WCMA Perspectives | Contributing Columnist

The Million Dollar Question: Where?

John Umhoefer executive director of the Wisconsin Cheese Makers Association

January 6, 2023


 

It’s not a decision for the faint of heart. Dairy manufacturers have green lit a wave of greenfield cheese production and conversion plants in the last few years with price tags in the hundreds of millions, ranging up to $870 million for Leprino Foods’ new Mozzarella and dairy ingredients plant in Lubbock, TX.

Ten newly operating or under-construction facilities, including four in Texas, three in Wisconsin, and one each in Kansas, Michigan and New York, required years of consideration to select the right location for these major, long-term investments.

WCMA spoke with each manufacturer below to capture their strategies for finding the right place to break ground.

MWC in Michigan
Glanbia’s George Chappell, VP dairy operations, cites two main factors driving growth decisions for the Ireland-based dairy business: a long-term and worldwide view of dairy supply and demand, and a successful joint-venture business model with partners Dairy Farmers of America and Select Milk Producers, first initiated with Southwest Cheese in New Mexico in 2005.

“Our broad view on when and where to build dairy processing plants is based a lot on macroeconomics. The last two builds have been based on growing milk supply in those regions and national and international customer demand for cheese and whey proteins. Finding skilled labor to operate the plant is also a key consideration,” Chappell said.

The latest joint venture facility, the MWC cheese and whey plant in St. Johns, MI, met these criteria, and then checked the boxes on additional considerations: proximity to the milk shed, local infrastructure to support a large manufacturing site and construction, and incentives offered by state and local leaders.

“The cost of freight – proximity to our customers – became a key part of the equation in choosing Michigan,” Chappell said. Other emerging concerns – such as cost of capital and cost of construction – mean Glanbia relies on long-term strategies, creative business models and carefully connecting all the pieces from farm to customer, he noted.

The MWC plant, opened in October 2020, now converts 8 million pounds of milk /day mostly into American styles: Cheddar, Monterey Jack, Colby Jack, Pepper Jack cheese and Gouda, as well as producing whey protein concentrate and isolates.

Hilmar in Kansas
“Hilmar Cheese is bullish on cheese growth, domestically and abroad and we pattern our site selection on regions with long-term growth potential,” Kyle Jensen, VP global sales and marketing, told WCMA. “We’re looking for plant locations that represent the most efficient places to grow our business in the coming decade.”

Hilmar’s latest mega-investment is the $600 million state-of-the-art cheese and whey production facility in Dodge City, KS. The greenfield site is expected to begin production in late 2024. Hilmar chose the location because of its available land, water and sufficient workforce both for the manufacturing facility and for the local farms that will thrive in the southwest Kansas region as a result of this project.

The company researched possible locations in the central US, “and in the end we found Kansas, like Texas, to be very receptive to new business and, easily accessible to our customers,” Jensen said. “Dodge City and its thriving dairy industry has welcomed us with open arms. We are very excited to be part of this community.”

Agropur in Wisconsin
“We looked at multiple factors when we chose to site our new Little Chute, WI, cheese factory adjacent to the existing plant,” said Mike Sipple, VP manufacturing, for Agropur Inc. USA. Retaining their skilled labor force was crucial, Sipple said, as was proximity to major buyers.

“We believe in Wisconsin’s infrastructure, and we saw the state back that belief with very good incentives for us to build here in northeast Wisconsin,” Sipple said. The facility will more than double the capacity of the former plant, taking in 750 million pounds of milk per year.

GLC in TX and NY
Great Lakes Cheese is in the midst of two major building projects, with diverse goals landing their new cheese production facility in Franklinville, NY, and their latest cheese conversion plant in Abilene, TX.

The new cheese conversion plant opening in Abilene reflects Great Lakes Cheese’s efforts to round out their national footprint and minimize supply chain costs. Texas proved very receptive to dairy business and offered multiple sites, and Great Lakes Cheese found that the labor pool and site logistics in Abilene were best among the choices.

New York offered a different opportunity. Retaining their key, skilled workforce drove the decision to search for a greenfield cheese factory site near the company’s storied plant in Cuba, NY. The new plant rising near Franklinville, NY, was the result of an exhaustive search for the right topography, including a stream for surface water discharge of treated wastewater.

Remaining in the Northeast brings other benefits according to the company: the plant will turn 4.5 million pounds of milk/day into Mozzarella and Provolone in one make room and 40-pound block American styles in another to serve markets along the eastern seaboard. Conversion to finished products – shreds and slices – will happen onsite.

BelGioioso in Wisconsin
Belgioioso Cheese is replacing the historic Langes Corner cheese factory with a greenfield facility near Denmark, WI, to increase production of Gorgonzola cheese.

“We chose to stay in the area because we wish to maintain our knowledgeable workforce and continue to partner with Wisconsin farmers,” said Gaetano Auricchio, BelGioioso’s executive vice president.

In additional to multiple Wisconsin facilities, BelGioioso operates cheese plants in Glenville and Campbell, NY, and “those do an excellent job serving markets in the Northeast,” Auricchio said. “We believe Wisconsin offers the opportunity to efficiently ship products to nationwide markets, and the local infrastructure of construction and equipment suppliers is a real advantage for custom equipment and getting service quickly and efficiently.”

The dairy processing landscape is changing, but common themes support new plant decisions. The potential for dairy farm partners to flourish long-term, for adequate skilled labor to run these large plants, and for optimal access to suppliers and customers are top priorities for cheese manufacturers doing the complex analysis of siting dairy’s future
.. JU

 

John Umhoefer has served as executive director of the WCMA since 1992. You can phone John at (608) 286-1001 or e-mail John Umhoefer at jumhoefer@wischeesemakers.org

 

The views, thoughts and opinions expressed by Cheese Reporter columnists are theirs alone, and do not necessarily reflect the views of the Cheese Reporter.

 

 

John Umhoefer

John Umhoefer has served as executive director of the Wisconsin Cheese Makers Association since 1992. You can phone John at (608) 286-1001 or e-mail John Umhoefer at jumhoefer@wischeesemakers.org


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