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HP Hood

July 24, 2017 - 3:11pm
posted by Howard B. Owens in Muller Quaker, HP Hood, batavia, business.

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Press release:

State-of-the-art production equipment from the former Muller/Quaker Dairy greek yogurt plant in Batavia, New York, will be offered at auction Sept. 13 by Harry Davis & Company.

Dairy Farmers of America (DFA) this week announced the facility — originally constructed by Muller-Quaker to process yogurt via a joint venture formed in 2011 between PepsiCo’s Quaker Oats Co. unit and Germany’s Theo Müller Group — has been purchased by HP Hood LLC. HP Hood will invest more than $200 million over several years to repurpose the 363,000-square-foot, currently idle processing facility to produce extended shelf-life beverages.

Meanwhile, the remaining state-of-the-art production equipment is being offered at auction by Harry Davis & Company.

Leonard Davis, president and senior appraiser for Harry Davis & Company, says this is a rare opportunity for processors to purchase equipment from 2012 or newer that was used for only 18 months of production time.

“This is a virtual showroom of equipment,” he says. “It’s a tremendous opportunity for the dairy world to purchase this equipment.”

He notes in particular the equipment available for production of Greek yogurt, which has soared in popularity at retail.

In addition to getting ultra-modern equipment at significant savings, Davis says it’s a rare opportunity to get equipment of this quality so quickly.

“Typically, if you wanted to get one of these filling machines, you’re looking at 18-24 months of lead time,” he says. “This is an opportunity to acquire like-new equipment well below new cost and have it installed and running in a matter of weeks.”

Some of the featured equipment, valued at $200 million, includes: • Aseptic S/S Silos & Tanks
• Pasteurization, Homogenization & Culture Injection
• Finnah Horizontal Form, Fill & Seal Packaging Lines
• Hamba/Oystar A+F Filling Line
• Kasag Fruit Batch Cooking Plant.

Since the former yogurt plant added fruit to some of its varieties, state-of-the-art fruit processing equipment also is available, including a fruit receiving, sorting and cutting system, Davis notes.

“There’s a complete fruit production sub-facility within this plant,” he says. “It’s highly desirable not only for other yogurt manufacturers, but also those involved in jam and other fruit manufacturing.”

Additional general plant and spare parts also are available.

Harry Davis & Company is seeking buyers from North America, South America and Europe. Interested parties can access the auction online at http://bit.ly/MullerHDC. The auction will be held at 9:30 a.m. Eastern Time Sept. 13. 

Photos provided. (click here for more photos)

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July 18, 2017 - 5:31pm
posted by Howard B. Owens in HP Hood, GCEDC, batavia, business, news, notify.

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(Photo of HP Hood Chairman John A. Kaneb taken this afternoon at his company's new processing facility in Batavia's Genesee Valley Agri-Business Park.)

With existing plants at capacity and demand growing, HP Hood was looking for a facility the company could get up and running quickly for long-shelf-life dairy and nondairy products, said its Chairman John A. Kaneb today in an exclusive interview with The Batavian at the company's new processing facility in the Genesee Valley Agri-Business Park. 

The plant was built in 2012 for $206 million as a joint venture between PepsiCo and Theo Muller Group and became known as the Quaker Muller Dairy plant.

Now, it's the HP Hood plant, which Hood acquired June 30 from Dairy Farmers of America for $54 million.

Kaneb said Hood knows Upstate New York well -- with four existing plants -- and knew the area had a good supply of raw milk, so when the plant became available, Hood took a keen interest.

"This plant happens to be located fairly well for us -- not ideally -- but fairly well," Kaneb said.  "The availability of the plant, that overcame a lot of, let's say, whatever reluctance we would have because we have to do a lot of very expensive repurposing here. We're moving from a plant that was designed for mass production of lots of yogurt to two fluid products. So that there were some warts and such, but we're very happy to be here."

The staff at Genesee County Economic Development Center made the whole process easy, understood it needed to be expedited, and that added to Hood's interest in locating in Genesee County, Kaneb said.

