Local Matters

Community Sponsors

September 21, 2016 - 6:28pm

There will be jobs at the former Muller Quaker plant, Hyde says, we just don't know when

The former Muller Quaker Dairy plant in the Genesee Valley Agri-Business Park is a big, gorgeous (if you're into such things), state-of-the-art dairy processing facility and Dairy Farmers of America officials think it has great potential. But they just don't know what to do with it yet.

DFA has yet to submit planning documents to the Town of Batavia and at the County's Ways and Means Committee. Today, Steve Hyde, CEO of the Genesee County Economic Development Center, said there are ongoing negotiations about the future of the plant, but he can't discuss them.

Hyde did say there are businesses interested in acquiring the plant outright and DFA is in negotiations with potential partners, but nothing is settled to date.

"They are fully committed to bringing milk into the plant and sending out dairy products," Hyde said.

There will be jobs in that plant again, Hyde said. It's just a matter of when and what business model either DFA or some other suitor decides to pursue.

Negotiations are ongoing.

DFA acquired the plant, which cost $206 million to build, for $60 million in January.

PepsiCo and Germany-based Muller Dairy formed a joint venture, Muller Quaker Dairy, to create tasty yogurt products designed to capture a portion of the growing Greek yogurt market, though the yogurt produced by the plant wasn't exactly Greek yogurt.

Whether through lack of marketing (either enough of it or the right message), lack of good distribution or lack of consumer interest, the product never caught on (though there was, according to sources, $100 million in first-year sales); the joint venture was dissolved and the plant closed in December 2015, costing about 200 people their jobs.

There are, we are told, still three former Muller employees on site, keeping the plant maintained so that when somebody does decide to do something with it, everything is in working order.

How much money Muller lost on the joint venture isn't known, because Muller isn't a publicly traded company. PepsiCo is, and the company took a $78 million impairment charge in 2015. An impairment charge is a somewhat complex accounting term that can mean a write-off on a loss of fair market value.

With gross sales of more than $66 billion annually and a net profit of nearly $10 billion, the write-down warranted nothing more than a footnote in PepsiCo's 2015 annual report.

The Wave Project, as it was initially known, did receive some subsidies along the way to assist in construction and starting production, but Muller Quaker never qualified for all of the subsidies it signed up for.

The PILOT (Payment in Lieu of Taxes), mortgage tax abatement and sales tax abatement on construction totaled about $11 million, but Muller Quaker never benefited from most of that tax relief. Since the PILOT is spread out over a 10-year span, as a reduction in property tax on the increase in assessed value, with the size of the abatement declining over time, Muller Quaker doesn't benefit for any of the PILOT relief from 2015 onward. The new owners, DFA, or other, could benefit from the PILOT until it expires (or is replaced by a new agreement as part of a new business being established).

From Empire State Development, Muller Quaker was promised $4.5 million in tax credits tied to job creation. As a result of creating 446 jobs in 2013 and 2014 (the number is combined for the two years -- one job in one year warrants credits for that year, and the same job, still in place, counts in the second year, and so on), Muller Quaker received $556,446 in tax credits, not the $4.5 million originally offered.

The company was offered, and received, $995,000 from New York State Homes and Community Renewal.  The grant was based on meeting specific investment and job-creation goals. 

New York State Energy Research and Development Authority (NYSERDA) also made a commitment for nearly $2 million to offset the cost of installing energy-efficient equipment and HVAV measures that would lower costs at the plant. Only $1.2 million had been awarded prior to the plant closing.

The New York Power Authority awarded a 1.3-megawatt grant of power under the ReCharge NY program and the plant used the full allotment of the grant.

Post new comment

Log in or register to post comments



Copyright © 2008-2020 The Batavian. All Rights Reserved. Privacy Policy | Terms of Service

blue button