. Warehouse operations will continue for an unspecified period serving as the company’s West Coast distribution center."

In a phone call, Chief Financial Officer Timothy J. Benjamin was more specific, saying the 2018 production season "hasn't started, so we're shut down right now, and we won't start up. There won't be a production season" at the Modesto plant.

Located on Finch and Mitchell roads in the Beard Industrial District, the 2.12 million-square-foot facility primarily has been used for packaging and warehousing of Seneca's peach and fruit cocktail products.

It is closing "due to challenging economic conditions," the news release said. Again, Benjamin provided specifics. "The big driver behind this is that we have been running some big losses there the last few years. There's a lot of import competition from overseas — China and Europe — and it's tough for us to compete against that."

Also, the decreasing supply of product coming into the plant has made it difficult to operate the "huge" facility, he said. A lot of peach growers in the region have pulled their trees in favor of almonds and walnuts, Benjamin said.

The 2016 Stanislaus County Agricultural Report gives some context: Almonds are the top commodity in the county, with a 2016 value of nearly $931 million. Walnuts were the sixth-largest commodity, at $134.5 million, and peaches were ninth, at $68 million. There were 182,000 acres of almonds harvested that year, compared to 5,456 acres of peaches.

"The company expects this plant closure to improve its long-term financial condition and reduce leverage," according to the news release. "Estimated restructuring charges as a result of the closure will be disclosed in future filings with the Securities and Exchange Commission.

"The company recognizes that these changes will have a significant impact on employees and their families and intends to offer transition benefits to these affected employees."

An employee at the plant Friday afternoon declined comment, saying she could not talk about the closure. Employees in Modesto received the news on Friday, Benjamin said.

Seneca is working closely with employees to assist them, Benjamin said, adding that he could not go into specifics. There are opportunities for employees to transfer to other Seneca facilities, but "none of them are in California, so I don't know how viable that is" for most.

In 2015, Seneca had planned to sell the Modesto operation to Lodi-based Pacific Coast Producers that year but was stopped by federal antitrust concerns. At that time, PCP said it planned to keep Seneca's 2,150 Modesto employees, most of whom were seasonal.

Seneca acquired the Modesto plant in 2006. It had been one of several fruit and tomato canneries owned by Tri-Valley Growers, which filed for bankruptcy in 2000.

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