Goodwill plans for $18 million vegetable oil contract

Former U.S. Foods distribution center in Coralville chosen for packaging plant, expected to be operational in late 2018 or early 2019

(File photo) Goodwill of the Heartland’s employment center in Cedar Rapids on Wednesday, Jan. 27, 2016. (Liz Martin/ The Gazette)

IOWA CITY — Goodwill of the Heartland would hire 40 people, most of whom would have disabilities, to package vegetable oil under a new federal contract worth at least $18 million a year.

The not-for-profit announced Wednesday it will lease the former U.S. Foods distribution facility on Highway 6 in Coralville, just east of Interstate 380, with plans to start production as soon as the end of 2018.

“I really feel this project will have significant impact,” said Jessica Schamberger, vice president for operations for Goodwill of the Heartland, which represents 19 counties in southeastern Iowa and eastern Illinois. “When you have work, not only do you have financial self-sufficiency, but social inclusion.”

Schamberger explained the project to the Johnson County Board of Supervisors Wednesday morning as part of a request for two $50,000 county block grants.

Goodwill of the Heartland has estimated $7.6 million in startup costs that include leasing and equipping the building, adding a rail spur to transport oil to the facility and paying workers until federal funds come in. Schamberger said Goodwill has commitments from Coralville and plans to seek many other grants and loans.

“While we do not traditionally do economic development, this is a different animal and I have a lot of interest in being a funding partner,” Supervisor Janelle Rettig said.

The U.S. Department of Agriculture told Goodwill in July the group was selected to package vegetable oil through the AbilityOne program, which provides employment opportunities for people who are blind or have severe disabilities. Goodwill will package between 10,000 and 20,000 metric tons of oil a year, which equates to about 6.5 million 4-liter cans of the soy-based oil used primarily for cooking.

The oil will be part of the World Food Program, which ships food products to 75 countries around the world, Schamberger said.

“They will take our oil to Syria, Yemen and Myanmar — places that are in need,” she said.

One significant detail yet to be ironed out is a fair market price for the packaging done in Coralville. Goodwill of the Heartland will submit a price proposal by the end of the month to the USDA and then the partners negotiate a price. If no agreement is reached, the deal would become null, Schamberger said, but she expects to have a deal by late March.

Goodwill of the Heartland provides people with disabilities employment through retail stores, janitorial services and packaging and assembly operations.

The vegetable oil packaging plant would pay hourly wages of $10.56 to $23.82 an hour, plus salaried managers, Schamberger told the board. Three-quarters of the employees must be people with disabilities for the plant to quality for AbilityOne. Because the plant will run three shifts, transportation to the facility was a primary concern, Schamberger said.

Coralville officials have said they will add a bus route to the Highway 6 plant and CorridorRides, an online commute-matching system, will allow Goodwill of the Heartland to recruit employees from Linn and Johnson counties, Schamberger said.

Supervisor Rod Sullivan asked Schamberger to work with Mark Nolte, president of the Iowa City Area Development Group, to make sure other entities are willing to contribute financially to the project. The board will notify block grant recipients by April.

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