Optimism in Salem: Town lost Feterl, looks forward to new company

SALEM — For more than a year, the building that housed Salem’s largest employer — Feterl Manufacturing — has been stark and vacant.

But like the mythical Phoenix rising from the ashes, the old Feterl plant is gaining new life through a Canadian company — Winnipeg-based Buhler Industries.

The longtime agricultural equipment manufacturer purchased the plant and its assets last month and anticipates the first auger will roll off the assembly line by June 1.

“We had someone willing to come in and take over a plant that has been sitting idle for approximately 18 months and wanted to go back to building augers,” said Darwin Miiller, Salem Economic Development Corp. president. “I knew that eventually the place had to get resold. It was going to take someone with some money.”

Salem is hoping to boost its economy and recover some local businesses’ losses in sales with Buhler’s purchase of the Feterl plant. The company’s plans to add about 50 new jobs in three years.

Feterl — Salem’s largest employer — closed in October 2008 amid a lawsuit in which the company was accused of owing at least $2.48 million to 45 customers. It filed for bankruptcy last year, causing some local businesses’ sales to decline.

Of those customers, 25 had accused the company of accepting payment for $1.2 million in farm equipment orders that were never delivered.

A federal bankruptcy judge authorized bankruptcy trustee Lee Ann Pierce, assigned to Feterl’s bankruptcy, to sell the company’s assets to Buhler for $2.38 million, according to a document filed in U.S. Bankruptcy Court Jan. 26. Buhler’s purchase plan was partially financed with a state Revolving Economic Development and Initiative Fund loan, said Mary Lehecka Nelson, of the state Governor’s Office of Economic Development. The loan provides up to 45 percent of a project’s total cost and a low interest rate.

Said Gov. Mike Rounds: “Getting operations up and running again at the Salem facility will be a boost to the region and the state.”

Adam Reid, Buhler marketing manager, said the company, as a competitor of Feterl, became aware of the plant’s closure soon after it occurred. Buhler expressed interest in buying the plant after some legal and financial issues were cleared up, he said.

The company’s manufacturing plant in Morden, Manitoba, became limited, and the Feterl plant fit the requirements of a grain equipment manufacturing facility without the need for extensive modifications, Reid said.

“It was the right time for us to be looking at expanding our capacity,” he said. “Our long-term growth has been limited for the last couple years as demand has grown for our product.

“The Feterl facility offered a wonderful solution for us.”

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In the past decade, Feterl’s history is marked with layoffs and closure.

The farm equipment plant closed in December 2001 and laid off 119 employees, according to The Associated Press. Then the plant’s general manager organized a group of local investors to buy the business from its parent company, SPX Corp., hoping to hire back at least half of the original work force.

In April 2006, lagging farm equipment sales caused Feterl to lay off 44 of its 100 workers, according to the AP.

About 60 employees were laid off in two rounds between August and Oct. 17, 2008.

Salem has quite a few service industries, but Feterl was the main manufacturer, said Darwin Miiller, Salem Economic Development Corp. president.

“That was the only show we had,” he said. “You’ve lost a quite a bit of support and lifelong economic maintenance and growth when you lose a business from town.

“It doesn’t matter if it’s large or small. It still hurts.”

When Feterl closed, Salem lost a couple of million dollars in salary, Miiller said. Out of 50 employees, some found manufacturing jobs in Madison or Mitchell and welding jobs in Sioux Falls. Some worked for a wind-turbine manufacturer in Howard.

The McCook County seat avoided a considerable loss in population because many employees opted to continue living in town, he said. Miiller is unsure if workers from surrounding towns in the county stayed in their communities.

Eight to 10 workers found jobs at Art’s Way Manufacturing, an Armstrong, Iowa-based company that leased the old Raven building across from Feterl, Miiller said. That company produces augers.

Buhler’s plans

Buhler plans to hire 30 employees in the first year, expanding to about 50 in three years, Reid said.

The company will continue to manufacture at least three former Feterl products, including grain cleaners and large augers under the Farm King brand, he said. The acquisition of Feterl will allow Buhler to increase its production capacity by 20 percent.

Buhler hired six people are working on human resources matters. The task at hand is to evaluate existing equipment and inventory and hire staff. An operations manager could be hired in the two to four weeks, Reid said.

