Hundreds of workers at Elmhurst Dairy in Jamaica, which has been a neighborhood institution for decades, could find themselves out of work and the plant shut down now that its deal with Starbucks has gone sour.
Elmhurst has supplied processed milk to the coffee giant since 2003 through a distributor, Bartlett Dairy. The deal is supposed to last until November 2013, but now Starbucks has decided to shift its source of milk from the dairy to Dean Foods, a non-union plant outside the city.
Elmhurst is suing Bartlett for breach of contract and Starbucks for wrongful interference with the agreement. Jim Olson, a spokesman for Starbucks, said that Barlett is committed to honoring its contract with Elmhurst, but Frank Balon, general counsel for Elmhurst Dairy, said that while it would indeed continue to provide milk to the distributor it would be without the Starbucks portion.
“I really need this job,” said Larry Washington, who has worked as an assistant foreman at the plant for more than three years. “I have two daughters and I’ve never had to ask for welfare. The most I have had to get is food stamps. I don’t want to have to rely on the government for assistance.”
Elmhurst Dairy employs 252 people at its Jamaica plant with over 450 in distribution and support operations. Starbucks provides a substantial portion of the dairy’s revenue and the loss of business would be devastating to the supplier.
“They are concerned that they won’t be able to find comparable work in this economy,” Balon said of Elmhurst Dairy’s employees, over 70 percent of whom are minorities. “The stress that that will put on themselves and their families, many of whom have been here for many years — it’s a sad thing and it’s a detriment to their financial livelihood and their lives.”
The plan would also effectively eliminate the last local competitor to out-of-state milk distributors, potentially disrupting milk deliveries to neighborhood grocers and inevitably increasing the cost of milk for both consumers and the city’s school system. Elmhurst Dairy is the sole provider of milk to 8,300 independent small grocery stores citywide as well as over 1,400 of the city’s public schools.
“Elmhurst Dairy provides well-paying jobs to hundreds of New Yorkers and provides the milk that has literally fed generations of the city’s residents,” Henry Schwartz owner and president of Elmhurst Dairy said at a press conference at City Hall on June 15, where he and several elected officials protested the plan.
When asked if the company could find another contractor to make up the funds lost from the Starbucks deal, Balon said “We will certainly try everything we can to stay around, but it’s quite a significant blow to over 50 percent of our profit. It’s not that easy to find that type of profitable business overnight.”
Olson presented a very different perspective on the case than Balon. He said that the company’s business only accounts for 10 percent of Elmhurst Dairy’s profits, noting figures presented as part of a court affidavit by Jay Valentine, vice president and general manager of Elmhurst Dairy.
Balon said the Starbucks deal accounts for 10 percent of the total volume of milk processed, but well over 50 percent of the dairy’s income.
Olson also pointed to an affidavit given by Thomas Malave, the president of Bartlett Dairy, in which he says that Valentine and other officials at Elmhurst told him “If Elmhurst lost the Starbucks volume it would not have to lay anyone off, but rather it would merely cut the substantial overtime it gives to its workers.”
Balon said Malave is “falsely characterizing,” the answer. He said Malave asked Valentine if he would immediately lay off 40 or 50 workers and he said that he would not because despite the drop in income the milk still had to go out to other suppliers.
Olson also noted that Elmhurst declined to participate in the dairy sourcing RFP process for the New York City market that it initiated last fall. Dean Foods won the contract because of its quality, manufacturing capabilities and price. Balon noted that there is a no-compete clause in its contract with Bartlett that prohibits it from soliciting business from any of its customers.
This is not the only loss of manufacturing jobs that the Jamaica area has experienced in recent months. In January, the Wonder Bread factory closed its doors. Parent company, Hostess, said the plant was put on the chopping block because it was “in need of modernization, an undertaking that would be difficult and expensive given the age and configuration of the plant.”
“What’s happening to the manufacturing jobs around here?” Balon asked. “Is the city only concerned with finance and tourism? What are they doing to keep local food manufacturing entities in business?”
“They are good hardworking people,” Balon said of the employees. “I think 40 percent of them live locally in the Jamaica area. They are the backbone of this community.”