Adam Reich (below) acquired Waumandee’s Foremost plant (above) and is looking for a new cheese maker to take over the facility. His company is considering attempting the same thing with Madison’s Oscar Mayer plant.
When Kraft Heinz Company announced that it was closing Madison’s Oscar Mayer plant, Mayor Paul Soglin had some clear demands about what should happen with the more than 50-acre property. Now that a potential buyer, Reich Brothers Holdings, has emerged, Soglin isn’t changing his tune.
“There are two things we told Kraft Heinz from the beginning,” says Soglin, “and we’ve expressed it to the Reich brothers, and that is that we’re determined that the facility continue to be utilized as a main source of employment, and that we were not interested in someone coming in, putting up a shopping center, some kind of retail or housing.”
So far, the mayor is encouraged by what he’s hearing from the Reich brothers, who have acknowledged the city’s desires and say there’s a demand for industrial property in Madison.
“They’re still very interested in the site,” says Soglin. “That I see as a good sign. We have [also] said, if it’s part of an employment center, there could peripherally be housing and retail. That’s not a problem. But we have to see the core use first.”
Adam Reich, the company’s co-CEO, is familiar with the Oscar Mayer plant, having been inside it “easily a dozen times” since 2002, working with Kraft Foods, Oscar Mayer’s parent company at the time.
“It is early in the process,” says Reich, a phrase that he repeats often. “At this point in time, I would say we’re cautiously optimistic.”
Kraft Foods merged with Heinz in August 2015 to become the Kraft Heinz Company, the fifth-largest food and beverage company in the world. Almost immediately 2,500 jobs were slashed in the United States and Canada.
The Madison plant will be shuttered at the end of this month. “Approximately 400 employees currently remain at the facility,” says Michael Mullen, Kraft Heinz senior vice president of corporate and government affairs.
The economic pain of the closing is obvious, but there’s also a wound to civic pride, and — well, what do you do with an empty food factory?
One possibility can be seen in Lehigh Valley, Pennsylvania. On March 2, Kraft Heinz announced that it had sold its condiment plant there, to Atlanta-based Ridgeline Property Group for $36.5 million. It will be demolished, and warehouses put in its place.
So Madison waits for the Reich brothers, Adam and Jonathan. Adventurous opportunists or white knights?
“We’re lawyers,” says Adam Reich, 50. Older brother Jonathan is co-CEO of the firm, based in White Plains, New York. Reich is pronounced like “rice,” but with a “sh” ending.
“Specifically, both of us are bankruptcy attorneys,” says Adam Reich, “both of us specializing and forging an expertise in the purchase and sale of distressed assets in a bankruptcy setting.”
For years the two worked together and apart, learning as they moved from firm to firm on both the West Coast and their native East Coast.
“As a result of that, and as result of our experience buying and selling, and representing clients, it became sort of a natural fit for us to go into what I would call the asset recovery business,” says Reich.
That doesn’t mean they’re repo men or liquidators. “The whole point of what we’re trying to do is an interesting sort of, I guess, vision or strategy that we have. Our day-to-day business is repurposing plants, attracting new industry and hopefully creating new jobs.”
“We love what we do,” Reich adds. “We think it’s important. And we’ve had some really good results.”
Since 2006 they’ve operated as a “boutique asset recovery firm,” with offices across the country, notably in Los Angeles and Chicago. Their work occurs in several phases, distributed across several divisions.
First, they buy manufacturing facilities. “We don’t buy any vacant real estate,” says Reich. While processing facilities are something of a specialty, they call themselves “industry agnostic,” working with companies in fields as varied as aerospace and mining. They recently closed on a facility belonging to Milwaukee-based Joy Global Inc., a leading manufacturer of mining equipment.
“We’ve been doing this for a long time, and we’ve got some really good in-house expertise that allows us to go after these types of facilities,” says Reich. “Our primary purpose once we purchase a facility is to simply repurpose the facility. And what I mean by that is, first and foremost, look and see if we can find a user to take over that manufacturing facility.”
If they’re able to find a user, they either sell the facility or enter into a long-term lease. If they’re unable to find a user, the brothers’ equipment-auction division cleans house.
“We will then proceed to do any sort of cosmetic changes to the facility,” says Reich. “If we determine that facility needs to be a complete redevelopment, then our third division, which is demolition and salvage, will engage in a demolition and salvage program relative to that property,” joining with a local developer or redeveloping it themselves.
While the firm is international, Wisconsin is well-trod ground. Besides Joy Global, Wisconsin facilities that Reich Brothers Holdings has worked with include Ken’s Foods, maker of Steakhouse-brand dressings, and Foremost Farms USA Cooperative, “a turnkey cheese-processing facility,” says Reich. The brothers are now attempting to lease the former Foremost plant in Waumandee or sell it to another processor.
As for Madison’s Oscar Mayer plant, Reich says that “It’s very, very complex. Some of the structures, for example the cold storage, are newer. It absolutely makes sense for them to stay intact and in place.”
But the plant’s antiquated structures may not be best suited for another manufacturer. So some demolition appears likely.
“That said, we are absolutely exploring opportunities whereby another manufacturer or manufacturers might come in and operate on site,” he says. “First and foremost, we’re going out and seeing whether or not we can attract a user.”
At the same time, says Reich, “we’re engaging in the parallel path or the dual path that we typically engage in, with respect to our business plan,” by considering which buildings to keep.
Reich is hopeful the Madison plant can attract a new user.
“There is a very low vacancy rate for industrial in Madison, and there is absolute need for vibrant new manufacturing space,” he says. “And so my early goal — if we could not attract a user — would be to see some newer industrial or warehousing space being built there, again, to attract industry and to attract jobs.”
Reich stresses that “It’s a longer-term process, and we’re just now getting involved.”
However, he adds, “We’re excited about the prospect. We’re genuinely looking forward to sort of linking hands with some of the local concerns to see if we can bring a good result to the city of Madison.”