Harbeson could gain jobs under Harim

Harim USA, the American branch of a South Korea-based poultry producer, expects to expand operations in Harbeson, adding an estimated 150 workers, to produce specialty chicken products for the Asian-American market.

The $45.2 million Harim deal closed last week, according to United States Bankruptcy Court - District of Delaware documents.

On Sept. 12, unsecured lenders filed a suit in Delaware bankruptcy court in an effort to make sure the judge allows them to recuperate some money owed by Allen Family Foods. The suit states the unsecured lenders want to recover something from the sale and plan to block major lenders, including MidAtlantic Farm Credit from taking all the proceeds from the sale.

According to court documents, debts total more than $80 million. Attorneys are working out a fee schedule for the sale money, which will pay the highest-priority creditors first, with remaining money trickling down to those creditors who are owed less.Harim purchased a 43 percent stake in Allen Family Foods, which declared bankruptcy in June. Hong Kuk Kim, chairman of Harim, said the South Korean company plans to spend money on Delmarva to expand operations after taking over the 92-year-old company.

Harim also plans to add another 150 workers at the Cordova, Md. processing plant. Both Harbeson and Cordova will be working on new chicken products, which is why the additional jobs are planned, according to reports from Harim.

Bill Satterfield of the Delmarva Poultry Industry said Harim wants to target the Asian community living in the United States with products using Asian-style flavors.

Harim focuses on producing fine chicken products and is mostly associated with raising chicken and producing chicken products in South Korea.

Satterfield would not release the name of the new CEO, but said for Harim it makes sense to employ a person with local knowledge of the poultry industry.

"It will be helpful to the company, and it will be helpful to the industry locally," Satterfield said. "We look forward to welcoming Harim to the industry and making them a part of the local chicken community."

President and CEO of Allen Family Foods Bob Turley did not return phone calls at press time.

Harim plans to continue using the Allen name and employ growers already associated with the company, which may be one of the reasons they decided to employ someone who already works with Allen Family Foods.

In addition to the Harbeson and Cordova processing plants, Harim will also take over a breeder operation in North Carolina, hatcheries in Dagsboro and Seaford, a feed mill in Seaford and a rendering plant in Linkwood, Md.

Global market saves jobs

Agriculture Secretary Ed Kee said more and more international companies are coming to the United States as the world becomes one large global market.

In this case, Kee said, Delaware is lucky the world is getting smaller because Harim's purchase will save jobs and keep a business on Delmarva.

If Allen had been allowed to close its doors, many would have lost jobs, not to mention the loss of a major chicken producer, Kee said. Because international companies such as Harim are interested in moving to Delaware, the economy will benefit, he said.

Satterfield said Harim will not only save the jobs of Allen employees; it will likely add more jobs in the near future.

"Some of the Delmarva-produced Harim chicken will be further processed into products appealing to the Asian community living in the United States," Satterfield said. "Further processed means things like thinly sliced, flavored or otherwise changed. Harim would like to install these further-processing systems at Harbeson and Cordova with a new marketing plan for the Asian community. It could create an additional 150 jobs at both plants."

Chicken purchasing declines

While consumption of chicken is increasing, overall need for poultry is decreasing, said Satterfield.

In the United States, 46 percent of chicken is eaten in restaurants, but with the slow economy, Americans are eating out less, so restaurants are buying less chicken.

"The consumption has been on an incline; however, with the stagnation of the economy in the last year, chicken sales have dropped," Satterfield said. "People have other bills to pay, and instead of visiting restaurants they have been economizing and spending less on nonessential things."

When too much chicken is produced, it drives down prices, Satterfield said. Large-scale production, also has some drawbacks, including large amounts of manure, and the pollution it can create for sensitive ecosystems like the Chesapeake Bay.

"Having a company come in and continue to grow chickens here is a very positive thing for the businesses that deal with growers and for the employees, as well as for the governments who collect taxes," Satterfield said. "One of the problems facing the U.S. chicken market is that there is too much chicken on the market, so some would argue that having these chickens continue to be produced here is not a positive thing."

International consumption of American-grown chicken has also declined as both Russia and China are no longer importing chickens.

"Russia and China have not bought chicken this year and they were the two biggest consumers in the past 10 years. Virtually none has been sent this year," Satterfield said. "The Russians are trying to grow their own chicken industry to be more self-sustaining. They don't agree with some of the food safety systems we use here, so they don't want to import our product. On the Chinese side, some of it has to do with trade disputes on other products, so they also aren't importing chickens."

While some of the volume left in the lurch by Russia and China is going to other nations, these sales do not completely replace what the two countries used to purchase.

Harim meets Delaware

Gov. Jack Markell said he is confident Harim will meld good aspects of poultry farming with what already exists in Sussex County and beyond.

Markell said he was happy to hear from Kim that if Harim purchases Allen Family Foods, the Harbeson processing plant will remain open. He said Harim's specific plans are unclear because the sale has not been finalized.

Allen Family Foods fell on hard times last year as corn prices rose. Corn is the primary feed for poultry, and the higher feed cost strained finances that were already tight at Allen. Allen filed for bankruptcy in June.

"We care about every job and work to create the conditions that will help make businesses successful. We know that Harim has many choices ahead, and we want to make sure that Delaware is always the right choice," said Markell.

Kim said Harim hopes to build on the good name that Allen Family Foods has created by continuing outreach and community service in the region.

“Meeting with the governor provided a very good first impression of the state of
Delaware,” Kim said.

About Harim

According to market data, Harim Holdings Co. Ltd. is a South Korea-based company engaged mainly in the poultry and poultry processing business, as well as the manufacture of feed products. "The company's chicken-based products are divided into two categories: fresh chicken products, consisting of whole chickens and chicken parts including chicken breasts, drumsticks and wings, and processed chicken products, including fried chickens, barbecued chickens, ham/sausage products and ginseng chicken soup. The company also provides sauces."flavored or otherwise changed. Harim would like to install these further-processing systems at Harbeson and Cordova with a new marketing plan for the Asian community. It could create an additional 150 jobs at both plants."