Is less more for Parks Sausage?

Sale of the Baltimore plant marks last-ditch effort to keep company afloat

They came in amid much ballyhoo and fanfare in 1996 — set to chalk up a winning game plan for the resurrection of the venerable Parks Sausage Co. Now, two years later, after saving the company from bankruptcy, former football greats Franco Harris and Lydell Mitchell are gambling on one last strategy aimed at Parks’ survival.

As news spread in Baltimore that the company would have to find yet another buyer or face closing its doors for good, the pair recently sold the 133,000-square-foot manufacturing building to Pennsylvania deli meat producer Dietz & Watson. This move resulted in a shedding of production employees and a shrinking of the payroll from 88 to about 20 sales personnel. The price of the sale to Dietz & Watson, a privately owned company with more than $100 million in annual sales that employs about 500, was not disclosed.

The now streamlined business has moved from its base in west Baltimore into downtown Baltimore offices to concentrate on marketing, promotion, distribution and sales of the product line.

So a little over two years after rescuing the company from bankruptcy and nearly $10 million in debt, Harris and Mitchell have opted to throw the burden of a $16 million processing plant off their backs and have outsourced manufacturing to several contractors. After struggling with overhead costs such as the building’s mortgage and mounting utility bills, the owners say they were hamstrung in their attempts to boost advertising because all revenues went back into plant upkeep.

Perhaps they underestimated the size of the problem. Following Parks’ filing for Chapter 11 in 1996, Mitchell and Harris purchased the company by paying $1.7 million cash and assumed most of the $9 million debt of the 48-year-old company, much of which was forgiven by Parks largest creditors, NationsBank and the city of Baltimore (See “The Immaculate Reception of Parks Sausage,” September 1996). Following their arrival, sales rose from $10 million in 1997 to $14 million in 1998. But it’s still a far cry from Parks’ heyday during the baby boom era, when revenues topped $28 million.

“When you’ve got a plant that big and you’re not doing a tremendous volume on a weekly basis, it makes it very, very difficult,” says company President Mitchell. “We were not able to sustain that. So we’re doing the right thing, and we will be alive and well.”

Mitchell says despite the plant sale, Parks’ consumers will still have ready access to their product line as well as new items for a younger consumer. Contracted manufacturers will abide by Parks’ specifications. He says that because of the sale, consumers may see a bigger advertising presence from the company. Over $500,000 is being budgeted for advertising to revive the Parks name in the Northeast and to branch out into the Midwest.

“The Parks brand name, although it’s not what it once was, still has some value in this region,” says Kurt C. Funderberg, a meat industry analyst for Baltimore-based Ferris, Baker, Watts Inc. “One of the problems is that the name-value is

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