"Your economic development people here are superb," Kaneb said. "I mean they really are good and they're knowledgeable and they're friendly to business. Hopefully, we will not disappoint them."

Scott Blake, senior vice president of operations for HP Hood, added that the GCEDC staff provided a wealth of information on the area, businesses, and people, which helped them get comfortable with the decision to open a plant here.

HP Hood has committed to creating 230 jobs at the plant. They will take on the original PILOT (Payment In Lieu of Taxes) agreement signed by Muller Quaker to receive $7 million in tax abatements over 10 years. The state is also providing a $2 million capital grant from the Upstate Revitalization Initiative.

If employment goals are met, Hood is also eligible for $5 million in performance-based Excelsior Jobs Program tax credits. 

The 170-year-old, Lynnfield, Mass.-based company is adding 100,000 square feet of refrigerated warehouse space to the plant, which is already 363,000 square feet. After the expansion, with retooling the plant, and the purchase price, Hood will have sunk nearly $200 million into the new facility by the time it goes into production in early 2019.

There has been a rumor recently that the Hood plant could eventually employ 500 people. That's too far down the road to think about, Kaneb said, and he doesn't want to promise that level of growth. He believes they will hit the 230 employee target, but in the first priority is hiring 140 people over the next 12 months.

"I think we're we're confident that it will be reached, but I don't want to get into when we get to 230 or 250 or whatever," Kaneb said. "As far as going beyond that, I hope so. I will tell you that the only other situation that's halfway comparable to this is a greenfield plant we built from the ground up in Winchester, Virginia. We built that in basically 2000 to 2001. Today, 17 years later, here it is employing about 600 people. This plant has the acreage and, et cetera, et cetera, to do something like that, but that took 17 years."

(For photos of the Winchester plant, click here.)

Kaneb is a former Navy man. He graduated from Harvard in 1956, before joining the Navy, with a bachelor's degree in Economics. He acquired a controlling interest in Gulf Oil, tripled its sales to $4.5 billion, and got out of the business in 2005.

The Kaneb family acquired HP Hood in 1985.

It was almost happenstance that the family got into the dairy business, Kaneb said. The only way to grow the oil business was through acquisition, and with growth opportunities limited, they were sitting on excess capital that needed to be put to work. Hood was a great brand and as a native New Englander, Kaneb grew up drinking HP Hood milk. So did his children. But the company had fallen on hard times.

"(Hood) was a company with a great reputation and a great name," Kaneb said. "It was in some difficulty. In fact, a lot of difficulty. As we looked at we thought it might benefit from management that was highly motivated and with energy, et cetera. We thought we could bring some money to the table. We said, 'you know this isn't the business we know but it doesn't look like a complex business. It looks like a basic blocking and tackling business.' "

Since the acquisition, HP Hood has grown to $2 billion in annual sales and has opened new facilities around the Northeast and around the country, such as Virginia, California and Minnesota.

Hood’s portfolio includes its own brands and licensed products. The familiar names include Crowley Foods, Simply Smart Milk, Heluva Good!, Lactaid, Baileys Coffee Creamers, Hershey's Milk and Milkshakes, and Blue Diamond Almond Breeze.

When the Kaneb family took over Hood, they replaced much of the management, though they also identified some bright young talent, such as Blake, Kaneb said. Since then, Hood's executive team has been stable.

"(Blake) is certainly one of those stars who could take on more responsibility," Kaneb said. "We found those who had the skills that have helped us build the company into what it is today," Kaneb said. "It's really common sense, frankly, having a true partnership with your employees. If you want to put a motto on it, how we as owners look at the business and the employees, is that 'You take care of us, we take care of you.' Very simple."

Kaneb said he thinks that approach has been good for the company and it's what potential employees can expect in Batavia.

"You take care of us, we take care of you," Kaneb repeated when asked about company culture. "I mean, do your job and do it well and then you'll find the company will appreciate it and take care of you. We prize low turnover and we have low turnover, I would say, very low turnover, at every level."

As for the kind of corporate citizen Hood will be in Batavia, Kaneb said getting involved in the community is something Hood will strive to do, but the first order of business is getting the plant into production.