A map of Buhler’s U.S. plants shows that Salem is the smallest community under its wing. Other Midwest locations include a Farm King factory in Fargo and a warehouse in Blair, Neb. Some Buhler equipment is produced in Willmar, Minn., but the company doesn’t own the plant, Reid said.

“Feterl was an established company,” Reid said of the reason to locate in a town of 1,321. “Many people in the area worked for, or are familiar with, manufacturing grain handling equipment through association with Feterl.”

Reid said he hopes some former staff will join Buhler. Several candidates filled out applications at a January town-hall meeting in Salem about the company.

Miiller expressed confidence that former workers commuting to jobs would want to return. He noted that Buhler’s employment package is similar to Trail King in Mitchell.

“I would guess those that are driving are going to look pretty hard at finding local employment where they are only a few blocks from work versus a few miles,” he said.

Randy Sabers, who owns The End Zone Bar and Grill and an insurance business, said a core of experienced workers remains in Salem. His father was the first salesman hired by Feterl when it opened and he worked there for 27 years.

“As much as I hate to see them quit the jobs that they got after Feterls closed down, it’s understandable they get back into their natural habitat,” Sabers said.

The fact that a reputable, financially-solid company is taking over the former Feterl plant will give reassurance to employees who return to work in Salem, he said.

“At least they know they’re going to be working for somebody who isn’t going away,” Sabers said.

Buhler’s impact

Mayor Ken Scott looks at the number of jobs Buhler will create in three years and sees that many paychecks being spent in the community.

“That’s quite an impact,” he said. “I think we have enough workforce available to handle those jobs. People from Howard and the surrounding area who worked at Feterl — some might do that again.”

There’s also a group of satellite workers who did tasks such as setting up augers who could be rehired, Miiller said.

Housing is available in terms of homes for sale and some rental units. Scott said he would like new housing developments to spring up.

Both Miiller and Scott see the potential of Buhler expanding the plant.

Buhler could make it a distribution center — an idea discussed at the January community meeting, Miiller said. Scott envisions the plant having 75 to 100 workers.

“I think the potential is there down the road in a few years,” Scott said.

Reid said initial discussion has occurred about using Salem as a distribution point to supplement sites in Fargo and Blair, but it’s too soon to announce whether that will happen.

Businesses hit

While local sales tax revenue figures don’t show a clear link to the loss of Feterl, a drop in a special tax can be attributed to the business’ closure.

Salem, which began imposing a 1 percent bed, board and booze tax in 2008, encountered a 7.8 percent decrease in that revenue from 2008 to 2009, with $14,191 last year, according to city records. The tax can be imposed on lodging, alcohol, prepared food and admissions to athletic or cultural events and places of amusement.

One bar/restaurant business manager in town attributes that decline to the demise of the Feterl plant.

“We really noticed it. We had a lot of the workers come in. The salesmen and the big wigs when they would come out and have meetings, they would come in and have lunch,” said Mary Doane, who grew up in Salem and is Sabers’ sister.

The possibility that former Feterl employees might return for a job at Buhler enthuses Doane. That means more customers coming through her doors on Main Street.

“That, I think, would be huge for a small community,” she said.

Salem Farmers Market, the local grocery store, also experienced a decline in customers because of Feterl employees finding jobs in larger communities. Assistant Manager Michel Roth said business slowed after the Feterl closure.

“We just had to throw things out that didn’t last very long like the produce, mark stuff down,” she said.

With Buhler buying the plant, Roth said she hoped that would create more business for the store and more production jobs for area residents.

When Roth heard that Buhler was reopening the plant, she said some employees who lost their jobs at Feterl could not find work.

“Now they maybe actually apply there and get in there again,” she said.

One former Feterl employee who remains unemployed is optimistic that he can find a job as a laser operator. Darrin Haak, Canistota, who worked for Feterl for four years, has unsuccessfully tried finding work in Sioux Falls, Madison and Mitchell. He has been caring for his infant son while his wife works in Sioux Falls and goes to school full-time.

“It’s been pretty tough,” Haak said. “I like the field of running machines. That’s kind of a tough field right now — not a lot of jobs out there.”

He contacted Buhler officials and hasn’t received a call or e-mail about returning to work. While Haak is holding out for a job opportunity with Buhler or a different company, the thought of working at a plant outside Salem doesn’t appeal to him.

“It would kind of mean a lot to me because I liked the people I used to work with,” he said. “I’ve been in agricultural manufacturing all my life. It’s all I’ve ever done.”