IMPACT ANALYSIS OF SARA LEE'S CORPORATE RESTRUCTURING ON MICHIGAN'S TURKEY INDUSTRY AND SOUTHWEST MICHIGAN'S LOCAL ECONOMY

In 1998, the Sara Lee Corporation decided to restructure its value chain by diverging from manufacturing many of its products to outsourcing and concentrating its resources on developing and managing its brands. In light of this change, Bil Mar Foods, a subsidiary of Sara Lee located in Zeeland, Michigan, responsible for the processing of its packaged meat products such as hot dogs, shut down its turkey slaughter facilities and expanded into a full processing plant. The company also opted not to renew the expired production and marketing contracts of turkey growers and bought out the existing contracts of other growers. This action left turkey growers in the region without a market for their live birds.To assess the implications of Sara Lee's decision on the turkey growers in southwest Michigan and the effects on the local economy, an impact analysis using the statistical software Micro IMPLAN was conducted. Results show that shutting down the kill floor at Bil Mar will have an effect of approximately $65.5 million in total lost output and total lost employment in excess of 600 persons. This effect includes not only those persons in the industry directly impacted, but also those indirectly affected in other industries. As an option for redress, the formation of a cooperative, the Michigan Turkey Producers Cooperative (MTPC), will provide significant economic relief.