Fed by food companies

Dairy processors lead region’s job growth and investment

Published February 28, 2014 by James Heffernan

The cream rose to the top of economic development activity in the Shenandoah Valley in 2013 as dairy processors announced plans to invest more than $220 million in their local operations, moves that are expected to result in 170 new jobs.

Two of the year’s biggest announcements involved significant expansions by longtime members of the valley’s corporate community.

In April, state officials joined business and local government leaders in breaking ground on a $69.8 million expansion of WhiteWave Foods’ operation in Rockingham County. The company has since completed a new warehouse facility on site and purchased machinery to expand production of its plant-based dairy foods, beverages and coffee creamers under the brand names Silk, Horizon Organic, International Delight and Land O’Lakes. The Mount Crawford plant has been in operation for 25 years, and more than $190 million has been invested in property and equipment since 2000.

In the northern valley, HP Hood delivered the region’s largest dollar investment of the year and the largest in Frederick County in three decades — an $84.6 million expansion of its flagship facility along with 75 new jobs. The Massachusetts-based dairy processor is increasing the plant’s ultra-high-temperature production capacity, which will allow the company to keep up with product demand as well as secure and service new business.

Hood is a full-line dairy products manufacturer whose portfolio includes beverages, flavored coffee creamers, Greek yogurt, ice cream and cheeses. It is investing heavily in new equipment and technology. The Frederick County expansion strengthens the plant’s standing as the largest of its type in the U.S. In October, members of Hood’s executive team flew from their Boston-area headquarters to Winchester to tour the local facility and shake hands with employees.

“The fact that the largest plant of its type is operating in our area is testament to Frederick County’s business environment, our infrastructure capabilities and the quality and availability of our workforce,” says Richard Shickle, chairman of the county Board of Supervisors.

Those same selling points helped lure a new dairy processor to the valley last year.

Arizona-based Shamrock Farms, one of the largest family-owned and -operated dairies in the U.S., is building a $50 million, 130,000-square-foot manufacturing facility in the Mill Place Commerce Park in Augusta County. The project, which is on pace for completion this fall, will bring 60 new jobs. (See related story.)

“Augusta County is rich in agricultural heritage and committed to attracting industry that supports that history while advancing our community,” says Jeffrey Moore, chairman of the local Board of Supervisors. Shamrock Farms’ investment, he says, “presents opportunities to capitalize on each.”

Shamrock CEO Kent McClelland agrees, saying in a statement announcing the deal last March that Augusta County offers “the perfect fit for Shamrock Farms” from a business and a company culture perspective.

The valley’s dairy industry as a whole is strong, says Dennis Burnett, executive director of the Shenandoah Valley Partnership, a regional economic development organization. “It’s a federally regulated industry, so they can’t control the cost of their product. But we feel we can help them control their cost of doing business.”

The region’s commitment to agriculture produced two additional investments in 2013.

Shenandoah Processing LLC, a new locally owned company in Harrisonburg, announced in December that it will open a processing facility in the former Pilgrim’s Pride building to produce organically raised, all-natural chicken. The $2.2 million investment during the next three years will provide an important resource for area poultry farms, some of which have been forced out of production in recent years.

“We believe there is a significant demand for certified organic and humanely raised chicken products,” says company President Corwin Heatwole, adding, “This awareness will only increase.”

Shenandoah Processing will provide services for its sister supplier, Shenandoah Valley Organics, as well as custom processing for individual farmers and growers who want to have their poultry prepared for retail.

The new venture will create more than 100 jobs and is expected to generate a ripple effect on the local economy, as new poultry production will result in greater demand for equipment, veterinarians, farm hands, feed suppliers and other operations that support the valley’s poultry industry.

In another deal involving processing, Ariake USA, which makes stocks, bouillons and natural meat flavorings, added a $6.2 million production line at its Harrisonburg facility late last year. The expansion was the company’s third since moving to Virginia in 1989. Ariake invested $23.5 million and doubled the size of its facility during its last expansion in 2007.

Meat processing is a step in the food production ladder that consumers haven’t always paid attention to, but that’s beginning to change, according to local officials. More customers are demanding to know where their meat comes from, how it was raised and ultimately how it was processed.

