Rembrandt Foods is closing its Renville egg-production plant, a move that will result in the loss of 52 jobs in the small central Minnesota community.
The egg market is oversupplied, which undercuts the company's profit, Paul Hardy, the company's president, said Wednesday.
The company is facing other headwinds as well. Consumers are shifting away from conventional eggs toward cage-free varieties. And several states are considering legislation, like California's Proposition 12, that restrict the sale of eggs that don't meet certain animal-welfare standards.
These changes add costs to Rembrandt's production and also render several of its existing facilities — like Renville — outmoded.
Conventional, whole liquid eggs is the sole product made at the Renville facility. There are chickens on-site that lay eggs that are collected on a conveyor belt and sent through an egg-breaking machine. That liquid is then loaded into tankers and transported to customers or a Rembrandt processing plant where it is turned into cooked or packaged egg products.
"It was a tough choice to make. We were ultimately overindexed on conventional eggs," Hardy said. "This decision was about positioning Rembrandt for the future by reinvesting and focusing our resources on our core products and people in Rembrandt [Iowa]."
The company, based in Spirit Lake, Iowa, notified the Minnesota Department of Employment and Economic Development on Tuesday of the closure. Layoffs of all 52 full-time workers will begin Jan. 13.
The Renville jobs range from equipment operators, to security guards to quality controllers of the egg-manufacturing processes. Rembrandt Foods is owned by Glen Taylor, who also owns the Star Tribune.
Hardy said they have no plans to close any other facilities.
The egg market has faced a supply-demand imbalance for the past four to five years, Hardy said, chiefly as a ripple effect of the bird flu outbreak that led farmers in the Midwest to kill millions of birds in 2015.
Growers bulked up their flock size as an insurance buffer against another outbreak that could decimate their bird supply. Meanwhile, growing demand for cage-free eggs has added additional inventory and warehouses to the market.
"And that didn't come with a one-for-one reduction in the conventional supply," Hardy said. Rather than switching from conventional to cage-free operations, many growers simply added more barns to make up for the low prices they were fetching, which only exacerbated the oversupply issue, he said.
Rembrandt plans to use the cost savings to possibly increase capacity for cage-free eggs as well as adding more flexibility to its sourcing. It's also a way to consolidate its talent pool.
"Being in the Midwest, in an agricultural community, the challenge has been maintaining a good, focused workforce and reducing turnover. We are trying to concentrate our resources of both our people and capital investments as well," he said.
Some Renville employees may transfer to the Rembrandt plant.
Kristen Leigh Painter • 612-673-4767