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Progress 2018

Costco/Lincoln Premium Poultry facility has eyes set on summer 2019

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The chicken processing facility poised to open in south Fremont in 2019 is far from your run-of-the-mill poultry plant, in fact, it is the first of its kind designed specifically by Costco Wholesale and Lincoln Premium Poultry to produce its own, in-house chicken products.

Using state-of-the-art technology, within one year following its projected June 2019 opening, approximately 2 million chickens will be processed weekly inside of the main facility, which will sit upon approximately 100 acres of the 414-acre site, said Jessica Kolterman, who handles external affairs for Lincoln Premium Poultry.

The operation will send millions of birds across the western part of the United States, as well as Alaska and Hawaii, she said. Some time ago, Costco Wholesale started analyzing its chicken products and determined that some shifts needed to happen moving forward.

“Costco started looking at their product several years ago and saying, ‘What can we do to make sure we have the amount of product we need, at the quality we want with all the specifications we want,” Kolterman said. “And after several years of analysis, decided that one of the ways they could have a very strong probability of getting exactly what they wanted with their product was to develop that product themselves. So this is that strategy coming to fruition. They have never developed a project specifically like this previously.”

Prior to working for Lincoln Premium Poultry, Kolterman came to Dodge County in late 2015 on a special assignment through the Nebraska Department of Agriculture to communicate to area residents about a possible large-scale project coming to the area – it was not known Costco was the company at the time --- that would provide farming families a way to diversify their income streams through an animal growing operation. Essentially, it was an effort to gauge the interest of possible stakeholders.

Kolterman said that the interest was there from farming families right out of the gate.

“The response that came back from farmers around the region was overwhelming. With the people who signed up to stay engaged in the process we had over 300 percent of what we would have needed from growers based off of that initial conversation,” Kolterman said.

Currently, approximately 80 farming families are going through the process of receiving conditional use permits enabling them to erect poultry barns on their property. To be eligible for a permit, applicants must score at least 75 out of 100 points on the Nebraska Department of Agriculture’s Livestock Siting Assessment Matrix, and meet several other specifications through the Nebraska Department of Environmental Quality.

In total, there will be a need for around 120 farming families from a 13 county, 60-mile radius, to have pullet, hen house and broiler barns, which will take the chickens through the growth process until they reach approximately 6 ¼ and are ready to be harvested inside of the approximately 380,000-square-foot facility, which is a key component of the approximately $275 million project. Of that dollar amount, approximately $18 million is eligible for use of tax-increment financing.

In 2016, Lincoln Premium Poultry was created specifically for the Costco Wholesale project. Kolterman started working for Lincoln Premium Poultry in September 2016.

“This company, Lincoln Premium Poultry, is a company that was developed for Costco, in collaboration with Costco,” she said. “This company was created specifically to execute this strategy that Costco developed. So when people ask us, ‘Where can we go and buy your chicken currently,’ the answer is you can’t.”

While the processing facility is moving Costco toward its goal of creating its own optimal product, much of its chicken nationally will still come from other chicken providers.

“Previously they’ve gotten them (Chickens) from existing companies,” she said. “Like from Fosters, Perdue, Pilgrims … And I’m not positive about what all integrators they’ve gotten them from previously, but I do know those are examples of integrators … This is a concept that has not been done previously.”

Nebraska – and specifically Dodge County and Fremont – was one of four sites that Costco Wholesale looked at to erect the Costco/Lincoln Premium Poultry processing facility. The ultimate decision was based off of four main components: access to food supply, sufficient utilities, workforce and overall community interest.

In terms of food supply, there is a need for quality corn and soybeans to feed the birds, and not having to transport the product in from out of state saves expenses and ultimately provides a better product.

Utilities are also vital, because the facility will use thousands of gallons of water weekly to process birds, and to keep birds cool in the barns through the use of Cool Cell Technology, Kolterman said.

Of course, having access to a solid labor force was a vital part of the final decision to build in Nebraska.

“The labor studies completed as part of the area analysis showed that there are adequate numbers of people who are underemployed or unemployed,” she said. “We will have about 800-1,000 workers, and it also played a role that Fremont is in close proximity to major urban areas (Omaha and Lincoln).

Perhaps most importantly, she said, Costco wanted to see interest and excitement from growers, and that level of passion and excitement was there immediately.