“Farmers [understand] there are profitable opportunities associated with the local food movement,” says Scott Smith, a Highland County sheep farmer who helped coordinate the opening of Alleghany Meats in 2012. The processing facility specializes in custom, humane and USDA-inspected slaughter, helping farmers in rural Highland and neighboring parts of West Virginia sell their products directly to consumers.

Together with snack maker McKee Foods in Augusta County — which completed a $19 million expansion in 2012 — Hershey Chocolate in Stuarts Draft, and Route 11 Potato Chips in Shenandoah County, the valley is developing a significant cluster of food companies that is attractive to firms that may be considering locating in the region, Burnett says.

Overall, 2013 was a strong year for the valley, Burnett says. “I think you see that reflected in the investment and you also see it reflected in the unemployment numbers. To me, it’s a sign that we’re making progress. We’re not out of the woods yet, certainly, but we are walking toward the light.”

According to labor market information from the Virginia Employment Commission, the jobless rate in the Shenandoah Valley steadily declined last year, from 6.4 percent in January to 5 percent in November.

The valley benefits from a high-quality workforce and a diverse economy that includes advanced manufacturing, distribution, health care, medical technology, retail and tourism. “Some industries are taking a hit,” Burnett says, “but others are growing. That helps even things out.”

As a general rule of thumb, he says, about two-thirds of an area’s growth comes from existing industry, and in the valley that trend has certainly held true during the past five years. Commercial expansions not only create jobs and help broaden the local tax base; they also send a message to prospective companies that the valley is a good place to do business.

“New investments like Shamrock Farms are just icing on the cake,” Burnett says.

Moving forward, the region is marketing Innovation Village @ Rockingham, a county-owned research and technology park on 365 acres north of Harrisonburg, as a hub for innovators and entrepreneurs, particularly in the area of life sciences, energy, information technology, agriculture and crop science.

The park is already home to SRI Shenandoah Valley’s Center for Advanced Drug Research, a partnership with James Madison University focused on improving the productivity of the pharmaceutical industry, helping respond to biothreats and developing lifesaving treatments for neglected and orphan diseases. 

Last year, SRI Shenandoah Valley produced its first spinoff when the research firm licensed its bedbug detection technology, which was developed on-site during the past three years, to a local company, Redcoat Solutions Inc. Redcoat intends to market the device under the brand name Rapid Pursuit. The test requires no sophisticated equipment, registers a response in minutes and is designed to detect only bed bugs, avoiding confusion that could be caused by the presence of other pests.

This year already is shaping up to be another good year for the region. “We’re pleased with the interest and activity levels we’re seeing,” Burnett says.

The Shenandoah Valley Partnership believes the area’s natural beauty, people, collaborative spirit and quality of life leave site selectors, consultants and prospective companies with a favorable impression. “We have set goals this year for getting boots on the ground, and we’re exceeding those goals,” Burnett says. “We feel those positive perceptions will pay dividends later.”

Major employers by number of jobs

James Madison University
Harrisonburg
2,500-4,999 jobs

Cargill
Rockingham County
2,000 jobs

Augusta Medical Center
Fishersville
1,500-2,499 jobs

Sentara RMH Medical Center
Harrisonburg
1,500-2,499 jobs

Target Corp.
Augusta County
1,300 jobs

Marshalls
Rockingham County
1,100 jobs

McKee Foods
Augusta County
1,100 jobs

Valley Health System
Winchester
1,000+ jobs

Frederick County Public Schools
1,000+ jobs

R.R. Donnelley & Sons
Rockingham County
1,0000+ jobs

_{Source: Shenandoah Valley Partnership}

Shenandoah Valley’s recent deals

Shenandoah Processing LLC
Harrisonburg
102 jobs 

HP Hood Inc.
Frederick County
75 jobs

Shamrock Farms
Augusta County
60 jobs

Daikin McQuay
Augusta County
50 jobs

Approved Colleges
Harrisonburg
40 jobs

WhiteWave Foods Co.
Rockingham County
36 jobs

DBT-Data
Harrisonburg
35 jobs

Pactiv Corp.
Frederick County
25 jobs

Dormeo Octaspring
Frederick County
20 jobs

Polymer Group Inc.
Waynesboro
20 jobs

_{Source: Virginia Economic Development Partnership}