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041207 Subcontractor Sues Mississippi Beef Plant

December 4, 2004

Jackson, MS - State-backed, financially troubled Mississippi Beef Processors is being sued for allegedly failing to pay $170,000 to the subcontractor who installed equipment in the rendering plant.

Anco-Eaglin Inc., states in the lawsuit that it has been unable to collect the remaining portion of its $1.7 million contract, due on Sept. 19. The court document, which represents one side of a legal argument, was filed in U.S. District Court, said Mark D. Herbert, with Watkins Ludlam Winter & Stennis, the Jackson-based firm representing Anco-Eaglin.

"Anco has repeatedly demanded full payment. These demands have either been ignored, responded to by false promises of payment, or responded to with various untrue and/or inaccurate accusations," according to the lawsuit, which seeks 1.0% interest past September.

Richard Bradley of Jackson, the attorney for plant president Richard Hall, said that he had not seen the lawsuit and a copy of the suit was not available by searching the Public Access to Court Electronic Records Web site. PACER is an electronic public access service that allows users to obtain case and docket information.

The suit would be the latest round of woes for the north Mississippi cull cow processor, which shut down Nov. 17 because of mechanical problems with its rendering plant. A cull cow can no longer produce offspring and are culled from herds.

The $43.5 million facility, paid for with state and federal grants and state-backed loans, had been open for about three months. Hall issued a statement that said the 400-employee plant might not reopen until January when he finds money to resume buying cattle and repairing equipment.

Hall asked state officials for $5.25 million at a Nov. 3 meeting to purchase cattle. They refused. Hall's statement blamed the shutdown on substandard work by Anco-Eaglin of North Carolina, and The Facility Group of Smyrna, Ga., a consultant on the project.

Those statements caused both firms to fire back. The Facility Group alleged that the problems with the rendering plant, which converts inedible beef by-products into bone meal and fertilizer, was a problem before it got involved in June 2003.

Mississippi Beef Processors' decision to "procure a used rendering plant from Anco- Eaglin has proved to be a source of major difficulty in the start-up and operation of the plant," The Facility Group wrote. Company officials did not return calls from The Clarion-Ledger.

Brian Eaglin, accounts manager for Anco-Eaglin Inc., said his crew rebuilt portions of the rendering plant on orders from Hall and The Facility Group. Sometimes that meant advising them against using certain parts, or outright refusing to install them, he said.

"They bought the equipment from an old rendering plant. Facilities Group installed some. We installed some," Eaglin said. "Some of the equipment was in such poor condition, we said, 'Look, we're not taking responsibility for this.' That's when The Facility Group said, 'We'll do it.'

"The equipment that they bought was more or less junk. And they put us on a pretty tight budget. And we did a damned good job," Eaglin said.

Hall did not return calls. State Agriculture Commissioner Lester Spell said The Facility Group will have personnel at the facility to fix the rendering components.

Whether the used, rebuilt parts contributed to the breakdown at Mississippi Beef Processors is open to speculation, Spell said.

"For me to say that is a big problem ... it might be, it might not be," Spell said.

One established beef processing company has contacted the state to express interest in the facility if Hall fails, Spell said. And an investor also has expressed interest in discussing the facility, Spell said.

"At this point, we have not contacted them and said, 'Hey, we want to talk with you.' At this point it would be up to (Hall) to contact them and see if he can work out something," Spell said. Spell said he hopes the flaws are quickly corrected and Hall finds the money he needs to continue operations, so the state's original intent of providing jobs for a depressed area can be realized.

Employee wages range from $6.50 to $16 per hour.

"This is an area of the state that can critically use those 400 jobs, too," Spell said. "That's the reason that such an effort has been given."

State Auditor Phil Bryant is conducting performance audits on the Land, Water and Timber Resource Board, which funded the facility, and is auditing Mississippi Beef Processors. The attorney general's office is also assisting by reviewing contracts related to the project.

The 154,000-square-foot plant is supposed to have an $8 million payroll and process 1,000 head of cattle daily at peak operations.

Eaglin said that if Hall had experienced personnel, which they had asked him to secure for operating the plant, there likely would not have been a shutdown.

"They've not bought a single spare part to support that equipment. We told them that from day one. We've bent over backward," Eaglin said. "They need what is called a ($10) presser bar to put a cage assembly back together. We're going out of our way to send it to them. That's stuff they should have stocked."


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