Costco’s chicken processing operation is expected to have a ripple effect in Nebraska’s economy far beyond the cornfield where officials turned ceremonial shovels of dirt Monday morning.
Its estimated $1.2 billion annual economic impact compares to about 1 percent of the state’s economy, Gov. Pete Ricketts told a crowd gathered south of Fremont on the site of the future chicken hatchery, feed mill and processing plant.
“Folks, that’s how we grow Nebraska. It’s projects like this,” he said. Ricketts said the state government has a philosophy of working like a customer service organization to help businesses locate here. He noted “how grateful we are to be able to serve Costco and Lincoln Premium Poultry,” the business managing the operation for Costco.
The project will be among the region’s largest economic engines, said Randy Thelen, senior vice president at the Greater Omaha Economic Development Partnership.
Its entire supply chain — from corn fed to the chickens to the finished product themselves — will be concentrated within about a 100-mile radius around Fremont.
It will generate about 800 new jobs at the plant itself and will support farmers and small businesses that serve the plant.
The Omaha chamber and others are working to study what extra housing Fremont will need and what workforce training and recruitment needs Costco has. Site preparation work will continue this month, and the plant is expected to open for production in April 2019.
There’s also the $400 million in direct investment to build the plant along with barns to house chickens on area farms.
The plant is the first live animal processing facility for Costco, which is based near Seattle.
Officials estimate that the plant will process more than 2 million chickens a week, or more than 100 million a year. It will handle about a third of the raw and rotisserie chicken sold at Costco stores nationwide. Costco operates 732 warehouse-style stores and had $119 billion in revenue in its 2016 fiscal year.
Most retailers do not process their own fresh meat, instead buying it under arrangement with plants that might also serve other customers.
But it makes sense for Costco to have more control over its own supply, said Jonathan Luz, director of strategic planning and infrastructure development for Costco.
That’s because Costco sells relatively few types of chicken products and because it has steady demand.
“Our need is abnormally regular,” he said.
It will be able to operate a plant at full efficiency, with predictable demand for utilities and schedules for employees, he said.
Costco also wants to lock in a supply of the type of chicken it’s known for — birds that come out to three pounds once cooked in a rotisserie oven. The chicken industry has been raising bigger birds in recent years, to weights over six pounds, which can create texture problems in breast meat.