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Dairyman: Frank Vandersloot Saved My Business

Published in the January 2014 Issue Published online: Jan 06, 2014 Articles IFM Editor
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Last March, Glanbia Foods, the world’s largest producer of American-style cheese, purchased the cheese factory in Blackfoot. Already, the Twin Falls-based company is praising Blackfoot’s cheese plant for its strong local supply of high-quality milk. For hundreds of employees and southeast Idaho dairymen, it was the happy ending to a story that nearly turned disastrous more than 17 years ago.

Round I: Saving the Cheese Factory

From the 1940s until the mid-‘90s, the cheddar factory was owned and operated by Kraft, the food behemoth that brings you items like Kraft Macaroni & Cheese. But in 1996, Kraft announced to the factory’s employees that the Blackfoot operation would be coming to a close—leaving 115 family-operated dairies with nowhere to send their milk, and putting nearly 825 people out of work.

Instead of watching their employment slip into oblivion, a couple of concerned milk producers banded together with a plan to purchase the plant from Kraft. The dairymen, Gaylen Claysen and Merlin Morgan, would partner with an investment capital venture from Texas and rename the facility the “Snake River Cheese Factory.”

But the plan had a hitch: the milk producers needed $1 million to refurbish the plant and obtain a loan from the bank. Unsure where else to turn, they drove to Idaho Falls and approached the office of Frank VanderSloot, CEO of Melaleuca. Though the men didn’t have an appointment, Frank accepted their request and sat down with them for a meeting.

“Frank told us he did not know anything about the cheese business and did not want to be in the cheese business,” Claysen remembers. “However, he wanted to help the farmers in the valley keep their farms.”

The proposal, Frank admitted, made little financial sense. Nonetheless, Frank could see the passion and perhaps desperation in the men’s eyes. So he agreed to make the investment. The Snake River Cheese Factory was saved—for the time being.

Round II: Saving the Cheese Factory

Six months after the rescue, the dairymen ran into a new problem: their partners from Texas had mismanaged the factory into a worse situation than it had been in before. To make matters worse, the cheese factory was heading for a default on the next month’s payments to the dairymen. The family dairies had delivered several weeks worth of milk to the factory, which now owed them $2 million, but had no cash to pay up. Each of the dairies had their own payrolls and their own loan payments to make. The family dairies were in jeopardy of losing everything they had, including their family farms.

Even more desperate, the dairymen reluctantly approached VanderSloot again. This time, they needed more than money; they needed someone to manage the business, invest in the plant and turn the company into a profitable entity.

Frank sat down with the local dairymen and, after surveying the situation, asked them to make him a promise.

“He said, ‘I want to do the right thing, but only if it’s going to end up helping people and not hurting them,’” Claysen remembers. “Frank told us, ‘If you will stick by me, I will stick by you. But I’ve got to be sure you’ll stay with me to see this thing through. If you promise to do that, then I will put up the money and we can run the plant until we can pass it on to the right buyer.’”

The dairymen agreed to the terms, and VanderSloot went to work. First, he paid $2 million out of his own pocket to the farmers for their milk. Then he bought out the Texas partners, and invested another $2 million more in the factory. Over the next few years, VanderSloot made several changes to enhance the factory’s operations, and he counseled with the dairies to strengthen their own businesses.

Not a single person ever missed a check.

“He kept us going for several years until he could find a reputable company to buy out the operation,” Claysen recalls. “And all along he told us, ‘I won’t sell unless I am sure the transaction is good for the dairymen.’

“Without Frank VanderSloot, we might have all gone broke. Frank jumped in solely to help us survive. Because Frank cared about local people, hundreds of families in Southeast Idaho were able to keep their homes and farms and jobs intact.”

The cheese plant’s longevity did not come without sacrifice, Claysen says. “Frank probably lost a fair amount of money on the deal. He never told us how much he lost, and he never complained about how helping us ended up hurting him.”

A Legacy Continues

Today, business at the cheese factory in Blackfoot is booming. Glanbia Foods, whose cheese products you’ll find at McDonald’s and Burger King restaurants and in 30 countries around the world, is now running 750,000 pounds of milk per day through the facility—300,000 more pounds than ever before. It’s all positive economic news for the local dairies and agricultural professionals who provide that milk and support the industry. By all accounts, the dairy industry in southeast Idaho looks strong for years to come.

But this bright future never would have happened if it weren’t for the initiative of a few determined Idaho dairymen and one compassionate CEO.


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