SAN JOSE, Calif. -- Buffalo, N.Y.-based Sorrento Lactalis announced it will close its San Jose, Calif., cheese-making plant in February.
According to the Mercury News, intense cheese price competition, high labor costs and a ready access milk supply hurt the production facility, which has operated for nearly half a century.
Most of plant's 215 local employees will be given the option to retire or work at one of the firm's other plants in Turlock, Calif., Idaho, Wisconsin or New York.
"It's terrible," said David Chambers, vice president and general counsel for Sorrento. "We've been trying to hold on."
Chambers said this year's low prices for mozzarella, the primary cheese produced in San Jose, thinned margins so dramatically that it didn't make sense to keep the plant open. The 10-acre facility also was too small to compete with much larger and newer facilities in the Central Valley, said Sorrento president Erick Boutry. The cost of purchasing real estate to expand it to match production at competing facilities was too high, he added.
That the Sorrento plant closed, said Nancy Fletcher, a spokeswoman for the California Milk Advisory Board, which helps promote California cheese, is unusual given the increase in the state's number of cheese-making plants.
California cheese makers produced 1.6 billion pounds of cheese last year. Industry analysts predict the state's output will surpass Wisconsin's cheese production in a couple of years.
Dick Groves, publisher of the Cheese Reporter in Wisconsin, said many cheese makers nationwide are having a rough time in the sluggish economy.
"It's not been a real good year for cheese companies," he said. "I think everybody in the industry right now is suffering."
Sorrento is controlled by France's Lactalis, one of the world's largest dairy companies.