Stella desires to be a good corporate citizen

A new management team at Stella Foods' Hinesburg plant is winning plaudits from town residents for its response to long-standing community concerns regarding pollution at the giant cheese-making facility.

Local leaders say relations between the town and its biggest employer have vastly improved in the two years since Stella was sold to a group of investors affiliated with Texas billionaire Robert Bass. The plant's previous owners and operators were much less cooperative in their dealings with the town, according to Hinesburg Select Board chairman Lynn Gardner.

C Dean Metropoulos served as chief executive of Stella Foods, parent to the Hinesburg factory, until the company was sold to Bass' group in August 1993 for $375 million. The Hinesburg plant, which used to be known as the International Cheese Company, was headed for a time by Metropoulos' brother, Evan. Both the Metropoulos brothers are now out of the picture locally, with Sid Kittelson having taken over as the Hinesburg plant manager last February.

"It was a very profit-oriented operation," Selectman Gardner said of the factory during the time it was controlled by the Metropoulos brothers. "Making money by making cheese was all they ever looked at. The town usually dealt with them only through attorneys."

The friendlier face of the Hinesburg facility was on display July 4 when it held its first-ever open house. Public response to the invitation to tour the plant and talk with managers was "overwhelming," Gardner said. "The Metropoulos brothers never let anyone into the plant to see what was going on," he said.

Kittelson, who came to Vermont from a Stella facility in Wisconsin, declined to discuss the Metropoulos' tenure, other than to say that their relations with Hinesburg had been "almost adversarial." Kittelson described the current state of affairs between the town and the plant as "very good," adding, "We want to be a good, strong member of the community."

Specialty Foods, the Illinois-based conglomerate that now includes Stella, has no intention of pulling the factory out of Hinesburg, Kittelson assured. He pointed to a new $1.2 million wastewater treatment system as proof of the company's commitment to the Chittenden County community.

"We're not going to walk away from that anytime soon," Kittelson said, further noting that the Hinesburg plant is Stella's only manufacturing and distribution facility in the Northeast.

The cheese-making operation is an important component of Vermont's overall economy. The Hinesburg factory processes about one-fifth of the milk produced in the state on a daily basis, according to the Agriculture Department.

With 210 workers, the plant is by far the largest source of jobs in Hinesburg. Its property tax payments are also important to the town, though not nearly to the extent that IBM underpins the budget of Essex Junction. The cheese factory pays Hinesburg about $100,000 a year in taxes, an amount which ranks it only third or fourth on the town's rolls, according to Gardner. Overall, Hinesburg collects nearly $5 million in annual property taxes.

Local residents are especially pleased by the steps taken to mitigate the odor that has periodically been emitted by the plant for the past 25 years.

The new wastewater treatment system is credited with making a big difference, though Hinesburg officials are not prepared to go quite as far as Kittelson, who said of the stench, "We think we've got it solved."

Town leaders caution that more time must pass before the problem can be said to have been eliminated. But "we're very satisfied to this point," remarked Gardner. "The initial results are extremely encouraging."

Home owners in close proximity to the factory, which is situated near the village center, have long complained of foul odors. The stink was actually not the fault solely of the cheese plant, Gardner said, but was sometimes caused by the town's own deficient treatment system. That facility, too, has been upgraded.

Stella recently installed a larger and better-designed clarifier, which separates solids from the discharge water sent by the plant to the town's treatment system. In addition to making the clarifying process more effective, Stella has begun aerating the lagoons that hold wastewater in order to prevent the stagnation that causes the odors.

The improvements in both the factory and town systems came partly in response to fines that the US Environmental Protection Agency levied about a year ago against Stella and the town of Hinesburg. The company was fined $100,000 and the town $10,000 for violating EPA standards on the amount of phosphorous that could be discharged into the LaPlatte River. Hinesburg was also temporarily barred from approving new hookups to the town's water system.

Redesigning the factory's treatment system and upgrading the municipal facility were steps recommended in an engineering study co-sponsored by Hinesburg and Stella. The improvements in Hinesburg's system were financed through a federal grant.

Stella's cleanup initiative is said by Kittelson to reflect "an aggressive approach to renovating equipment and buildings" at the site. "There had been some definite inefficiencies" in the plant under its previous ownership, the new manager said. When the changes are completed, he predicted, "this will be a state-of-the-art facility."

Progress is being made in reducing noise pollution from the plant's boilers, Kittelson added. The racket produced by huge trucks entering and leaving the grounds may be harder to control, since Stella's Hinesburg factory is a busy place.

It ranks as the third-largest of Stella's 14 plants around the United States. And the company itself is the country's fourth-biggest cheese maker and the largest producer of specialty cheeses. The Hinesburg factory turns out Feta, Ricotta, Mozzarella and Provolone cheeses, which are sold to supermarket chains, discount clubs and pizza outlets, mainly in the eastern part of the US.

Stella makes no claim that its cheeses are BST-free. In processing more than 1 million pounds of milk per day, the Hinesburg plant does not limit its purchases to dairy farms whose owners forswear use of the genetically engineered bovine growth hormone known as Bovine Somatotropin. Since there is no practicable way of detecting trace presence of the artificial hormone in milk, Stella would be performing "almost a disservice to the public," Kittelson says, were it to claim that its products contain no BST.

The cheese business is "tremendously competitive," Kittelson said at another point during an interview conducted in his office at the Hinesburg facility. "You've got to have the best quality, the best customer response."

INTERNATIONAL CHEESE

Under the leadership of C Dean Metropoulos, Stella proved adept at competing. When he took it over in 1983 from founder Costas Economou, Stella was posting $20 million in annual sales. By the time it was sold to the Bass group a decade later, Stella's yearly sales figure had reached $800 million, and it was employing 1,750 people, most of them out-of-state.

Metropoulos followed an aggressive strategy of acquiring smaller cheese makers. Having become a valuable commodity, Stella was purchased in 1993 in keeping with the consolidation trend occurring throughout the food industry. Stella was the single largest unit in a deal involving the purchase of eight firms for a total of $1.1 billion. The transaction was described at the time as the biggest leveraged buy out of the year.

Specialty Foods Corporation, with headquarters in Lincolnshire, IL, was created to manage the new grouping that includes Stella. The diversified corporation reports annual sales of about $2 billion.

For his part, C Dean Metropoulos remains a major player in the food processing business. He was the subject of a small but flattering article in Forbes magazine last year.

According to other published reports, C Dean Metropoulos is chairman of Morningstar Group Inc, which makes refrigerated specialty food products. Some of those brand names are International Delight, a gourmet-flavored coffee creamer, and Second Nature, an egg substitute. As he did when with International Cheese, he is reportedly still eagerly pursuing acquisitions.

A dozen years ago, the Metropoulos brothers took over the $20 million International Cheese company in Hinesburg and grew it into an $800 million cheese-making giant in just 10 years. Along the way, the brothers ran afoul of local officials over a smelly wastewater treatment plant, and two years ago they cashed out and sold the business to a Texas billionaire.

* Now, the facility is one of Stella Foods' main plants nationally. The new owners are fixing the wastewater problems and have literally opened their doors to the public. The friendlier attitude and assurances that the largest employer in town won't leave have been like a breath of fresh air to the locals.

*But the importance of the plant goes well beyond Hinesburg. The specialty cheese maker on a daily basis consumes a fifth of all the milk produced in Vermont.

Kevin Kelley is a freelance writer from Burlington.

Copyright Lake Iroquois Publishing, Inc. d/b/a Vermont Business Magazine Aug 01, 1995
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