Jul. 26—Despite AppHarvest's current financial drought, SPEDA boss Chris Girdler is confident that the seed his organization planted in Pulaski County with the arrival of the agribusiness will still bear fruit in the future.
Girdler, president and CEO of SPEDA (Somerset-Pulaski Economic Development Authority), spoke to the Commonwealth Journal this week to address the situation surrounding AppHarvest, a high-tech agricultural company that has filed for Chapter 11 bankruptcy, as was announced on Monday.
"I really feel like that going forward, decades from now, strawberries and cucumbers will be grown in Pulaski County," said Girdler. "... It's unfortunate that there were these missteps in management ... but I think this is a model of future food production in America. As I think as our population grows, you're going to see more and more of this type of thing working."
In June of 2021, ground was broken on a 30-acre sustainable indoor farm in eastern Pulaski where strawberries could be grown year-round (alternating with English cucumbers), following months of work on behalf of SPEDA to find the right location for AppHarvest's facility and introduce them to the area.
Somerset's AppHarvest greenhouse was to be one of five in Kentucky either up and running or in the works at the time of its public introduction, along with a 58-acre facility in Morehead to grow tomatoes, two 15-acre facilities in Morehead and Berea with leafy greens, and a 60-acre facility in Richmond for vine crops.
AppHarvest officials talked in local public events about how the technology used in their sustainable farming model, including climate screening, robotics, and artificial intelligence, with a controlled environment that makes it comfortable to work in any season. The greenhouse, which opened in November of 2022, is designed to be self-sustaining, capturing 100 percent of rainwater and using huge retention ponds to help make it insulated from the effects of challenges like forest fires and droughts.
But 2023 has not been a year of bounty for AppHarvest as a company. Last December, the Lexington Herald-Leader reported that AppHarvest had told investors that the company was running out of funds, and was removing two executives as part of a restructuring effort. There was a lease dispute over the farm in Berea reported earlier this month, when Mastronardi Berea LLC sent AppHarvest a notice of default and termination over the lease agreement, and AppHarvest founder Jonathan Webb stepped away from his role as CEO and chairman of the AppHarvest board. Then this week came the bankruptcy announcement.
A release from AppHarvest stated that the company is "pursuing a financial and operational transition to enable the company to reduce its outstanding liabilities." It also said that business operations would continue at the farms, including shipping products to top national grocery store chains, restaurants, and food service outlets.
"The AppHarvest board of directors and executive leadership evaluated several strategic alternatives to maximize value for all stakeholders prior to the Chapter 11 filing," current AppHarvest CEO Tony Martin was quoted as saying in the release. "The Chapter 11 filing provides protection while we work to transition operation of our strategic plan, Project New Leaf, which has shown strong progress toward operational efficiencies resulting in higher sales, cost savings and product quality."
Despite the challenges being faced by AppHarvest however, Girdler is still bullish about what they can bring to Pulaski County's economic horizon.
"I've definitely been keeping a close eye on things since the first updates or news articles on some of the things going on," said Girdler, who, in his role with SPEDA, was "aggressive" in recruiting AppHarvest to this area and the ever-developing Valley Oak Commercial Complex off of recently renovated Ky. 461. "Obviously, it saddens me to see what is taking place right now and the storyline that has led up to that. I definitely am looking at it though in a very cautiously optimistic viewpoint."
While "bankruptcy" can be a daunting term, Girdler noted that Chapter 11 is in actuality a reorganization opportunity and does not mean that the company is shutting down.
"There are many other businesses that have gone through Chapter 11 reorganization throughout the history of our country, so that is without one question one point that needs to be made," said Girdler. "... They may potentially come out bigger, better and stronger after all of this."
Girdler said that there's "no question" that AppHarvest "made some missteps early on" in the area of management. However, he added that they had passed all state and federal financial stress tests and both levels of government had provided financial help for the community; "The state and federal government don't just randomly hand these things out," said Girdler.
He noted that at the outset of SPEDA's relationship with AppHarvest, it was fair to wonder if "something that was so unique and groundbreaking can really work," as the company was "disrupting an entire food production process and distribution industry."
Said Girdler, "Is there from time to time that fear of failure? Absolutely. But in my opinion, in the America that you and I grew up in and live in, we don't allow that to scare us into not doing anything. So I commend the entrepreneurship. Yeah, there was a little bit of a seed of doubt in my mind, (as there is) when you're doing something that's so big and monumental. There are going to be some hurdles, there are going to be some roadblocks. I think that with any company I'm talking to that's out there, and it could happen to any company."
He pointed to an industry with which he's very familiar — houseboats. Girdler is the grandson of Jim Sharpe, the late local figure considered essentially the father of the industry with Sumerset Houseboats, and also himself served as executive vice president with the later Trifecta Houseboats.
"Who would have thought 20 years ago when the houseboat industry was booming and there was so much production taking place right here in Somerset where the houseboat was birthed that now we would have no houseboat manufacturers?" said Girdler. "So things happen, and we shall see."
Girdler said that if SPEDA had the chance to go back and reconsider its efforts to recruit AppHarvest to Pulaski County, "I don't know that we would have done anything differently. Everybody in the state was after them. ... They were valued at over a billion dollars. So I make no apologies for trying to recruit and bringing to this community a company that was going to and still is right now employing over 150 people from this community right here."
He added, "SPEDA did not provide ... any direct monetary incentives whatsoever. We basically sold our community. ... They actually had been looking at other communities and we were able to lure them this direction."
Girdler emphatically dismissed what he called "conspiracy theories" about what SPEDA might have done for AppHarvest, such as paying them and wasting Pulaski County taxpayer money. He said one thing they did do for them was extend the roadway around the Hendrickson factory to help AppHarvest's traffic, but the road needed to be built anyway, he noted, and has made for safer driving for everyone in that area.
AppHarvest officials were impressed by the community, in particular its "focus as an economic development entity in arts and entertainment (as) a great quality of life component," as well as the programs within local schools for workforce development, said Girdler; he added that talks are still happening about the possibility of putting an AppHarvest greenhouse at a local high school.
"Anybody that wants to try to be critical of (bringing AppHarvest here) in any way is very short-sighted and uninformed," said Girdler. "SPEDA doesn't do local incentives. We cut that out immediately upon forming this organization. We decided we wanted to take care of existing businesses first and put that money that otherwise was pennies on the dollar to some company coming here into quality of life initiatives for our citizens who live here now, and create that atmosphere that they want to live in and other people want to come back to."
Girdler also addressed concerns that AppHarvest would compete with local farmers, calling it an "apples to oranges" relationship between the two entities growing strawberries.
"(Local farmers') final marketplace is the farmers' market; their final marketplace is not your big national distribution with Meijer and Walmart and Kroger, things of that nature," said Girdler. "Really, (the party) AppHarvest is competing against are the growers in Mexico; 75 percent of America's strawberries come from Mexico. So that's who AppHarvest is competing with, not the local farmer."
SPEDA and AppHarvest have kept in touch throughout the current situation the company is going through, noted Girdler, and has plans for a "Bus to Biz" outing for local Somerset Independent Schools teachers to visit AppHarvest in August and learn more about what's done there.
From Girdler's understanding, AppHarvest's Somerset and Morehead facilities are the strongest in the company, while the Madison County farms are seeing more struggles, including significant damage suffered during recent severe storms.
"I'm told things are going well here," said Girdler. "... So again, I'm cautiously optimistic. Anything can happen, but we're just hoping and praying for the best for our community."
