Zacky Farms filed for bankruptcy protection on November 13, 2018. Photo by David Castellon.
Written by David Castellon
Despite receiving a reported $41 million in loans earlier this year to pay off debts and fund expansion, Fresno-based Zacky Farms has begun issuing lay-off notices to employees ahead of plans to cease operations.
“Over the past several months, the company has been diligently engaged in seeking capital and business that would have enabled the company to continue operations,” states a termination letter obtained by The Business Journal.
“Unfortunately, those exhaustive efforts, which continued until recently, have been unsuccessful, and the company must now proceed with steps to cease all operations,” it continues.
Those letters started being issued Tuesday, with some workers reportedly laid off immediately and others being notified of later layoff dates.
It all came as a surprise to many workers at Zacky’s south Fresno chicken and turkey processing plant, said Isley McDowell, an 18-year-old who started with the company just four months ago as a manifester, recording and scanning shipments of poultry from the facility.
His shift began in the late afternoon Tuesday, and earlier in the day he had heard from co-workers about the mass layoffs, so he wasn’t surprised when he arrived to work later in the day and was handed the notice that he would lose his job on Dec. 8.
“Honestly, it kinds of sucks because now I have to go find another job,” the young man said, adding that many co-workers who are older and don’t have many job skills outside of working at a poultry plant are worried about their futures and their ability to support their families.
And some were outright angry and didn’t show up for work today, quitting ahead of their termination dates, McDowell said.
Officials at Zacky didn’t respond to an interview request to discuss what’s happening.
“My heart goes out to the families affected by this news. It’s always a shock when a company that’s been around as long as Zacky’s announces that they’re closing their doors. Now more than ever, it’s important that we work hard to keep building our local economy and focus on my goal to bring 10,000 jobs to Fresno before my time in office is over,” Fresno Mayor Lee Brand said in a written statement.
The termination letter states that Zacky & Sons Poultry, LLC, which operates as “Zacky Farms,” will cease all operations on Jan,. 19, 2019.
As for how many jobs will be lost, Fresno city officials said they didn’t know, nor did Eric Cherkaski, business services manager for the Fresno Regional Workforce Investment Board, who visited the Zacky plant on Tuesday, “but we were not provided any additional information about the number of people who would be laid off or nothing else.
“They instructed us they would probably be providing more information in the coming days. It seems like a relatively new news item, and a lot of their staff aren’t aware of it,” he said, adding that based on the language of the WARN letter – which Zacky is required by law to deliver to the California Employment Development Department if a mass layoff is initiated – the closures likely include all Zacky facilities, not just the Fresno plant and headquarters.
In Stockton, where Zacky Farms has a smaller plant, the San Joaquin County Employment and Economic Development Department reported receiving its WARN letter on Monday.
Patty Virgen, the department’s director, said she spoke to the company’s chief administrative officer, who informed her that operations there already had ceased, and the last paychecks for employees there were issued a couple of days ago.
“I felt like they should have given people warning instead of waiting until the last minute, when it was too late,” McDowell said of his employer.
He said the only communication he’s aware of from the company indicating that it was in trouble came the day before the layoff notices in an email from CEO Lillian Zacky, whose family started in the poultry business 90 years ago.
“As I sit here at my desk with a heavy heart, I and Zacky Farms have come to a realization,” the message begins. “After four generations and an enormous effort to keep the company in sync with the fast pace of changing times, we no longer are able to keep up with business as usual.”
While not actually stating a closure is coming Zacky’s letter goes on to say it has become “impossible” for the company to sustain profitability and the company will deliver all its turkey products for the Thanksgiving holiday.
It ends by thanking employees and informing them they would receive notifications of their employment status by mail.
But McDowell said there were signs of trouble starting about a month back, as it became apparent that the amount of poultry coming into the plant to be processed, packaged and distributed had considerably slowed down, which his more seasoned co-workers said was unusual because normally production would have started to pick up ahead of the holiday season.
Over the past three weeks, several Zacky employees reported their paychecks had bounced, though McDowell said the company issued him new checks that he cashed.
As to concerns about getting his final check after his last day, he said, “The lady who brought the letters to us said we don’t have to worry. We‘ll get the money. That’s a sure thing.”
Not mentioned in the letters widely issued to Zacky workers are the $25 million secured-term loan and the $16 million revolving loan Zacky & Sons Poultry obtained to refinance existing senior indebtedness and fund capital expenditures to expand its production facilities and support the company’s growth that Bloomberg.com reported in early June.
“This financing provides Zacky’s with the capital needed to drive our continued growth, as we remain focused on our commitment to bringing our customers the best quality of poultry one can buy,” reads a statement by Zacky executives cited in a June article by WATTAgNet.com., an online magazine following the poultry industry.
The publication lists Zacky as the 18th largest turkey company in the U.S., having 82.96 million pounds of live turkeys in 2017.