5 p.m. update: 85 laid off as PGG closes stores in Pendleton, Athena, Milton-Freewater

<p>PGG is closing three of its AG Supply retail stores, including this one in Pendleton, and selling three others.</p>

Unable to find buyers for every location, Pendleton Grain Growers Inc. will close half its AG Supply retail stores across Eastern Oregon by early September — including outlets in Pendleton, Athena and Milton-Freewater.

The Pendleton Automotive Service Center will also close Friday as part of the co-op’s ongoing effort to cut costs and restructure business. Negotiations are underway for PGG to sell the remaining three stores in Hermiston, Island City and Joseph.

Spokeswoman Maddee Moore said approximately 85 employees will be laid off, though some could be reassigned to other positions within the organization.

“Our goal, first and foremost, is to take care of our employees and do the best we can by them,” Moore said.

PGG announced plans in May to move on from retail and focus on providing more resources to what the co-op considers its core areas of business: the grain, seed, energy, fleet and agronomy divisions.

Layoffs were inevitable to come with the change, Moore said. Another eight members of the office staff were already told they would be let go effective Aug. 29 as the co-op scales back operations.

Currently, PGG has about 250 employees including seasonal workers, not taking these layoffs into account.

In an announcement released Thursday, board chairman Tim Hawkins said they understand the impact closing stores will have on their communities, but remain optimistic about the opportunities of restructuring PGG.

Moore said the board’s actions have involved “painstaking” conversations, but these decisions were needed to keep PGG together and profitable for the co-op’s 1,850 members.

“It’s a business decision of where we’re at, and what we have to do,” Moore said.

In a meeting with the East Oregonian editorial board in January, General Manager Rick Jacobson said profit returns have been marginal for decades. About the same time, a letter signed by Hawkins to members stated their financial performance over the past decade has not allowed PGG to stay current or maintain adequate reinvestment in business.

The Board of Directors began looking through the co-op’s portfolio to determine which services were most important for members, and how they could be made more effective. Ultimately, they decided PGG could no longer support the stores and hoped to have them sold by late August or early September.

PGG reached out to every major agricultural retailer on the West Coast in search of buyers, Moore said. While PGG is now in negotiations to sell the Hermiston, Island City and Joseph locations, the remaining stores — as well as the automotive service center — did not generate any offers.

“There wasn’t the market share they were looking for,” Moore said. “We never really heard why, but that was their decision to make.”

The stores in Hermiston, Island City and Joseph stores will remain open and operating as usual, Moore said. Information about the buyers will be available once the sale is finalized, which PGG expects sometime in October.

Meanwhile, the Pendleton, Athena and Milton-Freewater outlets will begin an inventory clearance sale beginning Friday and running through Sept. 5.

In addition, public records show PGG has taken out a $50 million mortgage with Denver-based CoBank listing six properties throughout Umatilla County. Both the co-op and bank have declined to comment on the transaction.

Moore said the goal of restructuring is simply to provide more value to their members.

“We will be able to go back down to our core areas and support them effectively,” she said. “We see tremendous opportunity to continue to grow.”

PGG was originally incorporated in 1930, following the stock market crash of 1929, as farmers united to protect themselves against falling wheat prices.

Anyone with questions about PGG can call 1-800-422-7611, or email membership@pggcountry.com.

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Contact George Plaven at gplaven@eastoregonian.com or 541-564-4547.

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Pendleton Grain Growers Inc. announced Thursday it will close three of six AG Supply stores in Umatilla County by early September, including locations in Pendleton, Athena and Milton-Freewater.

The Pendleton Automotive Service Center will also close Friday, part of the co-op’s effort to phase out retail service and restructure business.

PGG has entered into negotiations to sell its remaining AG Supply locations in Hermiston, Island City and Joseph. The cooperative did not receive offers on the other businesses.

Tim Hawkins, chairman of the co-op’s board of directors, said they understand the impact of closing the local stores but remain optimistic about the opportunities of restructuring PGG — a move that will provide more resources to the grain, seed, energy, flee and agronomy divisions.

The stores in Pendleton, Athena and Milton-Freewater will begin an inventory clearance sale Friday. The final date of business is not yet determined, but is expected to be in early September.

More information will be coming in Friday’s East Oregonian.

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