BATAVIA – State and local economic development officials say they are confident HP Hood will succeed where Muller Quaker Dairy did not, inside a plant once hailed as a boon for upstate New York.
Muller Quaker Dairy ceased its Greek yogurt production at the plant in late 2015, just two years after opening. Now comes HP Hood, a Massachusetts-based dairy company that will turn the site into a processing facility for "extended shelf-life beverages."
Hood's plans are compelling: It will invest more than $200 million in the Genesee Valley Agri-Business Park facility, including $50 million purchase to buy it, and create 230 jobs over five years.
But Muller Quaker Dairy's plans also sounded enticing when they were unveiled a few years ago: a joint venture between powerhouse PepsiCo and Theo Muller Group to produce Greek yogurt, inside a newly built $200 million plant. They ultimately pulled the plug on the plant, eliminating 170 jobs.
State and local officials acknowledged that not every business venture they provide incentives to works out, but they see Hood as a robust replacement for a plant that needed a new purpose.
"If you want to be in the economic development business, you have to get accustomed to the adjustments," said Gov. Andrew Cuomo, citing the high failure rate by many businesses after five or 10 years.
Steve Hyde, president and CEO of the Genesee County Economic Development Center, called HP Hood "a high-quality company, very strong in the marketplace. They're going to be producing a whole portfolio of their existing, tried and true, market-accepted products."
Hyde said that even though the Greek yogurt venture was backed by two large companies, "it was still a start-up product. There's a difference on the risk profile there. It points to (HP Hood) being very successful, very sustainable, because it's being built and run by a high, high-quality company." Hood says it has $2 billion in annual sales.
Hood officials did not elaborate on exactly what type of dairy products they will produce in the Batavia plant.
Howard Zemsky, the state's economic development chief, said the shutdown of a plant like Muller Quaker's underscores "how competitive the industry is. There are no guarantees. Not every business venture works out."
With the state's Excelsior tax credit program, Zemsky noted, companies collect incentives only if they live up to their commitments.
"They only got a very small portion of the tax credits that were originally announced," Zemsky said of Muller Quaker.
"If you want to develop jobs and you're going to partner with companies, you have to expect some of those companies to fail," Cuomo said. "That is how the economy works, and you're not going to defy the overall economy."
Cuomo described Empire State Development as basically "an investment banker for the state of New York, and every state is in the business. That's what you have to remember. If you don't attract Hood to come to New York, some other state will attract Hood to come to their state."
Zemsky said he views a dairy industry company such as Hood as a relatively low risk venture for the state to support. "We're not figuring out if consumers like milk; we're not breaking new ground in producing milk," Zemsky said.
Hood will receive both state and local financial support. Empire State Development will provide up to $5 million in performance-based Excelsior Jobs Program tax credits and a $2 million capital grant from the Upstate Revitalization Initiative. The Genesee County Economic Development Center board will amend a current payment-in-lieu-of-taxes agreement for the Batavia plant that will provide Hood with more than $7 million in tax abatements over 10 years.
Hood plans to start production at the site in the second quarter of 2019. Along with repurposing the 363,000 square foot plant, the company will build a 100,000 square foot refrigerated warehouse.
"We're very, very excited to have this opportunity to grow our business here, and we're very, very grateful for the support we've gotten from the governor's office, the staff, the county and the entire community," said Jeffrey Kaneb, Hood executive vice president. "We look forward to becoming a supportive member of this community, a good neighbor and an employer of choice here in Batavia."
After Muller Quaker Dairy closed, the Dairy Farmers of America stepped in to buy the facility. That entity sold the plant to HP Hood.
"Our primary goal was to ensure that this facility remained active in dairy for the long term," said Rick Smith, president and CEO of the Dairy Farmers of America. "We explored opportunities with more than a dozen dairy companies and think HP Hood is a great fit to serve the local milk shed and community.”