Former Mid-Am chief off to DFA's KC offices

by Karen E. Culp

SBJ Staff

The dairymen are off to the big city.

Dairy Farmers of America, a merged dairy cooperative that includes the former Mid-America Dairymen, opened its new corporate headquarters in Kansas City July 1, said Dan Reuwee, director of co-op communications.

About 15 people relocated from the Springfield office, which was once home to Mid-Am's corporate headquarters. The top executives from the co-op, including President and Chief Executive Officer Gary Hanman, along with the accounting department, human resources, corporate communications and the legal department have all relocated to the new office, which is near the Kansas City airport, Reuwee said.

The Mid-America building, now owned by Dairy Farmers of America, is for sale because the company "doesn't need that much space now," Reuwee said. Existing operations in that building will be relocated to other DFA sites, some of which remain in Springfield. The company's research and product development center, which is next door to the former corporate headquarters, remains in Springfield, along with a plant on Tampa Street, the formulated dairy foods group and a food safety lab, Reuwee said.

The Springfield plant has had some layoffs, and a former Mid-Am plant in Lebanon will close by the end of July, Hanman said.

The Springfield plant, which produces shelf-stable products in cans and glass, including the Frappucino product it produces for a partnership including Pepsico and Starbucks, has about 100 people continuing to work in it after about 104 were laid off in June and July, said Sam McCroskey, who heads the plant's operations.

The layoffs are the result of decreased volume; demand for those products has decreased, McCroskey said.

Hanman cited several other plants that have been closed as a result of the merger. Two cheese plants that were part of Associated Milk Producers Inc. closed; one was in Mountain View, the other in Mansfield.

A Mid-Am plant in Clinton, a processed cheese plant, has also closed. Other cheese plants have also closed in Texas, Utah, California and Wisconsin, Hanman said.

Some plants are closing because of diminished availability of milk in the area, some because of fewer contracts from suppliers and some because there are other DFA plants in that area, Hanman said.

All four cooperatives have representation on the management team for DFA, Hanman said. About 400 jobs that have been removed from the new cooperative have been administrative jobs.

"Our objective was to streamline and to cut overhead, and that is what we're trying to do," Hanman said.

The leaner operation was to concentrate on garnering better milk prices for its members. Reuwee said that, as of Sept. 1, 1997, the four cooperatives had 5,848 employees. DFA now has 4,169 employees.

The merged cooperative's objective was to take $20 million out of its operation costs during the first year, but the new company has already reduced its costs by $81 million.

Further consolidation is also on its way. DFA's board agreed in a letter of intent at its July board meeting to merge California Cooperative Creamery into its ranks.

"Consolidation is not just something that's going on in our industry. You see it in the retail food industry with supermarkets merging and being bought out, too," Hanman said.

The merged cooperative has 20,000 members, 2,000 fewer than when the four cooperatives started negotiating, a result, Hanman said, of continuing consolidation of dairy farms.

"We're continuing to see more farmers leaving the business and smaller farms selling to larger farms," Hanman said.

The cooperative has members in 43 states and markets 25 percent of the nation's milk. It began business as DFA Jan. 1.

The four cooperatives that merged to form DFA were Mid-Am, Associated Milk Producers Inc., Milk Marketing Inc. and Western Dairymen Cooperative Inc.

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