In the Spring of 2019, the future between the City of Lancaster and Saputo Cheese could not have looked rosier - the Canadian-based firm was in talks with the city for a massive, $120 million expansion of the former Woolwich Goat Cheese facility, that would have added 47,000 sq. ft., to create a whey processing plant.
It was going to be so massive, that the city was looking at ways to move Roosevelt Street, which would have been closed off going to Lincoln Avenue because part of the plant would have been across the street on open lots.
Today, however, that plan has long since shriveled up, and it is now one week since it was announced Saputo was closing the Lancaster plant sometime in early 2024, and with it, more than 100 full-time jobs are gone.
“They didn’t give us any early warning,” said Mayor Stuart Harper, who found out last Thursday, after word began trickling out into the community, with workers being just informed a day or two earlier about the closure.
In looking at the series of events leading up to the announcement last week, a clearer picture of what took place comes into view, one where one corporation, doing its due diligence in options for growth, got the hopes of one community up, while the reality was that it was likely never going to happen.
In a press release simply titled “Saputo announces network optimization initiatives in its USA sector,” the Montreal-headquartered company stated its plans for permanent closure of the Lancaster plant, reiterating the closure of the Belmont plant, and its consolidation for everything to its Reedsburg facility.
“In line with our Global Strategic Plan, the network optimization initiatives announced today will increase operational efficiency and capacity utilization in our USA Sector, while further improving our cost structure,” said Lino A. Saputo, Chair of the Board, President and CEO, in the release. “The start-up of our Reedsburg facility marks another milestone on our journey to strengthen the competitiveness and the long-term performance of our USA cheese network.”
The cost of the closure to Saputo will be $4.35 million, writing off the fixed assets of the plant at $2.9 million.
Besides announcing the closure, the company states it will be seeing what employees can transfer to the Reedsburg facility, with the rest getting a severance package.
For Grant County Economic Development Corporation Executive Director Ron Brisbois, the announcement came as a surprise. “It was not that long ago they were talking about expansion here,” Brisbois stated.
He had heard rumors for a couple of days before the announcement, but hadn’t had a chance to followup with the company before it became official. Brisbois immediate work is to help facilitate the rapid response from the Wisconsin Workforce Development Board, which will be working with the affected employees, and trying to connect workers with the many employers in the area who are looking for people.
“I want to make sure we keep them here,” Brisbois noted, adding that with the tight workforce, there are jobs available here for those workers.
Taking a longer look, Brisbois noted the conditions were such that this was ultimately what was going to happen, that the talk of expansion in 2019 was corporate speculation, and Saputo did not make the ask to get the Lancaster idea finalized.
“They didn’t ask ‘what more could you put on the table?” Brisbois said.
“I don’t like questions like ‘could we have done more?” Brisbois said, not liking having such comments getting the community wondering if more can be done.
First, there is no concrete way to know, but given the conditions, the answer would probably be likely not.
When Saputo was talking with Lancaster in 2019, they were likely looking at different alternatives, including the possibility of purchasing the Reedsburg facility.
Brisbois said that Lancaster was receptive to making changes to the street and the utilities underneath for the possible expansion, as they discussed at the April 2019 council meeting.
Harper, who had just joined the council that same year as the discussion of the plans, noted that the city never got more formal plans. “They never brought a proposal to us that was solid enough to approve,” Harper reflected.
Despite saying they wanted to move forward in Spring 2020 with construction, plans that were to be looked at in Fall 2019 never came to the city.
“They basically ghosted us,” Harper reflected.
Which Harper felt was odd, because the workers at the Lancaster plant have shown their connection to the community again and again. They spent the spring cleaning up parks in the city, and were working towards a collaboration on a ball diamond in Memorial Park.
“The workers are great people and I would like to keep them in town,” Harper said.
Brisbois noted that Reedsburg did a lot to assist Saputo in the expansion of the facility there, but typically a business will ask what can be done, leading to Brisbois earlier thought - that Saputo never asked.
He notes that the City of Lancaster may have been in a limited position to do more. Given the age of the tax incremental finance district, which was created to finance the purchase and development of Arrow Ridge, the city may not have been able to add funding for development - costs for a district must be incurred within the first decade, and the park was created in 2006.
Also, because of the lack of development in the industrial park, Arrow Ridge was labeled a ‘distressed TIF,’ which means it is not generating enough property taxes to pay off the bonds sold for the development. The district was tied to the TIF District that includes Alona Lane, which helped cover the payments.
Still, Brisbois says the lesson is to be more active in talking with a company. “We could have had a more robust discussion,” Brisbois states.
How did we get here?
Opened in March 2008, the plant was the anchor business for the Arrow Ridge Business Park, the reason it was created. State officials joined Tony and Olga Dutra in the opening of the facility, which was their foray into U.S. production.
“Tony Dutra made sure of it that it was state of the art,” Brisbois recalled.
Saputo purchased Woolwich in October 2015 for $80 million. At the time, there were 190 people working between Woolwich’s Canadian and Lancaster facilities.
Two years later, in 2017, Saputo purchased Montchevre Dairy, which operates solely in Belmont, for $265 million, and had 319 employees.
Given those operations were two of the largest goat cheese production facilities in the Midwest, the purchase of both was believed to lead to the consolidation of one or the other.
Instead, both will be closed.
As part of the 2019 pitch to the City of Lancaster, Saputo was looking to create a new whey protein processing facility. In recent years, the growth of consumption of whey protein made it the buzzword in the cheese industry as it had been used more and more in muscle building supplements.
When the Dutras still owned Woolwich, they had been transporting their whey to Wisconsin Specialty Protein in Reedsburg, which had been processing the cheese byproduct. “Woolwich was shipping whey there,” remembered Brisbois.
Saputo purchased the Reedsburg whey production facility in May 2021, along with Bute Island Foods in a separate transaction, with both totaling $135 million.
One year later, in 2022, Saputo announced that it was investing $45 million into the Reedsburg facility, to convert mozzarella cheese production over to goat cheese production, and that it was closing the Belmont plant.
What’s next?
Mayor Harper got on the phone Thursday to talk with anyone at Saputo, and he wanted to make clear what the city wanted to see happen with the soon-to-be-shuttered plant.
“I made it very clear we want to get that building up and on the market as soon as possible,” Harper said.
“I got no promises.” The issue may be that while Saputo is planning to end production in Lancaster, they may not want anyone else to start.
Brisbois noted that the way the facility is designed, it’s set up specifically to be a cheese processing plant. “If a new business wants to come in, will they want to sell that?” Brisbois said, noting he has seen in the past companies balking at allowing a potential business competing with the business leaving.
As an example, there is a recently closed convenience store that, one of the conditions is that any new property purchaser will not be running any business that would compete with the current owner’s operations.
Given the workforce in the area is trained to process cheese, a similar business may want to tap into that experienced workforce, Brisbois noted, as firms often look to see about closures for possible expansion.
With such a tight labor market, having trained workers would be enticing, but with few buildings to accommodate, it may make it tough to bring those businesses in.
“I don’t know why else you would close down a plant that’s as new as the Lancaster facility,” Larry Hedrich, Manager of Quality Dairy Goat Producers Cooperative in eastern Wisconsin, told Brownfield Ag News in their story about the closure, noting the newness of the Lancaster plant.
GRANT COUNTY HERALD INDEPENDENT THURSDAY, NOV. 9, 2023
