Richland getting $200M french fry plant

Lamb Weston Technical Center at the ConAgra Food’s Richland campus.
Lamb Weston Technical Center at the ConAgra Food’s Richland campus. Tri-City Herald

The world’s growing appetite for deep-fried potatoes is turning Richland into a french fry powerhouse.

ConAgra Foods Inc. announced Wednesday it is investing $200 million to build a second french fry processing line at its Lamb Weston manufacturing campus in Richland. It cited rising global demand for the move.

It is the largest private investment in the Tri-Cities to date for 2016, easily dwarfing the $39 million AutoZone warehouse under construction near Pasco’s King City truck stop.

Construction will begin immediately just east of the existing Richland french fry plant, 2013 Saint St., near the Richland Airport.

When it opens in fall 2017, the second french fry line will employ an additional 128 people and will transform about 300 million pounds of Mid-Columbia potatoes into frozen fry products annually. It will likely result in more acres devoted to potatoes in the Columbia Basin.

$200million Project cost

128 New jobs

300 million pounds annual capacity

Fall 2017 Opening date

Plant manager Mark Schuster said Mid-Columbia growers supply the local plant with most of its potatoes.

Schuster said Richland is a natural place to expand. The existing Richland plant opened in 1972 and employs about 500.

It has another 70 employees at the neighboring technology center, where it develops new products. The company has a corporate office in Kennewick and two manufacturing plants in Pasco.

“We have a proud history in the Tri-Cities,” he said

We have a proud history in the Tri-Cities

Mark Schuster, Richland plant manager

Schuster said the new french fry line will employ a mix of salaried and hourly workers, including equipment operators, maintenance workers and managers. The company is not unionized. It will release hiring information when the plant is closer to opening.

Logistics played an important role in the decision to invest in Richland.

Lamb Weston’s Richland campus is only a few miles from the largest commercial freezer in North America. Preferred Freezer Services opened its 455,000-square-foot, high-tech freezer warehouse near the Horn Rapids Industrial Park in 2014.

The $115 million freezer offers customers, including Lamb Weston, frozen storage and access to both rail and trucking lines for distribution to domestic and international markets.

ConAgra cited Euromonitor data showing demand for frozen potato products will grow by 2.6 billion pounds by 2020.

“We have a tremendous opportunity to help our customers realize their global growth projections, but we need to make more french fries to do that,” said Greg Schlafer, president of Lamb Weston.

We have a tremendous opportunity to help our customers realize their global growth projections, but we need to make more french fries to do that

Greg Schlafer, president of Lamb Weston.

Making more french fries means producing more potatoes. Chris Voigt, executive director of the Washington State Potato Commission, said the new plant is welcome news, but presents a dilemma.

Washington can plant a maximum of about 175,000 acres of potatoes under current irrigation and soil conditions. It already grows 170,000 acres, according to recent Washington State University research.

Fresh demand from Lamb Weston could push the industry to capacity, Voigt said.

“Any time we get an increase in demand for potatoes in Washington state, that’s good for our growers,” he said. “Our concern as an industry is we are pretty close to being maxed out.”

One challenge is potatoes can only be grown on a site once every four years. That means it takes four acres for every single acre under cultivation. Washington’s potato industry supports 36,000 jobs and $7.5 billion in direct and indirect spending.

Brian Bonlender, director of the Washington State Department of Commerce, called the new facility a welcome investment that will cement the Tri-Cities as a hub for food processing.

“Like attracts like. These are facilities that require a specialized workforce. It helps us build that workforce. That helps us when it comes to recruiting the next similar type of business,” he said.

Carl Adrian, president and CEO of the Tri-City Development Council, or TRIDEC, concurred.

“The investment and jobs are important but the project further establishes Eastern Washington as the premier location for food processing,” he said.

The state is allocating $250,000 from the Governor’s Strategic Reserve Fund, which support projects that expand or retain existing businesses. TRIDEC is matching it with an additional $250,000.

Bonlender confirmed the new plant may qualify for a deferral of the 6.5 percent state sales tax on the cost of construction if the area’s unemployment rate is deemed “distressed.” The exemption would be worth up to $13 million.

$250,000Governor’s Strategic Reserve Fund

$250,000Tri-City Industrial Council

$13 million Potential sales tax exemption on construciton

The strategic reserve allocation will reimburse Lamb Weston for a portion of the costs associated with the waste water treatment system and a traffic impact study.

The investment in LambWeston comes just months before it is set to emerge from ConAgra as an independent, publicly-traded company. In November, ConAgra (NYSE: CAG) announced it would spin off its frozen potato subsidiary in fall 2016.

At the time, ConAgra said Lamb Weston generated 2015 revenue of $2.9 billion and accounted for a majority of the commercial foods segment’s fiscal operating profit of about $570 million.

A ConAgra spokeswoman said the process of dividing the companies is ongoing.

Wendy Culverwell: 509-582-1514, @WendyCulverwell