Frozen food maker Amy's Kitchen has shelved plans to build a second production plant in Santa Rosa and is now seeking to build a new manufacturing facility in New York.
The Petaluma-based company, which has 1,000 workers in Sonoma County, is no longer pursuing plans unveiled last March to build a second production facility in Santa Rosa, said Kevin Haslebacher, Amy's executive vice president of manufacturing operations.
The new plant had been expected to bring 800 new jobs to Santa Rosa. But concerns about hefty water and sewer permit fees quickly clouded the future of the project.
On Thursday, Haslebacher insisted that proximity to customers on the East Coast, not water and sewer fees in Sonoma County, was the primary reason for the company's decision.
"Having an East Coast plant really is a necessity for us," Haslebacher said.
On Wednesday, Amy Berliner, the family member for whom the company is named, appeared at a meeting in New York to propose a $95 million plant that one day could employ 680 workers.
The company, which is owned by the Berliner family, is seeking more than $11 million in tax breaks to support the project in Goshen, N.Y., according to a local media report. The plant would be located about 55 miles north of New York City.
Amy's, one of the nation's largest makers of natural frozen foods, needs a production facility on the East Coast to reduce the cost of shipping products across the United States to eastern consumers, Haslebacher said.
"More than half of our sales are on the East Coast," he said. "So it just makes good business sense to expand that way."
The company might be able to begin operations in New York in about three years, Haslebacher said.
In the short term, it plans to expand production at its existing plants in both Santa Rosa and near Medford, Ore., Haslebacher said. It is too early to know how many new jobs might be created in Sonoma County, he said.
It is still possible that Amy's might need a second plant in Santa Rosa one day, Haslebacher said.
Amy's steady growth has propelled it into the ranks of the nation's largest food processors. Founded in Sonoma County in 1988, it employs 1,900 people and its sales last year were projected at $380 million.
A decade ago the company was courted by both California and Oregon officials when it considered where to locate its second plant. The Berliners eventually choose to build near Medford and the facility opened there in 2006.
In 2011, Amy's opened a small plant in Corby, England.
Also in 2011, Amy's announced plans to build a $63 million plant in Greenville, S.C., but dropped that proposal last year. Andy Berliner, the company's CEO and co-founder, explained in March that the company had found it difficult in South Carolina to establish the supply system of natural and organic crops needed for its products.
Greenville's loss appeared to be Santa Rosa's gain last March when Berliner proposed to build a second plant in Santa Rosa at a cost of between $40 million and $50 million.
However, the first hint that the project might not happen came within months. In May, officials for the city of Santa Rosa and the company acknowledged they were trying to find ways to reduce the plant's proposed water and sewer consumption to bring down city permit fees, which were projected to total as much as $34 million.
Haslebacher said Thursday that the city fee issue "was not the key driver" in the decision to build in New York. He insisted the main reason was to gain better efficiency by producing food closer to customers.
City officials echoed that view. The initial $34 million fee estimate "was not accurate," said utilities director David Guhin, because it was based on an inflated projection of Amy's water needs. The city worked with the company to find ways to reduce water and wastewater volumes and increase recycling.
The city is now hiring a consultant to work with Amy's and other companies on ways to help them operate their existing plants more efficiently, Guhin said. Haslebacher said the company believes such efforts will help make Amy's more sustainable in its water use.
Last spring, local officials and business leaders applauded the news of a second plant in Santa Rosa. On Thursday they were nearly as enthusiastic that the company instead was going to build in New York.
Santa Rosa Mayor Scott Bartley said the company's Petaluma headquarters and its Santa Rosa plant will remain in Sonoma County and that Amy's will continue to grow.
"Making that company successful ... should be our bottom line," Bartley said.
He maintained that city staff members had worked hard to provide Amy's with valuable input on the actual costs of operating a second plant in Santa Rosa. In so doing, they helped Amy's executives make an informed decision in regard to future expansion.
Ben Stone, executive director of the Sonoma County Economic Development Board, said that shipping heavy, frozen products across the country is an expensive way to conduct business. He compared it to the move by Petaluma-based Lagunitas Brewing Company to build its second plant in Chicago.
"It just makes sense," Stone said of the New York plant.
Carolyn Stark, executive director of the Sonoma County BEST job creation program, said Amy's continued growth will result in new management- and executive-level jobs at the company's headquarters in Petaluma.
"While it's unfortunate that the large expansion won't be happening in Santa Rosa, it's a good thing that the company's doing so well," Stark said.
Jonathan Coe, president of the Santa Rosa Chamber of Commerce, said "the bottom line is it's great to see that Amy's is growing as fast as they are and that their product is as popular as it is."
The Times-Herald Record of Middletown, N.Y., reported Thursday that the tax breaks Amy's is seeking include an estimated $4.5 million property tax abatement, a $420,000 mortgage tax exemption and a $6.5 million sales and use tax exemption.
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