Incentives Deal of the Month
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New Mexico's Incentives Help Land Glanbia's $192M Plant
by JACK LYNE, Site Selection
ALBUQUERQUE, N.M. Ireland's Glanbia (www.glanbia.com) is, quite literally, bringing the big cheese to eastern New Mexico.
Teaming with the Dairy Farmers of America (DFA at www.dfamilk.com) and Select Milk Producers (SMP at www.selectmilk.com) on a 3,000-acre (1,200-hectare) site, Glanbia is creating a $192-million, 300,000-sq.-ft. (27,000-sq.-m.) facility near Clovis, N.M., that will rank as North America's largest cheddar cheese plant.
Located five miles (eight kilometers) south of Clovis, Glanbia's plant will employ 205 workers, company officials say. And those workers will be churning out jumbo-size output.
The Curry County facility will receive 6.6 million pounds (2.9 million kilograms) of milk a day, turning it into 640-pound (288-kilogram) and 40-pound (18-kilogram) cheese blocks, as well as whey-protein products. Annually, the plant will turn out more than 250 million pounds (113 million kilograms) of cheese and 16.5 million pounds (7.4 million kilograms) of whey-protein products, generating a projected $340 million in sales.
Framed by numbers like those, Gov. Bill Richardson (D) and Sen. Pete Domenici (R) had no trouble saying cheese at the project announcement at Albuquerque's Sunport International Airport. Both, in fact, wore plastic cheese-colored ties.
"This is a defining moment for economic development in New Mexico, and here's the main message: New Mexico competed against Texas and won," Richardson said.
The Clovis area beat out several west Texas sites in the final short-list competition, Glanbia officials said.
Domenici likewise lauded the giant project as a major leg up for the dairy industry in New Mexico, already the seventh-leading U.S. state in milk production.
"With this plant, New Mexico will move up in becoming one of the leading dairy-producing states in the country," said the senator. "The fact that it will use vast quantities of milk produced in New Mexico will mean the economic impact of this plant will reach far beyond Curry County's borders."
Incentives One of Three Decision DriversIncentives played a big role in bringing that impact to the Land of Enchantment.
Three primary factors, Glanbia Foods Executive Vice President Jeff Williams explained in Albuquerque, drove the site selection decision: incentives, site access to a very large milk supply and the permitting process.
Mike McCloskey, CEO of Artesia, N.M.-based SDP, said that Richardson's responsiveness vis-à-vis incentives was clearly a decision driver.
"We needed a community that had the infrastructure and the support for a project of this size," McCloskey explained. "It was clear that there were a lot of great places and great communities in the western United States. But at the end of the day, thanks especially to the governor and his desire to create business, when it came time to come to the table and work with us to attract this industry, he came to the table."
Officials didn't put a hard dollar estimate on total project incentives.
But Richardson noted, "The only thing we're not providing is that the governor is not going to work in the plant, and neither is the senator."
The project is getting $400,000 in on-the-job training funds and rural job tax incentives, Richardson explained. But the plant is also receiving an undisclosed amount of manufacturing tax credits and utility incentives, state officials said.
Milk Supply Determined SiteMilk supply likely played an even bigger role in choosing the Clovis area. Glanbia officials estimate that the new plant will need ongoing output from 88,000 dairy cattle.
The initial search centered on an east New Mexico/west Texas area known as "the fertile triangle" - with Clovis to the west, Lubbock, Texas, to the east and Amarillo, Texas, to the north. Glanbia, said Williams, sees the area as "one of the country's fastest-growing milk sheds for the next 10 years."
Glanbia's search at first focused on Texas. Five of the six areas considered, Williams noted, were in the Lone Star State: Dawn, Dimmitt, Hereford, Muleshoe and Plainview/Edmondson.
But Glanbia found that the Texas Panhandle's dairy industry hadn't yet grown enough to provide a sufficient supply, Williams explained. And with 180 milk-hauling tankers coming to the plant each day, transportation costs loomed large in swinging the search toward New Mexico.
Bigger Blocks Mean More Cows NeededSimilar concerns prompted Glanbia Foods' initial decision to diversify its manufacturing base from Idaho. The U.S. subsidiary of Kilkenny, Ireland-based Glanbia plc, Glanbia Foods has its headquarters in Twin Falls, Idaho, and has Gem State cheese plants in Gooding, Richfield and Twin Falls. (A fourth is in Monroe, Wis.)
The 640-pound blocks made at Glanbia Foods' newest plant necessitate more nearby cattle than at the company's current plants. The Clovis facility will be Glanbia Foods' first to make the larger blocks. Existing operations make 40-pound blocks and 500-pound (225-kilogram) barrels.
Many Glanbia customers were demanding the 640-pound blocks, said Williams. The larger blocks lower waste and make it easier to create exact-weight packages for supermarket customers. In addition, most cheese-shredding companies have installed equipment that can handle 640-pound blocks.
The larger blocks are a major plank in Glanbia Foods' growth strategy. Since coming to the U.S. in 1988, Glanbia has become the nation's third-largest cheese producer.
"This project will be a significant step forward in the implementation of Glanbia's growth strategy," Glanbia plc Group Managing Director John Moloney said from Ireland. "It will position us as the No. 1 producer of American-type cheddar cheese in the USA and simultaneously build our global position as a supplier of advanced technology whey proteins to the nutritional sector."
Glanbia Nutritionals, he added, will market the nutritional ingredients derived from the whey stream.
SMP Will Build JV Plant,The Clovis plant will be a joint venture, with Glanbia owning 50 percent and DFA and SMP owning the other 50. SMP, which initiated the joint venture, will build the plant. Glanbia Foods will staff the plant, manage daily operations and be responsible for cheese sales.
Glanbia Will Staff and Operate It
Glanbia's two joint-venture partners, both dairy co-ops, are key conduits in getting the Clovis plant's raw materials.
Kansas City-based DFA last year marketed 47.8 billion pounds (21.6 billion kilograms) of milk, 28.2 percent of total U.S. production. DFA also operates 27 dairy manufacturing plants.
SMP is comprised of a group of large-scale dairy producers primarily located in New Mexico and western Texas. The New Mexico-based co-op last year sold 3 billion pounds (1.4 billion kilograms) of milk.
"We are delighted to partner with DFA and Select on this project," Moloney said. "These cooperatives have access to a growing, large-scale milk pool in the west Texas/New Mexico region."
The operation will be a boon to the area's milk pool. New Mexico produces more milk than its citizens can consume, necessitating some farmers' shipping their milk to states like Arizona, California and Minnesota.
Williams said dairies generally need one full-time employee for every 100 cows. Using that math, the new cheese plant's need for 88,000 cows would mean 8,800 dairy jobs.
Big cheese indeed.
Editor's note: Look for further coverage of New Mexico in the
Southwest Regional Review in the November 2003 issue of Site Selection.
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