Beech-Nut to leave N.Y. village after 118 years

CANAJOHARIE, N.Y. -- The big white Beech-Nut factory has dominated this little Mohawk River village since horse-and-buggy days, making everything from chewing gum to baby food and employing generations who fondly recall production lines fragrant with apples.

"All my friends, everybody, worked at Beech-Nut," recalled retiree Sophie Ferraro, who answered phones for Beech-Nut back when her husband Victor handled quality control for strained food. The Ferraro's neighbors and friends worked at Beech-Nut, too. Their three children, now grown, had summer jobs there.

"It was really a family affair," Sophie said.

And now comes the break up.

After 118 years, Beech-Nut is planning to move to a state-of-the-art factory about 20 miles east. The new factory will allow Beech-Nut to pump up baby food production and is expected to provide a shot in the arm for this struggling patch of upstate New York west of Albany. It looks like a winning deal all around -- except for the 2,200 people in this long-settled village.

"It's going to kill Canajoharie," declared Scott Mosher as he finished up breakfast at a diner across the street from the plant.

New plant, new town

Beech-Nut Nutrition Corp., the No. 2 baby-food maker behind Gerber Products Co., is leaving for a new 550,000-square-foot plant in an industrial park down the road in the Town of Florida. New York state will pay up to $104 million with the company spending about $124 million.

Beech-Nut says it will add up to 135 new positions on top of the 350 already employed at the Canajoharie plant, the company's only manufacturing site. The company pledges to buy more fruit and vegetables from local farms. Operations could start migrating by late summer and the move should be complete by the second quarter of 2010, said Earl Wells, a company spokesman.

"It's going to be significantly more production to meet what is a growing demand in the marketplace," Wells said.

Christopher Shanahan, a food industry research analyst with Frost and Sullivan, said the expansion will help Beech-Nut compete with Gerber, a subsidiary of Nestle. While the $1.08 billion U.S. baby food market is growing slowly, growth rates are much higher in emerging markets like China and India, he said.

Began in 1891

But Beech-Nut has stuck around since its origin as The Imperial Packing Co. in 1891. Its big product then was not baby food, but vacuum-packed ham. Beech-Nut diversified over the years into everything from peanut butter to chewing gum. Strained baby food was introduced in the 1930s, and it really took off with the post-World War II baby boom.

Beech-Nut has been through a number of corporate incarnations over the years. It merged with Life Savers in 1956 (they later split off) and has been owned in the past by Squibb Corp. and Nestle.

The Hero Group, a Swiss food group, bought Beech-Nut in 2005 and decided to move the plant after it was damaged in a flood in 2006. But Wells said main reason the company is moving is to stay competitive with a modern factory. Workers at the plant get to keep their jobs, though some will have longer commutes.

Wells said Beech-Nut is committed to working with the village on transition issues, like what to do with a big, empty plant. But efforts are complicated because the village sued state and local governments and Beech-Nut over the new plant's construction, claiming a necessary economic impact review was never conducted. The village lost in trial court, but is appealing.

While the psychic blow to the village is tough, the financial hit will really hurt. Beech-Nut has been the mainstay here as other, smaller businesses in Canajoharie have moved on or closed up.

"There used to be a five-and-ten store here, a shoe store," Victor Ferraro said, pointing to the mix of occupied and vacant storefronts on Church St., "little by little, they bit the dust."

Mayor Leigh Fuller said the tax revenue loss of more than $130,000 a year is just the tip of the iceberg. Canajoharie's water and sewer system was upgraded with the help of a $12 million loan in 1992 to handle Beech-Nut's industrial needs. The village not only will lose the $1.5 million every year from Beech Nut for water and sewer, but Fuller said the village still owes $3.6 million on the loan that will have to be split among the 850 taxable buildings in the village.

With Beech-Nut gone, the next largest employer in the village will be the candy maker across the street, Richardson Foods. Ironically, even those jobs are threatened by Beech-Nut's move. The Richardson factory relies on steam generated from the nearby Beech-Nut factory to cook candy and heat the building, a legacy of when Beech-Nut made Life Savers in the nearby building.

Richardson says it will cost $1.2 million to build a new onsite boiler once the steam source shuts down. Without $1 million in government help in paying for the boiler, Richardson says will take its operations -- and its 128 jobs -- to Connecticut.

Richardson's president Don Butte said the company wants to stay in Canajoharie, but is waiting for help from the state. Similarly, the village is looking for help paying down its water and sewer debt. The company and the town are both waiting on word from the state on whether financial help is coming.

A spokeswoman for Gov. David Paterson said in an e-mail that the administration will continue to work on financial assistance plans for the village and Richardson. Erin Duggan said the village plan could include restructuring of the water and sewer debt to lower payment costs.

"We keep banging our heads against the wall," Fuller said. "We know doomsday is right around the corner with no help."