southwest cheese co. llc - edclc• 220 tankers of milk/day • 32 truckloads of cheese/day • 13...

Southwest Cheese LLC

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Who is SWC?: Southwest Cheese Company is a Joint Venture. The partners are:

50%-Milk Members

Members of Greater

Southwest Milk Agency

(GSA)

DFA GSA is responsible for : -Milk Supply

Select

Zia

50%-Glanbia plc

Glanbia plc

Glanbia is responsible for: -Operations -Marketing -R&D

Dairy Farmers of America (DFA)

• Largest U.S milk marketer

• Formed in 1998 combining several existing milk coops

• Services 19,000+ dairies across 48 states

• SWC serviced by Southwest region

Select Milk Producers

• Markets 6 Billion lbs of milk annually

• Formed in 1994

• Services 87 dairies in Texas, New Mexico and Southwest

Glanbia- World Wide

Glanbia Foods USA Footprint Glanbia Foods

ẋ Twin Falls, ID- Cheese Plant ẋ Richfield, ID- Cheese Plant ẋ Gooding, ID- Cheese/Whey Plant ẋ Blackfoot, ID- Cheese Plant

Glanbia Nutritionals * Springfield, MO- Blending Plant * Corona, CA- Aseptic Solutions * Sioux Falls, SD- Flax Plant * Madison, WI- Sales Office * Carlsbad, CA- Seltzer, Premix Blends

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Performance Nutrition o Boca Raton, FL- Pre workout o Aurora, IL- Protein Blending

Joint Venture ẋ Clovis, NM- (Southwest Cheese) Cheese/Whey

Plant

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The Strategy for SWC • Joint Venture:

– Glanbia and Milk Member: clear rights, responsibilities and legal agreements regarding Milk Supply, Sales, Operations and Finance

• Operational Strategy:

– Economy of scale, low cost, high quality, utilizing the Glanbia Performance System GPS

– 640 pound & 40 pound cheese products – WPC 80 and WPI Whey products – Long-term (20 years) milk supply agreement

SWC Milk Supply •There are 65 dairies producing 9 M lbs of Milk (150,000 cows) per day in Curry & Roosevelt County, this is within a 25 mile radius of the plant. •Milk Growth in 2013 for the area is expected to contract due to drought conditions •Average farm size 2,250 cows in production

U.S Milk Supply Data: March, 2013

Milk Utilization in TX & NM 2013 – Milk Distribution

-SWC 25% of Overall Milk Utilization -SWC 50% of Overall Milk used for Cheese

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Begin expansion:

10.5M lbs/day

Exceeding Design capacity

First milk processed 10/4/2005

Plant at design capacity: 6.8M

lbs/day

Plant expansion complete –

10.5 M lbs of milk/day

Discuss plant expansion to 10.5 M lbs of milk per day

SWC Growth Timeline

Site Selection

Ground Breaking

WPI Expansion

Value-add Project -Permeate

Milk Milestone:

4 Billion lbs/annum!

SWC Throughput • Original capacity 2.4B lbs.

• Expansion capacity 3.8B lbs. • Over 4 Billion lbs. of milk

processed in 2012 and in 2013!

• SWC produces roughly 10% of US market share of American Style cheese.

• Produced 440 Million lbs. of

cheese in 2013- Export 50 M lbs

• Over 12% of cheese produced was exported to 28 different countries, primarily Mexico

SWC - The Plant • $300 million investment-

– Original build: $200M – Expansion: $100M

• 220 Tankers of Milk/day

• 32 truckloads of cheese/day

• 13 truckloads of whey powder/wk

• Approximately 375 employees

• Process Water Use - 350k/day

• Effluent Water – 1.2 Million gallons/day

SWC Produces • Milk Processed: 11 Million lbs/day

• Cheese (40’s/640’s): 8.3 Million lbs/week – 40’s: 5.3 Million lbs/week – 640’s: 3.0 Million lbs/week

• WPC 80: 330 Thousand/week

• WPI: 170 Thousand/week

• Permeate: 1.1 Million gal/wk

• Water: 900k gal/day

SWC - Critical Success Factors

People – attract, train and retain well-trained, skilled, competent and highly motivated employees

Efficiency- low cost productivity, operate at capacity, waste minimization- GPS

Non-Negotiables: Safety – provide a safe and secure work

environment Quality - Products produced consistently. Sustainability- to meet long-term commitments -

raw milk, energy, water, wastewater Housekeeping- “Always audit ready”

Glanbia Performance System- GPS

• Example: SWC Reduction of Lost Opportunity- Revenue (Fines, Downgrade, Waste, Process)

Guaranteed to succeed, but… its not easy …. detail, tenacity, rigor are REQUIRED!

It’s all about changing thinking and behavior – weaving a culture focused on Zero Losses where everyone, everyday learns & improves something

Safety- Incidence Reduction A 40% reduction in 1 year!

• Safety reduction driven daily actions utilizing Behavioral Based Safety, Risk Predictions, Early Management and Progressive Maintenance

• Safety owned by “Everyone, Everyday”

Sustainability (Water, Gas) Net water generator of 900,000 gal/day!

• Biogas Usage: • 5% of total plant needs

Quality- “Voice of the Customer” Cheese: 38% Improvement in 2 years!

• Whey Plant quality performance excellent- 4 years in a row. Slight increase (9 complaints total 2013)- New customer ASPAC

• Cheese Overall complaints/100 shipments improved 15% YOY, 38% vs 2012 • SWC 40 complaints/100 shipments steady performance and favorable to target of 1.00 • SWC 640 complaints/100 shipments 23% improvement YOY, 51% improvement vs. 2012.

Perennial Award Winning Cheese

US Cheese Contest: 2009- Gold 2011- Silver 2013- Gold and Bronze World Cheese Contest: 2008- Gold and Bronze 2010- Gold, Silver, and Bronze 2012- Bronze 2014- Bronze 2012 Customer Bulk Cheese Supplier of the year

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Supplying the World w/ Food

55 Million lbs. of cheese in 28 Countries in 2013!

Where’s the cheese in the U.S?

Where’s the cheese (cont.)?

Where’s the whey?

Key Stakeholders • Community

• Donations in excess of $300k+ to: Clovis Schools Foundation ($100k/annum), United Way, PRMC ($35k), Hartley House, Clovis Music Festival, Others

• Suppliers

• Dairy Industry

• Employees • 380+ People • Average $20+/hr

SWC: A Partnership for Growth and Sustainability

Questions?