Gary Clark, executive director of the Greater Fremont Development Council, said that opportunities to bring in an operation like the Costco/Lincoln Premium Poultry facility don’t happen too often.

“It’s an outstanding push for growth in our community, a lot of communities struggle to get a project like this to take place in their communities, it could easily be a 50-year gap, or never, before a project of this magnitude comes back,” he said. “This really is a life changer for the community, and it does show a lot about our community.”

Clark talked about the ripple effect of the project: the jobs, the housing developments, and the continued development of schools – so many things.

Bringing in more families into Fremont widens its tax base, which Clark said is a game changer.

“Housing is already an issue and a need, but it is going to become even more apparent, there are going to be an even bigger variety of housing options in the community,” he said. “In terms of tax base, we all know as economic developers that the more people you have to participate in the local taxes, the better. So when you broaden that tax base then it limits and lessens the burden on one individual citizen. So growth is ideal to remedy some of those issues.

The project as a whole is projected to comprise approximately 1 percent – $1.2 billion annually – of the State of Nebraska’s Gross Domestic Product (GDP), and it’s estimated that the tax base added to Fremont and Dodge County could increase as much from $63 million to $93 million.

Originally it was anticipated that the processing facility would create upward of 1,200 jobs, Kolterman said, however, that was before Lincoln Premium Poultry realized how automated the facility would be. Now, it’s looking like it will be closer to the 800 mark.

“A lot of the technology that you will see inside of this facility is state-of-the-art technology that comes from all over Europe and Canada,” Kolterman said. “They visited Iceland, Holland, Germany, the UK, Canada and all over. Everywhere they visited in the early planning phases they would look at equipment and they would say, ‘show us the newest things you’ve got and tell us how it works and tell us the pros and cons of each component.’”

The processing facility also features a walkway through the facility enabling tours without getting in the way of work being completed on the floor.

“We are putting through a walkway where we can take through visitors who want to see what we are doing within our facility, and we can do that without ever having to step foot on the plant floor,” she said. “This way we can make sure our employees can do their jobs without interference, and it allows us to provide that transparency that shows we are doing things humanely, while also educating people about where their food comes from.”

The plant will also feature an in-door unloading area for birds, which is not a common feature at many facilities, she said.

“Most traditional designs for facilities of this nature have a bay on the outside of the building where the trucks pull up and unload the poultry,” she said. “We are going to have an inside location where the trucks will be able to pull into the building, they will close the door and then they will unload … It’s a dual-purpose, one, it allows the environmental benefits in terms of you get to mitigate anything that people would be concerned about relating to dust or odor, and most importantly, it’s a more humane treatment of the poultry.”

If the birds are cold, they can be warmed up inside the building and if they are hot, it’s easier to cool them down.

“It just allows for a better poultry process,” she said.

While the projected workforce numbers have been lessened, there are still hundreds of jobs that need filling.

“If someone has a real strong interest in working for us, I think there most likely will be some sort of opportunity that will be a good fit for them," she said.

Many of the jobs will enable people who are unemployed or underemployed to find one solid stream of income – with benefits – to provide for their loved ones.

“We do have a high percentage of people in our state – higher than you might expect – who are working two or three jobs,” Gov. Pete Ricketts said. “And if we are able to create some great-paying jobs that they can support their families on with just one (job), then that obviously works out better for everybody, because those usually come with benefits, and it will allow for more free time with the family.”

Currently, parking lots and roads have been under development for the facility, and the 160-foot-tall feed mill was erected in November and December. Kolterman said that work is beginning on some areas of the processing facility, and that one of the next big steps is to build the hatchery.

“My hope is that we, as a team, will be able to walk into that processing facility within the next six to eight months from now, and there will be walls, and things put together and we will be able to start talking about the equipment that goes into it," she said.

By early 2019, the goal is to start putting equipment into the facility getting it ready to churn out birds during the summer of 2019, Kolterman said.

Clark said that the overall project is huge in terms of continued growth of the City of Fremont, and also a big recruiter for other companies to look at Fremont as a place to bring its business. Cities as a whole, he said, have to prepare for change moving forward or they will ultimately become stagnant.

“Communities that never plan for future growth and change fail,” he said. “Especially in rural places you see housing dilapidated, those numbers in terms of cost go up, and then what you see is an exodus of your talent, that talent starts leaving for greater opportunities in places that have hub communities with real opportunities … So you have to recognize your past, that’s important, but you also have to be ready for the future.”


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