HP Hood chairman confident $200 million investment in Batavia will pay off for dairy company and community
(Photo of HP Hood Chairman John A. Kaneb taken this afternoon at his company's new processing facility in Batavia's Genesee Valley Agri-Business Park.)
With existing plants at capacity and demand growing, HP Hood was looking for a facility the company could get up and running quickly for long-shelf-life dairy and nondairy products, said its Chairman John A. Kaneb today in an exclusive interview with The Batavian at the company's new processing facility in the Genesee Valley Agri-Business Park.
The plant was built in 2012 for $206 million as a joint venture between PepsiCo and Theo Muller Group and became known as the Quaker Muller Dairy plant.
Now, it's the HP Hood plant, which Hood acquired June 30 from Dairy Farmers of America for $54 million.
Kaneb said Hood knows Upstate New York well -- with four existing plants -- and knew the area had a good supply of raw milk, so when the plant became available, Hood took a keen interest.
"This plant happens to be located fairly well for us -- not ideally -- but fairly well," Kaneb said. "The availability of the plant, that overcame a lot of, let's say, whatever reluctance we would have because we have to do a lot of very expensive repurposing here. We're moving from a plant that was designed for mass production of lots of yogurt to two fluid products. So that there were some warts and such, but we're very happy to be here."
The staff at Genesee County Economic Development Center made the whole process easy, understood it needed to be expedited, and that added to Hood's interest in locating in Genesee County, Kaneb said.
"Your economic development people here are superb," Kaneb said. "I mean they really are good and they're knowledgeable and they're friendly to business. Hopefully, we will not disappoint them."
Scott Blake, senior vice president of operations for HP Hood, added that the GCEDC staff provided a wealth of information on the area, businesses, and people, which helped them get comfortable with the decision to open a plant here.
HP Hood has committed to creating 230 jobs at the plant. They will take on the original PILOT (Payment In Lieu of Taxes) agreement signed by Muller Quaker to receive $7 million in tax abatements over 10 years. The state is also providing a $2 million capital grant from the Upstate Revitalization Initiative.
If employment goals are met, Hood is also eligible for $5 million in performance-based Excelsior Jobs Program tax credits.
The 170-year-old, Lynnfield, Mass.-based company is adding 100,000 square feet of refrigerated warehouse space to the plant, which is already 363,000 square feet. After the expansion, with retooling the plant, and the purchase price, Hood will have sunk nearly $200 million into the new facility by the time it goes into production in early 2019.
There has been a rumor recently that the Hood plant could eventually employ 500 people. That's too far down the road to think about, Kaneb said, and he doesn't want to promise that level of growth. He believes they will hit the 230 employee target, but in the first priority is hiring 140 people over the next 12 months.
"I think we're we're confident that it will be reached, but I don't want to get into when we get to 230 or 250 or whatever," Kaneb said. "As far as going beyond that, I hope so. I will tell you that the only other situation that's halfway comparable to this is a greenfield plant we built from the ground up in Winchester, Virginia. We built that in basically 2000 to 2001. Today, 17 years later, here it is employing about 600 people. This plant has the acreage and, et cetera, et cetera, to do something like that, but that took 17 years."
(For photos of the Winchester plant, click here.)
Kaneb is a former Navy man. He graduated from Harvard in 1956, before joining the Navy, with a bachelor's degree in Economics. He acquired a controlling interest in Gulf Oil, tripled its sales to $4.5 billion, and got out of the business in 2005.
The Kaneb family acquired HP Hood in 1985.
It was almost happenstance that the family got into the dairy business, Kaneb said. The only way to grow the oil business was through acquisition, and with growth opportunities limited, they were sitting on excess capital that needed to be put to work. Hood was a great brand and as a native New Englander, Kaneb grew up drinking HP Hood milk. So did his children. But the company had fallen on hard times.
"(Hood) was a company with a great reputation and a great name," Kaneb said. "It was in some difficulty. In fact, a lot of difficulty. As we looked at we thought it might benefit from management that was highly motivated and with energy, et cetera. We thought we could bring some money to the table. We said, 'you know this isn't the business we know but it doesn't look like a complex business. It looks like a basic blocking and tackling business.' "
Since the acquisition, HP Hood has grown to $2 billion in annual sales and has opened new facilities around the Northeast and around the country, such as Virginia, California and Minnesota.
Hood’s portfolio includes its own brands and licensed products. The familiar names include Crowley Foods, Simply Smart Milk, Heluva Good!, Lactaid, Baileys Coffee Creamers, Hershey's Milk and Milkshakes, and Blue Diamond Almond Breeze.
When the Kaneb family took over Hood, they replaced much of the management, though they also identified some bright young talent, such as Blake, Kaneb said. Since then, Hood's executive team has been stable.
"(Blake) is certainly one of those stars who could take on more responsibility," Kaneb said. "We found those who had the skills that have helped us build the company into what it is today," Kaneb said. "It's really common sense, frankly, having a true partnership with your employees. If you want to put a motto on it, how we as owners look at the business and the employees, is that 'You take care of us, we take care of you.' Very simple."
Kaneb said he thinks that approach has been good for the company and it's what potential employees can expect in Batavia.
"You take care of us, we take care of you," Kaneb repeated when asked about company culture. "I mean, do your job and do it well and then you'll find the company will appreciate it and take care of you. We prize low turnover and we have low turnover, I would say, very low turnover, at every level."
As for the kind of corporate citizen Hood will be in Batavia, Kaneb said getting involved in the community is something Hood will strive to do, but the first order of business is getting the plant into production.
"First of all, get our business set up," Kaneb said. "We need to get to the level of employees we need to get going. I would call that, from my Navy days, as the shakedown period. Then we can be open to being a reasonably active corporate citizen. I don't think it's a great idea for us to do anything but get ourselves comfortable here, with the employees we need, and get our production going and so on. That should be our sole activity for the foreseeable future."
