Friday, August 13, 2004

Foremost to halt
isle milk production

The company intends to resume
but will lay off 30 workers
in the meantime

Foremost Dairies-Hawaii will shut down its manufacturing facility around Aug. 24 through at least the end of September, giving Meadow Gold Dairies a temporary milk processing monopoly in the state that could become permanent.

"At the end of September, we're going to assess the situation, and there's no guarantee that we're going to be able to start up again," said Ron Sugai, vice president for sales, marketing and distribution for Foremost.

Since new owner Bahman Sadeghi took over Foremost at the end of January, "serious environmental issues" have arisen at the company's Kalihi processing facility, Sugai said.

"The main part of the business is always ... quality and safety for employees," he said.

The problem is the aging facility, Sugai said. "We were starting to put money into the plant, improving this, having better equipment, more testing equipment to test for quality, all the things we wanted to do.

"Unfortunately, we've run into some issues that are not going to allow us to improve this at the pace we want to. ... You can't make the assessment while production is under way."

Foremost's previous parent company, House Foods International of Osaka, Japan, renovated the company's facilities 14 years ago, according to a state document.

Cracks in some filler tanks have been identified as a potential source of contamination, though there have been no problems with the quality of the company's products, Sugai said.

A state health official confirmed that there has been no problem with the milk. "They've been completely compliant. ... We test all milk products monthly, and it's the same high quality it's always been. From the health side, there's never any problem with it," said state milk inspector Peter Oshiro.

Foremost intends to maintain all of its other dairy business as its milk processing plant sits idle.

Meadow Gold Dairies has agreed in principle to process and "cold-pack" Foremost products for distribution, Sugai said. Meadow Gold officials would not comment since discussions are ongoing.

About 30 Foremost production personnel will be laid off in the meantime.

"We are part of a union agreement, and there could be some bumping process," Sugai said.

The company's 140 employees were notified Tuesday, and Teamsters Local 996 officials met with Foremost management Wednesday. Union officials could not be reached yesterday.

"We've let our customers know, our employees know, let the union know ... we've tried to let everybody know that's going to be affected," Sugai said.

Robie-Ann Dorwelo, a manager at Pacific Dairy -- one of only two dairy farms on Oahu and Foremost's only milk supplier, was not aware of the planned shutdown as of yesterday. "We deliver 6,700 gallons a day," Dorwelo said.

Gene Kaneshiro, school food services manager for the state Department of Education, also had not been informed of the plan. The DOE serves 150,000 cartons of Foremost and Meadow Gold milk each school day.

Sugai said Foremost is "definitely not shutting down. Foremost has been around for 70 years, and we're hopefully going to be around for a long time to come."

"We are constantly trying to bring new products to our customers, and that in itself is going to grow our distribution side of the business. We may not be a manufacturer come the end of September, but we're going to be doing distribution and selling a lot of other products that might just fold in to more employment opportunities," he said.

Foremost was purchased from House Foods Hawaii Corp. last year by California-based FH Acquisition LLC, led by Sadeghi.

When the purchase was announced last December, Sadeghi was quoted by the Associated Press as saying no changes were planned and that the Kalihi headquarters would be maintained. He could not be reached yesterday.

Sadeghi also owns Island Dairy Inc. on the Big Island, which is not a Foremost supplier, as well as Hawaii Intermodal Tank Transport. Hawaii Intermodal, also headquartered in California, specializes in transportation of bulk liquids, including dairy products and juices.



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