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December 10, 2015 - 5:59pm

Quaker Muller closing, but new dairy processing operation expected to open in plant soon

posted by Howard B. Owens in Muller Quaker Dairy, GCEDC, batavia, business.

It's a tough time of the year for people to lose jobs, said Steve Hyde, CEO of the Genesee Economic Development Center, but there is a silver lining on the dark clouds hanging over the Quaker Muller Dairy Plant.

A large dairy processing organization is close to closing a deal to purchase 320,000-square-foot plant, which cost PepsiCo and Muller Group an estimated $200 million to build. 

"We expect it won't take long and they will employ lots of folks," Hyde said. "Probably more than Muller Quaker and it will be good for Western New York dairy farmers."

While details of the plant closing are not available, some sources indicate it won't close immediately, even so, right before Christmas is a hard time to hear you might be out of a job soon, Hyde acknowledged.

"It is a sad day, especially this time of year, and we're all very sad about it, but there is a silver lining," Hyde said.

The GCEDC is already working with the Job Bureau to find suitable replacement jobs for Muller Quaker employees, along with job search assistance and transition training, Hyde said. There may be a job fair to assist workers. Hyde noted there are a lot of local job openings right now.

While Pepsi and Muller made a substantial investment in the plant, they did so with the backing of the state and the local IDA. The state promised Pepsi/Muller some $14 million in tax credits, but those tax credits were contingent on meeting specific job creation goals.

Quaker Muller never went beyond its Phase I goals, which was a bit less than 200 jobs, Hyde said, so the company received "only a fraction" of the anticipated tax credits though Hyde did not have the exact amount of tax credits awarded immediately available.

The project was also eligible for $11 million in tax abatements related to the improvement of the former farm field, mostly in the form of a Payment in Lieu of Taxes on the increase in assessed value. Such tax abatements are not a direct subsidy but are only realized if the project is built and the property tax assessment goes up. The next owner, assuming there is one, will inherit the PILOT.

There were also federal grants that have gone into the creation of Genesee Valley Agri-Business Park that did not directly benefit Quaker Muller, but provided infrastructure, such as sewer and roads, to make the plant construction possible.

Hyde said it's impossible to say, at this point, when this dairy processing organization might complete its acquisition of the plant, but he is optimistic the deal will go through. 

UPDATE 6:15 p.m.: Empire State Development has issued the following statement: “Empire State Development will be working with the new plant owner, DFA (Dairy Farmers of America), to restart operations soon.”

UPDATE 6:20 p.m.: Assemblyman Steve Hawley said he was briefed on the plant closing last night and only recently learned of DFA's purchase plans. He's hoping DFA will rehire the displaced Muller workers. "I'm not sure what the future holds, but we're moving forward and I hope this shutdown is short term." 

UPDATE: Statement from DFA: "DFA has agreed to acquire the Muller-Quaker Dairy Plant in Batavia, NY. The acquisition is a strategic one for DFA as it is in an important milkshed for us. This facility creates multiple potential milk handling and dairy manufacturing opportunities. We are currently exploring these."

Previously: Developing: Muller Quaker plant reportedly closing

John Roach
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WGRZ, Channel 2, in Buffalo, reported that the plant has been sold.

Kyle Couchman
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What a surprise.....

"He said sarcastically"

So what now, DFA comes in and inherits all the tax breaks, or are they gonna "negotiate" and hold us taxpayers hostage to newer deals, or maybe both?

Anyone making any bets?

Carmen Del Plato
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Well, if our government did something about jobs going to Mexico and China there wouldn't have to be any tax incentives!

jeff saquella
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some sources indicate it wont close immediately?? just talked to 3 different people that work there and they were told that today is their last day along with 90% of the workforce

Kyle Couchman
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I seem to recall several people saying something when the tax goodies were given out, that what are we gonna do when these people milk this for what it's worth and when they begin to have to start paying FULL SHARE they pack up and move on down the road?

I recall people saying the are a mutinational corporation, they wouldn't do that. Why would they invest all that for such a temporary stay? LOL Guess what?

James Burns
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Hyde says it will be better and more people will be hired, yet they are working with agencies to find these people jobs??? I call BS on Hyde. Anyone surprised?

Kyle Couchman
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One buffalo station says only 64 or the 180 jobs will be cut during transition.

I wonder if between this and Alpina's lay off last year if Gov Cuomo will remove yogurt as the state's official snack food.

cj sruger
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These companys dont just do this sort of thing on the spot, This was likley years in the making full well knowing how they would use the handouts and then sell off.

Ed Hartgrove
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Oh, there's a "silver lining", to be sure, Mr. Hyde.

And, I think most Genesee County residents are becoming well aware of whose pockets are being lined by that silver.

DOUGLAS MCCLURG
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Will they change the road back in to two lanes so Mr.Quaker Muller will have enough room to go down the road with his winnings?

Brian Graz
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"The GCEDC is already working with the Job Bureau to find suitable replacement jobs for Muller Quaker employees, along with job search assistance and transition training, Hyde said. There may be a job fair to assist workers. Hyde noted there are a lot of local job openings right now."

CYA... Thanks Steve. BTW how much do those "lots of local job openings" pay, and do they have benefits and pay for health care coverage??? Oh I get it... they pay $7-10hr but the people who get hired should qualify for Obamacare.

Gary Spencer
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"A large dairy processing organization is close to closing a deal to purchase 320,000 square foot plant, which cost PepsiCo and Muller Group an estimated $200 million to build. "
Will this "large dairy processing company receive millions in tax breaks to create new jobs?

John Roach
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Should be interesting. If the new company insists on tax breaks to buy the plant and hire back most, if not all, of the workers, do we say no? If not, are we willing to let the plant sit and have almost 200 on unemployment just so that the new company does not get any breaks?

Howard B. Owens
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The GCEDC-approved tax abatements included the standard sales, mortgage and PILOT. The sales and mortgage tax abatements, were, of course, related to the purchase of the property and building of the structure, so those breaks are already realized. The PILOT, of course, is spread out over 10 years, so hasn't been fully realized, and it stays with the property. A new owner just inherits it.

DFA will likely have to negotiate with the state to retain the tax credit tied to hiring. The tax credits would only be realized, just as with Quaker Muller, if specific job creation goals are met.

Pepsi spent more than $200 million to build the plant. It's likely selling for pennies on the dollar, not to mention the millions spent on developing a new product that will now be mothballed. Pepsi undoubtedly lost millions of dollars on this deal. Though, still a fraction of the company's billions in valuation, but in business, a loss is a loss.

Pepsi's stock opened down a buck 25 this morning. Hard to say if that's a result of this news, but investors might well be nervous about the company's inability so far to transition from junk food to more healthy snacks (not that the Muller yogurt was all that healthy). Consumer trends are strongly against surgery drinks and high-sugar and high-salt snacks, which has been PepsiCo's staple for years. This doesn't bode well for their evolution as a company.

Gary Spencer
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Maybe it's not a "new company" it may be an established dairy production company already in the area, which would probably be able to make good use of the facility.

Bob Harker
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Thank you Mr. Hyde for yet again wasting our tax dollars. How many more short term projects will abuse the corporate welfare you offer through the Ag Park, STAMP, etc?

Cut state taxes across the board, shut down ALL EDC's, and the - only then - NY will truly be "Open for Business". The only way this will ever be achieved would be to separate ourselves from downstate, which is not realistic. The day we retire we will head to Tennessee which is where most of our family has already moved.

Bob Heininger
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Today I learned investing several hundred million dollars in a business venture that failed is winning. Awesome!

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