"First of all, get our business set up," Kaneb said. "We need to get to the level of employees we need to get going. I would call that, from my Navy days, as the shakedown period. Then we can be open to being a reasonably active corporate citizen. I don't think it's a great idea for us to do anything but get ourselves comfortable here, with the employees we need, and get our production going and so on. That should be our sole activity for the foreseeable future."

July 15, 2017 - 9:22am
posted by Howard B. Owens in HP Hood, batavia, business, GCEDC, Genesee Valley Agri-Business Park.

Public Notice:

NOTICE IS HEREBY GIVEN, that the Genesee County Legislature will hold a public hearing on the submission of an application for Community Development Block Grant funding from the New York State Office of Community Renewal to provide financing to assist in the establishment of milk processing operations at the former Muller Quaker Dairy facility at the Genesee Valley Agri-Business Park in the Town of Batavia, New York by HP Hood LLC.  More detailed information regarding the project will be presented at the hearing.

NOTICE IS FURTHER GIVEN that the public hearing will be held at the Old Courthouse, 7 Main Street, Batavia, NY on the 19th day of July, 2017 at 5:30 PM. All persons who wish to speak will be heard. Written comments are invited and will be accepted upon delivery to: Clerk, Genesee County Legislature, 7 Main Street, Batavia, NY 14020 prior to the hearing. The hearing location is in compliance with accessibility standards under the Americans with Disabilities Act.

July 11, 2017 - 10:09pm
posted by Howard B. Owens in HP Hood, Andrew Cuomo, batavia, news, business, notify.

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Some businesses fail and some thrive, and if New York is going to grow economically, it needs to take the risk that not every business that receives state aid will live up to expectations.

That was the theme of comments by Gov. Andrew Cuomo and Howard Zemsky, president and CEO of Empire State Development, today in Batavia.

Muller Quaker Dairy didn't work out after being promised millions of dollars in state aid (most of which the project never received), but Cuomo and Zemsky are confident HP Hood is a good company for the state to assist as Hood prepares to expand the 363,000-square-foot facility in the Genesee Valley Agri-Business Park.

"If you want to be in the economic development business, you have to get accustomed to the adjustments," Cuomo said. "You know, only 50 percent of the businesses that start exist after five years. Fifty percent. By the time you get to the 10-year mark, only one-third are still in business. That's the nature of business.

"In the state of New York, we're doing economic development," he added. "We're creating hundreds of businesses, creating thousands of businesses. Well, then, you have to be prepared to have that number of defaults because that is the way the world works. The trick is to keep the fundamentals sound. Keep taxes low. Stay pro-business."

Both Cuomo and Zemsky said they believe Hood will succeed in Batavia.

"Think about the spectrum of industries out there," Zemsky said. "On the one hand, you've got relatively low-risk industries -- I would consider fluid milk to be a pretty stable. We're not figuring out if consumers like milk or not. You're not breaking new ground and producing milk.

"So milk is a pretty low-risk investment in the whole spectrum of things. On the other side, you've got chip fabs or really next-generation industries. We do take some calculated risk, but I'd say this is very low on the scale of calculating risk."

HP Hood is a 170-year-old company based in Lynnfield, Mass., with four other locations in New York. The company is licensed to produce, or has produced, brand-name dairy and non-dairy products throughout the United States.

Hood’s portfolio includes its own brand, Crowley Foods, Simply Smart Milk, Heluva Good!, Lactaid, Baileys Coffee Creamers, Hershey's Milk and Milkshakes, and Blue Diamond Almond Breeze.

The former Muller Dairy plant is the largest dairy processing plant -- even before Hood adds 100,000 square feet of the refrigerated warehouse -- in the United States and in the middle of Upstate dairy country. It cost PepsiCo and Theo Muller Group $206 million to construct. Pepsi took a $60 million write-off when the plant closed. It's unknown how much money Muller lost on the venture.

Muller Quaker was attempting to enter an already crowded and competitive Greek yogurt market with a product that tried to position itself as Greek yogurt but really wasn't.  

