Last week Strauss Brands announced plans to develop a 170,000-square-foot production facility and its headquarters at Century City in the city of Milwaukee that will have about 250 jobs. Strauss currently has a plant in Franklin.
One can understand the decision of Strauss Brands. It has outgrown their Franklin facility. Milwaukee will sell 20 acres to Strauss for a paltry sum of $1. Milwaukee will also kick in $4.5 million in financing. A new federal program initiated by the Trump administration called Opportunity Zones offers tax breaks for investments in low-income neighborhoods like the one that includes Century City. The Franklin site is not in an Opportunity Zone.
There’s more to this story.
On August 8, about three weeks before the news broke about Strauss expanding in Milwaukee, the private equity firm Insight Equity announced the acquisition of Strauss Brands, a leading producer of ethically raised specialty meats including American grass-fed and organic beef, as well as humanely raised veal and lamb.
“Due to the growth of our grass-fed and organic beef offerings, in addition to our core veal and lamb business, we have simply outgrown our current production facility,” said Randy Strauss, chief executive officer and grandson of company founder Milton Strauss.
The following is critical.
Strauss continued, “The investment by Insight Equity will provide the capital we need to develop a new state-of-the-art processing facility in Franklin, Wisconsin, which has been our home for over 50 years. We are grateful to the leaders of the City of Franklin for their support of this transformative project. Our location provides us with access to a stable base of exceptional employees and is ideally located to provide reliable delivery solutions to our customers via our in-house long-haul perishable trucking division.”
Back in May the Milwaukee Journal Sentinel reported, “A Strauss Brands affiliate is planning a building, or a ‘series of industrial buildings,’ on 30 acres near the intersection of West Ryan and West Loomis roads, according to a city report.”
So what happened between early August and early September causing Strauss to pull the rug out from under Franklin and dramatically change course?
Strauss Brands chief financial officer Jerry Bussen told the Milwaukee Business Journal that unlike the city of Milwaukee, Franklin had offered no financial incentives.
“At the end of the day, ‘free’ is hard to compete with,” said Franklin Mayor Steve Olson.
“Labor force is a factor,” Bussen said. “Many of our plant employees commute from the (central city) area now (to Franklin).”
“For us it came down to availability of workforce and speed to building,” Bussen said. “It’s important with our growing business that we get the building erected soon.”
“Since 1937, we have proudly operated both in and around Milwaukee,” said Strauss, and “with the support of Mayor Barrett and Milwaukee economic development officials, we are excited to announce our return to the city of Milwaukee, home of our operational roots.”
As for Franklin, Mayor Olson says Strauss Brands filed for a site plan and special-use permit and a public hearing is scheduled for September 19.
“We’re moving forward,” Olson told the Business Journal. “I know we have a deal. We have a signed agreement with Strauss. We’re going to honor our side of this agreement. We expect that they’ll honor it on theirs.”
Sure doesn’t sound like it. Note Strauss’ Bussen said they need to move quickly and I’m guessing they didn’t want to deal with Franklin’s notoriously lengthy economic development process.
Olson says the city is studying possible options to pursue. Could that include litigation?
It’s been reported Strauss could continue running the Franklin plant after the Milwaukee plant opens.
Bottom line: Strauss made a business decision. Milwaukee offered a much better deal. Wishing and hoping Strauss will build in Franklin is probably pie in the sky.