Today U.S. Senator Charles E. Schumer attended the grand opening of Beech-Nut’s new processing plant and headquarters. Schumer has been instrumental in keeping the company open in the last 10 years, defending against a proposed move to another state, governmental red tape and unfair practices on the part of Beech-Nut’s competitors.
“For more than a decade I have been working to keep Beech Nut in Montgomery County,” said Schumer. “We saved it when Heinz wanted to move it to Pittsburgh and again when the USDA threatened to disrupt the production line, and after the devastating flood of 2006 we wondered if our luck had run out. But today, as we open this beautiful new facility, we know that Hero will be keeping Beech-Nut right here in the Mohawk Valley long into the future. Hundreds of good paying jobs will stay here. The company will continue to buy millions of dollars of locally grown produce from our farmers. And, parents will continue to feel secure that they are feeding their babies quality, New York State grown, New York State produced baby food, cereals and drinks.”
“On behalf of Beech-Nut, we are extremely grateful and appreciative for Senator Schumer’s many years of support of our company,” said Jim Schneider, President & CEO of Beech-Nut Nutrition Corporation. “It was Senator Schumer who came to Beech-Nut and the community’s assistance and aid in February 2000 when a competitor tried to acquire Beech-Nut and relocate the company to another state. This would have been a devastating loss to Upstate New York and Montgomery County, but Senator Schumer was there for us. Senator Schumer also was there when the devastating floods severely impacted the community; the Senator was able to mobilize the resources of the Federal government to get the community back on its feet. He is here again today to support and celebrate the opening of our new baby food facility and I know Senator Schumer will be there for us and Montgomery County in the future.”
“I think it’s fair to say that we would not be here today if it weren’t for Senator Schumer,” said Ken Rose, Director, Montgomery County Industrial Development Authority. “He stepped in eight years ago when Heinz wanted to buy Beech Nut and move the jobs to Pittsburgh, and just a couple years ago he kept the production line running when USDA threatened to shut it down. In between he has helped both the company and the county whenever we have needed it.”
Schumer has a long history of working with Beech-Nut for the benefit of the region. In 2000, Heinz wanted to purchase Beech-Nut from Milnot, thereby combining the second and third largest baby food manufacturers. Schumer, after learning that Heinz did not intend on keeping the plant in Montgomery County, called in the FTC to investigate the merger. The FTC decided to oppose the merger based on the market effects of such a merger. Faced with federal scrutiny, Heinz and Milnot decided to scrap the merger plan.
In 2002, Milnot Corp. CEO, Scott Meader alerted Schumer that Gerber was potentially placing below-cost bids onWomen, Infants, Children (WIC) baby food program contracts so that it can win the contacts, secure brand loyalty when consumers are very young and recoup any losses from the below-cost infant contracts with years of future sales. Schumer wrote to Governor Pataki on June 19, 2003, saying he understood that the State has an obligation to its taxpayers to secure the lowest cost through an aggressive bidding process, but that other factors should be considered too.
According to Beech Nut, about 50% of WIC consumers who purchase infant cereal under the program will continue to stay loyal to that brand once the child switches to jarred food. By contrast if they do not win the cereal contract, they would expect to capture only 10% of the business after the child is eating jarred food.
Beech Nut claimed that Gerber had gone to extreme efforts to prevent Beech-Nut from winning WIC bids, saying it uses its 77.4% market share advantage to offer infant cereal under the WIC program at a fraction of its costs, thereby securing exclusive, sole-source WIC cereal contracts. By preventing Beech Nut from becoming the WIC supplier through below-cost bids, Gerber ensures that far fewer retailers will carry Beech-Nut infant cereal – for both WIC sales and non-WIC sales. Gerber thereafter recoups its losses in the WIC program by preserving its overwhelming market share in the jarred food market, having already secured brand “loyalty” from parents who were accustomed to buying their infant cereal. After Schumer’s intervention, Beech-Nut won the 2003 NYS WIC contract.
Finally, in 2007, the United States Department of Agriculture (USDA) changed the scheduling of their inspectors who must continuously monitor the process by which Beech-Nut produces its meat-based baby food. USDA decided to eliminate all "minimal" and "limited" inspection services leaving Beech-Nut with only one full time inspector and no additional coverage, which would have drastically curtail the plant's current operations and plans for future growth.
Beech-Nut's rigorous baby food production schedule, including preparing, cooking, cooling and packaging it in a sanitary fashion, requires two full time inspector-shifts or other equivalent staffing arrangements. Before the reduction of inspection services, the Canajoharie plant received inspection over the course of their 20-hour production schedule. The USDA did this by combining a single full-time inspector shift with a combination of overtime and "limited coverage." The change left them with a single inspector, creating inefficiencies and forcing Beech-Nut to drastically alter how their products are made.
In May, Schumer had sent a letter pressuring USDA to assign a second full-time inspection shift to the Canajoharie plant. This lead to the Under Secretary for Food Safety, Dr. Richard Raymond, visited the plant to personally assess the situation. Following the visit, Dr. Raymond, Schumer and the plant worked out a solution that allowed Beech-Nut to continue its full scale production.