Dairy Farmers of America purchased the plant shortly after it closed in December 2015 for $60 million. News broke in June (as first reported by The Batavian) that HP Hood was acquiring the plant from DFA and last week, Hood closed the deal for $54 million.

To assist Hood with its $200 million investment in the plant, Empire State Development will provide up to $5 million in performance-based Excelsior Jobs Program tax credits. As with Muller Quaker, these tax incentives are withheld until employment targets are met.

There is also a $2 million capital grant from the Upstate Revitalization Initiative.

The Genesee County Economic Development Center is also amending the current PILOT (Payment In Lieu Of Taxes), which will provide Hood with more than $7 million in tax abatements over 10 years.

In return, Hood is planning upgrades and equipment purchases and labor costs for reconstruction of more than $150 million. Construction will create more than 500 jobs. There will be another 230 to 250 permanent jobs at the plant.

The support the state is providing HP Hood has an immediate payoff, regardless of what comes down the road, Zemsky said. He called the support a "no brainer."

"This is huge for the dairy farmers," Zemsky said. "It's huge for the whole footprint of the dairy industry. The returns are immediate. Fifty-four million to buy the plant, about $150 million to repurpose it. Two hundred and fifty jobs. That's more than was here at the peak when it was Muller."

During his public remarks, Cuomo said he's trying to reverse 40 years of Albany's neglect of Upstate's business needs, that includes commiting more than $25 million to the Finger Lakes Region for economic development. He said that's more than any governor in history.

"You keep raising taxes, you make it difficult for businesses to be here," Cuomo said. "I'll tell you what's going to happen at one point -- they're going to leave. And they did. We had what I call a 'hangover New York arrogance.' Well, wait, the businesses will stay here. Where else are they gonna go?

"There are actually other places they can go. You look at a map you will see around the State of New York other shapes squares and triangles. Those are called other states. If you force people, they will leave New York and we have essentially forced people (to leave). It's been a tough business, high-tax environment, high-regulation environment.

He expanded on that theme with the press after his speech.

"We have businesses in New York who just get calls at their desk from other states -- come to my state and you won't have to pay any taxes and we'll send the plane and we'll bring you and your wife for the weekend," Cuomo said.

"It is amazing, the competition. So if you said, 'Well, I'm not going to try to do economic development,' you would just be sitting there as a target for every other state.

"One by one they would pick off your companies, and in a relatively short period of time, you'd be sitting there alone -- losing jobs, losing people, which is what happened to Upstate New York."

Representing Hood at the event was Vice President Jeffrey Kaneb. He is the son of John Kaneb, who first tripled revenue for Gulf Oil to $4.6 billion before selling it in 2005.  The Kaneb family acquired Hood in 1995, growing annual revenue from $600 million to more than $2.3 billion. 

"We're very excited to have this opportunity to grow our business here," Kaneb said. "We are very very grateful for the support that we've gotten from the governor's office, from his staff, from the county, from the entire community, in getting us to this point. We look forward to becoming a supportive member of this community, a good neighbor, and an employer of choice here in Batavia."

Hood is hiring. People interested in a job should call (1-800) 428-6329.

As for STAMP (Science, Technology and Advanced Manufacturing Park), the super site in Alabama intended to attract high-tech manufacturers, Zemsky said he thinks it's inevitable that big businesses start to move into that park, because of the location and its access to hydropower and fresh water.

However, Zemsky sounded a cautious tone about whether 1366 Technologies, the solar wafer startup from Massachusetts, that was the first announced tenant for the park, ever breaks ground. 

"I have met with them," Zemsky said. "I haven't talked to them in a while and I think, again, these businesses are competitive. They have to raise capital. I think they have some more capital to raise, so whether or not it happens depends, but it's not going to be all state-financed."

One of the holdups may be the change in presidential administration, from one that supported renewable energy to one that may be more skeptical about the need to support wind and solar. While 1366 has raised substantial private equity, receiving backing from the Department of Energy seems to be a key component of its financial package. The company was previously promised a $150 million loan guarantee from the DOE.

