State financing issues that were threatening a deal to allow a Philadelphia deli meat company to acquire the Parks Sausage Co.'s Park Heights plant are close to being resolved, a state official close to the negotiations said yesterday.
Dietz & Watson officials appeared to eliminate a major stumbling block by assuring legislators that any current and former Parks Sausage workers would be given preference when the buyer begins hiring at the Baltimore plant, said the state official.
Robert C. Brennan, assistant secretary of the Maryland Department of Business and Economic Development, said Dietz & Watson appears to have satisfied state lawmakers who delayed a proposal this month that would have given the Philadelphia company $750,000 in state "sunny day" economic development money.
The lawmakers, Sen. Barbara A. Hoffman of Baltimore and Baltimore County, and Del. Howard P. Rawlings of Baltimore, asked the state Legislative Policy Committee to delay action on the money until they received more information about Dietz & Watson's proposal.
After a meeting with Dietz & Watson officials last week in Rawling's office, the legislators seemed satisfied, Brennan said.
"They were primarily concerned about what was going on and what would happen to existing employees," Brennan said.
The timetable for approving the funds was not immediately known, although it is expected in the next few weeks.
Dietz & Watson said the sunny day money was vital to any deal to buy the Baltimore factory. The privately held company, which makes delicatessen meats, employs about 500 and has more than $100 million in annual sales.
The local factory would put Dietz & Watson closer to its Baltimore customers, which include the Giant and Super Fresh grocery chains. The company also is expanding in Philadelphia.
Parks Sausage has been in decline for several years, despite a new owner and debt forgiveness by the city and lenders. Majority owner Franco Harris, a former Pittsburgh Steelers star, had told workers recently that the factory would close early next year unless a buyer could be found.
Parks Sausage officials were unavailable for comment yesterday.
Dietz & Watson is acquiring the 133,000-square-foot factory, but not the actual Parks Sausage business, meaning that workers could be without jobs.
However, as a condition of the sunny day financing, Dietz & Watson has to employ at least 150 full-time workers by the end of 2001, at which time the $750,000 sunny day loan converts into a straight grant, the state economic development official said.
Since Dietz & Watson intends to spend $6.4 million to buy and renovate the plant, Brennan said, employment could be much higher.
"We hope to give some stability to the [neighborhood] work force," Brennan said. "These are living wages. Up in Philadelphia, $25,000 is the average wage of Dietz & Watson workers." The company also has an excellent benefits package, he said.
Dietz & Watson declined comment on the status of the negotiations or on its timetable for reopening the plant once the deal is consummated.
The company also faces a Jan. 7 public hearing on $4 million in state economic development bonds, the proceeds of which will also go toward renovating the factory.
The Parks Sausage brand -- made famous by commercials carrying the tag line: "More Parks Sausages, Mom! Please?" -- won't go away, said Brennan, the state economic development official.
Harris and partner Lydell Mitchell, a former Baltimore Colt running back and a teammate of Harris' at Penn State University, intend to keep the Parks brand alive. Manufacturing of some products has been outsourced, and Brennan said Dietz & Watson has agreed to make some of the products for Parks, though that won't constitute "a major part of Dietz & Watson's volume of production."
Parks, founded in 1951, was a strong regional player until it had to move from its longtime factory to make way for Orioles Park at Camden Yards. Its new Park Heights factory cost $16 million to build and loaded the company with debt. Lost contracts with Pizza Hut and Domino's Pizza worsened the firm's problems and accelerated the decline.
Harris bought the bankrupt company and put into place a number of programs aimed at rejuvenating Parks. But he faced too many obstacles, industry experts say. Among them: a production system that was not up to par and a brand name that had eroded somewhat because of the company's travails.
Parks Sausage once employed 220 nationwide. Recently, an official of the union that represents Parks Sausage production workers said the number had fallen to 50 factory employees. DBED's Brennan said that number has dwindled to 30 to 35. That's why the Dietz & Watson deal is so important.
"This is a great opportunity," Brennan said.
Pub Date: 12/29/98