Expanding The Hormel Institute, and adding 125 jobs, could create a major boost for the Austin economy

It’s hard for officials to predict, or even measure, the impact 125 high-paying jobs would have on Austin.­

As a town of 24,700 — about 3,000 of which work at either the Hormel Foods Corp. Austin Plant or Quality Pork Processors — Austin has a median household income well below the state average. According to the 2006-2010 American Community Survey five-year estimates, Austin has a median household income of $40,395, which is 29 percent below the state average of $57,243.

But at the other end of the spectrum from the blue collar work is The Hormel Institute, where the average starting pay is $40,000 to $50,000. There, officials are planning a $27 million expansion which would double its size and add about 125 jobs totalling $5 to $6 million in annual payroll.

Development Corporation of Austin executive director John Garry said that would be “enormous.”

“For a rural community of roughly 25,000, to add (that many jobs) that are averaging $40,000 per year, that is very rare,” Garry said. “It would improve the economic situation for Austin as a whole.”

Garry said that sudden increase in jobs would also have an employment “multiplier effect,” as the scientists would rent apartments, buy homes, purchase groceries and other goods, and their presence would trigger the need for more professional services and health care. He noted the multi-million construction project would also have an immediate impact.

Garry also points out that, unlike a new grocery store or restaurant, The Institute doesn’t compete for customers with other local employers.

“A new car dealership might add jobs, but its economic impact might be lessened if it competes for customers with other local businesses,” Garry said.

Mahlon Schneider, a Hormel Foundation board member and former senior vice president External Affairs and general counsel of Hormel Foods Corp., said the expansion is a uniquely beneficial project.

“These are jobs in a rural area,” Schneider said. “Too often, rural communities become stagnant and die because there’s no opportunity. The Institute has demonstrated in its (2008 expansion) that it has a viable enterprise in which the public and private can invest.

“This is not flipping hamburgers — not that there’s anything wrong with that — but if you’re in it for the long term, there’s not as much enterprise that’s generated as a result of that. The Institute jobs can provide not only substantial income, but they bring families and they ultimately benefit the community where they live.”

Then, besides the economic impact, there’s the cancer research.

‘World renowned’

The Hormel Institute was founded in 1942, but some of the biggest changes in its history are happening now. In 2008, an expansion tripled the size of the facility and since then it has gone from 60 to 130 employees. Now, it’s at full capacity and ready to expand again. According to The Institute’s director of public relations, Gail Dennison, a lot of that has to do with the leadership of Dr. Zigang Dong, its executive director.

“He really is absolutely a world-renowned scientist,” Dennison said. “He has a vision of, ‘where do we take this next?’ That is always a hallmark of a leader. From the start, he has taken opportunities and allowed them to flourish.”

Dennison said the biggest indicators of any research facility’s status in the scientific community is its publishing record and its ability to get grant funding. In both areas, Dennison says The Institute excels.

The Institute has the most cited work in the field of molecular biology in the past five years worldwids, associated director Dr. Ann Bode said in December.

While possibly The Institute’s most recognizable contribution came when a scientist there in the 1950s named Omega 3 and 6 fatty acids, Dennison points to numerous findings and research that have put The Institute on the map recently. For example, in 2010, The Institute’s Dr. Margot P. Cleary was widely published for her research in how “intermittent calorie restriction” reduces the risk of breast cancer. Dennison also points to Institute research on the connection between obesity and cancer, the study of resveratrol (found in foods like red wine) and research of compounds found in green and black teas with cancer preventive qualities.

With findings like that, Dennison said, The Institute is continually being awarded federal grants.

“We have the support of the industry saying that we are on the leading edge of research. (We get grants and our work published) because we’re doing what needs to be done,” she said. “We’re not one of the biggest (cancer research facilities), but we tend to think of ourselves as a thinktank. It’s a smaller number of scientists but they’re very highly accomplished.”

Adding to its prestige, Dennison said, is its renewed partnership in October 2011 with Mayo Clinic and the University of Minnesota to pool resources to begin what they call “translational research.”

Dennison said while The Institute is a world leader in molecular science, Mayo is renowned for its clinical trials, so the translational research would connect the dots.

“Having us under one roof, it will go from the lab, to (Mayo),” she said. “When we have a discovery at The Institute, (Mayo Clinic) will translate that into how it applies to human beings.”

Shovel ready and waiting on St. Paul

Institute leaders officially announced plans for an expansion in October of 2011, with half of the funding — $13.5 million — coming through an Austin Port Authority bonding issuance, meaning the port authority would own the expansion and The Hormel Foundation would be in a contractual agreement to make bond payments. No local property taxes would be used to pay for the expansion, City Administrator Jim Hurm confirmed in June 2011.

But before an expansion can happen, The Institute needs the other $13.5 million approved through state bonding funds by the capital investment committee.

Republican Sen. David Senjem, who is chair of the capital investment committee, toured The Institute in December with other committee members. He said the expansion ranks as a top priority for the bonding bill, particularly because of the high-value payback it could bring.

“I don’t look at the number, I look at the outcome and what it can do, and this is an absolutely outstanding project,” Senjem said in December.

However, Senjem’s post as chair of the capital investment committee may come to an end in the coming weeks because of his recent promotion to Senate Majority Leader. Sandra Whalen, a spokesperson for Senjem, said it’s rare for a majority leader to chair a major committee other than the Rules Committee, but a final decision has yet to be reached.

The Institute’s funding request will have the same chance of being approved regardless of Senjem’s position with the capital investment committee, Whalen said. She said all projects will still be weighed in the same light.

A vision for the future

Dennison said the hope of The Hormel Institute is for continued growth beyond this project. The Hormel Foundation, through Leaning Tree, LLC, has purchased 23 properties since September 2010 directly east of The Institute, which would be used for a parking lot with this project, but Dennison said could be used for additional expansions down the road.

“There’s a process of rolling it out,” Dennison said. “You have a vision, and you do it in phases as needed and as funding allows. Continued growth was always part of the plan, even back in 2006 at the groundbreaking (of the last expansion).”

For Minnesota to be globally competitive, Dennison said, it needs to excel in areas like bioscience, which they’re hoping to do with this expansion.

“There are certain things we can’t compete with China for, in terms of manufacturing,” she said. “But (bioscience) is an area we can lead the world in. That’s an area Minnesota can be globally competitive in.”

But this expansion could just be the beginning, Dennison said.

“It’s so exciting to think what (The Institute) will look like 20 years from now,” she said. “Will there be a campus of added buildings? There really is a great long-term vision. And that would be great for Austin having that happen right here.”

 — Amanda Lillie contributed to this report.