"I think, like anything, the changing of the landscape politically through regulations of the federal government, the vagaries of the financing market, the price of alternative energies -- these are all factors that make being in business really difficult," Zemsky said.

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Hood VP Jeffrey Kaneb.

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July 7, 2017 - 11:20am
posted by Howard B. Owens in HP Hood, batavia, business, news, notify.

HP Hood, the Lynnfield, Ma., dairy processor who is taking over the former Muller Quaker Dairy facility, already has human resources staff in Batavia so the company can start hiring immediately for its new dairy plant.

The company hopes to break ground on reconfiguring and expanding the plant this fall, and it won't be until early 2019 that the new plant is in production. But a source familiar with HP Hood's plans said the company is excited about coming to Batavia and is eager to start lining up its workforce.

People interested in applying for a job at the plant can call (1-800) 428-6329 for more information.

According to public documents, Hood plans to hire 250 people locally and expand the plant with a new 100,000-square-foot warehouse.

The source said details are still being worked out, but the plant will be used to manufacture extended-shelf-life beverages, both dairy and nondairy.

It's expected that Dairy Farmers of America, who initially purchased the plant from Muller Quaker for $60 million and held onto it until last Friday, when the cooperative sold the plant to Hood for $54 million, will be at least one of Hood's milk supplier. There are several DFA dairy farmers in the region.

There is still a lot of work and planning to do, but the source said that right now, Hood's focus is hiring a workforce for the plant.

Since DFA acquired the $206 million plant in December 2015, there have been seven to eight workers at the plant helping to keep it maintained and ready for the next producer. That staff has been offered jobs with Hood and our source believes all current workers accepted positions with Hood.

The source said the acquisition process has taken a year and now that the deal is closed, Hood executives are eager to see things move forward and get the plant into production.

Multiple sources have told The Batavian that staff for Gov. Andrew Cuomo has been trying to coordinate a visit by the governor to Batavia to celebrate the acquisition of the dairy plant by HP Hood. That could happen within the next couple of weeks.

Previously:

UPDATE: Here's a video about HP Hood:

July 6, 2017 - 2:09pm

One of the Northeast's largest dairy producers now officially has a footprint in Batavia.

HP Hood, based in Lynnfield, Mass., closed on the deed to the former Muller Quaker Dairy plant on Friday, paying $54,216,000 to Dairy Famers of America for the facility.

DFA acquired the property from Muller Quaker in December 2015 for $60 million.

As part of the deal, Hood agreed to take over the obligations of Muller Quaker for the property, which includes making payments in lieu of taxes (PILOT) along with paying a variety of fees to Genesee County Economic Development Center.

The GCEDC board has yet to improve a new PILOT agreement for the 363,000-square-foot, state-of-the-art milk processing facility, but is considering providing Hood with more than $7 million in tax abatements over 10 years, with an anticipated total economic benefit to the region of more than $330 million.

Hood will pay GCEDC $1.7 in annual installments of $280,000 over six years, starting with an initial payment delivered Friday at closing.

There is also an annual $1,000 administration fee and a $5,000 annual property maintenance fee to assist with maintenance of the Genesee Valley Agri-Business Park, where the plant is located (next to the Genesee County Fairgrounds on Route 5).

Hood is reportedly planning to add a 100,000-square-foot warehouse to what is already the largest dairy processing facility in the United States.

The plant cost PepsiCo and Theo Muller Group $206 million and Hood is planning to invest significantly more into the plant. Reconfiguring the plant from one that made just Quaker Muller's own take on Greek yogurt and adding the warehouse will create more than 500 construction jobs with a payroll of $26 million. 

While Muller Quaker topped out at 162 jobs created, Hood promises 250 jobs at the plant, with an average annual salary of $47,000.

Hood plans to begin construction this summer and be operational by the first quarter of 2019.

Previously:

June 9, 2017 - 4:45pm

One of New England's largest dairy producers, HP Hood, with an increasing reach into New York, is acquiring the former Muller Quaker Dairy plant in the Genesee Valley Agri-Business Park in Batavia.

