Tulare - Declining milk supplies was blamed for Land O'Lakes' decision to idle its Tulare cheese plant, a move expected to affect about 80 employees.
City officials were notified of the decision Tuesday, as were employees and their union, Teamsters Local 517.
“Land O'Lakes will be working with the union on the transition,” Gary Germaine, director of operations, butter and cheese told Mayor Craig Vejvoda in a letter informing him of the decision.
“I know this news is very unfortunate, but this was a necessary business decision,” Germaine said.
“Unfortunately, a declining milk supply made it exceedingly difficult to continue operating the cheese facility at this time,” he wrote. “We are currently planning to ramp down cheese production sometime during the latter half of the year.”
Once this is done, milk shipments will be “directed to our core butter manufacturing where, as you know, we have invested heavily in the past few years,” Germaine said.
Land O'Lakes has more than 200 dairymen within a 30 mile radius and employs more than 450 workers. In addition to cheese, the Tulare plant produces butter, buttermilk powder, whey protein and other products.
At one time Land O'Lakes had two Tulare cheese plants, but in 2007 it sold Cheese & Protein International to Saputo Cheese USA Inc., which was already operating in Tulare.
At a 2008 luncheon celebrating 10 years of Land O'Lakes' presence in Tulare – it merged with Dairyman's Cooperative Creamery Association in 1998 – company officials described the Tulare plant as the largest single-site milk receiving and processing facility in the U.S.
Last year the plant underwent a $75 million Galaxy expansion, which is allowing it to produce spray dried dairy products. The project added 100 jobs to the company's payroll.
Because of the positive impact of that expansion on the city, the Tulare Redevelopment Agency and Land O'Lakes forged an owner participation agreement that will give the food processing company 90 percent of the new net tax increment revenues generated by that project. This means the current assessed value of the project site would have to climb above the current $94.2 million.
Land O'Lakes officials have told city and redevelopment leaders that it is planning a second expansion, called Eclipse, which would be done in multiple phases with the first phase generating an estimated $10,000 in assessed value and the second about $25 million. That second expansion has not taken place.
Plugged into the 2009 agreement with the city is the requirement the company employee no fewer than 450 full-time employees to qualify for the second, third and fourth levels of agency assistance.
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