The plant has been vacant, except for a few maintenance workers, since Theo Muller Group and PepsiCo dissolved their yogurt-making partnership in December 2015. A month later, Dairy Farmers of America, a dairy farmers cooperative, purchased the 363,000-square-foot, state-of-the-art milk processing facility for $60 million.

Since then, DFA has been mum about its plans for the plant, and for 2017, the company wound up paying all of the property taxes due on the two parcels, more than $650,000, because they were not meeting the employment obligations of the PILOT (Payment In Lieu Of Taxes) agreement Muller Quaker received for the project.

Rumors have started circulating weeks ago that DFA planned to sell the plant to a large dairy producer.

Public documents released by the Genesee County Economic Development Center in advance of a meeting next week where new tax incentives will be considered indicate that Hood is the buyer. It is a 170-year-old company that does more than $2 billion in business annually, and is based in Lynnfield, Mass..

Hood is a subsidiary of Catamount Companies. The owner and CEO is John A. Kaneb, who is also a part-owner of the Boston Red Sox.

News of Hood's purchase is good news to local dairy farmers. Both Shelly Stein of Stein Farms and Dean Norton, former NY Farm Bureau president and owner of a dairy farm in Elba, said anything that creates more demand for local milk helps all farmers.

"Anything that can go into that plant and help with the oversupply of raw milk that we have in the Northeast right now, that would be good," Norton said.

Norton said he has met Kaneb a couple of times.

"He's a good guy and it's a pretty solid company," Norton said.

Bill Baskin, owner of Baskin Livestock in Bethany, got his start in the dairy business in Massachusetts, so he is very familiar with Hood and said it's a good, old, old, old company with deep roots in Boston.

The funny story, he said, is that his great uncles had a 700- or 800-cow dairy farm back in the 1940s and they didn't like the price they were getting from Hood for milk, so they started their own bottling plant, which years later they sold.

Both Stein and Norton are DFA members. Norton said he doesn't know, but he would expect that DFA will become the supplier of milk for Hood's operations.

Monica Massey, senior vice president and chief of staff for DFA, said she could not confirm the transaction with Hood.

"We are getting close to finalizing an agreement," she said.

Massey said DFA acquired the plant as a "strategic opportunity" because the region is an important and underserved milk shed.

Asked if DFA would supply milk to Hood, Massey said, "We acquired the facility because we thought it would benefit our member-owners." That is still the goal, she added.

Hood's purchase price for the former Muller Quaker plant has not been released, but GCEDC documents indicate that Hood plans to add another 100,000 square feet to the plant, which is already considered the largest in the United States, for a warehouse.

How much that additional investment will cost is not disclosed in the documents.

While Muller Quaker topped out at 162 jobs created, Hood promises 250 jobs at the plant, with an average annual salary of $47,000.

Hood plans to begin construction this summer and be operational by the first quarter of 2019.

Construction will create 524 jobs with a payroll of nearly $26 million.

The original cost of construction for the plant was $206 million, which is the cost of capital investment still tracked by GCEDC for its accounting purposes.

The GCEDC board will be asked to consider reinstating the PILOT, which will provide Hood with more than $7 million in tax abatements over 10 years, with an anticipated total economic benefit to the region of more than $330 million.

Hood has been expanding into New York and other parts of the United States over the past few years. In 2004, the company acquired Crowley Foods, based in Binghamton. It's also acquired dairy companies in Minnesota and Sacramento, Calif.

Eric Zuber, a local dairy farmer and VP of Upstate Niagara Milk Cooperative, said he hasn't heard what Hood plans to do with the plant, but like Stein and Norton, he believes anything that will "soak up some of the milk supply" is a good thing.

"There sure is a lot of milk around right now," he said. "A little more capacity with the right thing is a good thing. We need more processing capacity. I don't care where it comes from."

Hood and Kaneb, he said, have a good reputation in the dairy industry.

"He’s done a fantastic job with (Hood)," Zuber said. "They know how to manage a milk plant. Whatever they decided to do, I'm sure it's going to be first class."

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