While a 50-job company expansion might not seem like much in terms of boosting employment in Utah, a company planning that-size project in Ogden could be a company — and type of company — that can greater position the state as a center for advanced food manufacturing.
That’s the thinking of economic development officials involved in getting Oatly Inc. to build a western manufacturing operation at Business Depot Ogden.
The Swedish company, which develops and produces oat-based drinks and foods, picked Ogden for its first western U.S. manufacturing plant after being approved for a $295,463 tax credit incentive over seven years by the Governor’s Office of Economic Development (GOED) board.
Mike Flynn, chief operating officer at the Economic Development Corporation of Utah (EDCUtah), said EDCUtah and GOED have been trying to grow Utah’s food manufacturing industry for the past two years and that landing Oatly will be a “win” that the state can market.
“I think from a brand standpoint, this is going to be huge for us,” he told the GOED board. “There’s a long list of companies in this space that are much more significant that are in a high-growth mode, and I think this helps us put a flag in the ground.”
Flynn said a big push for EDCUtah this year is to “get aggressive about the food business.”
“We’ve had a number of projects that we’ve not won in this space — sort of in this plant-based food, alternative milks, alternative meats, things like that — that for various reasons, we’ve not been successful on. Part of it is maybe the perception that Utah is not a place for that kind of business,” he said.
Bringing in Oatly “highlights the fact that we can do food production in a really serious way in the state of Utah,” he added.
“It tends to be a fairly sticky industry. They come and make big investments and they stay. It has great applications in ‘shoulder’ communities and rural communities, and I think there is a tremendous amount of upside. … I think for us, a company like this, in this space, sort of the alternative-food space, it’s just a good win for us to be able to put up.”
Tom Wadsworth, GOED’s business development and corporate incentives manager, said that while Oatly has certain direct economic benefits — that’s what GOED is r required to consider — food manufacturing has other positives. “Food manufacturing historically has extremely high multipliers in that it engages a lot of food suppliers and supply chain around the company,” he said. “That’s economic benefit that doesn’t show up directly from the company, but that’s a benefit to the community.”
Oatly currently has production facilities in New Jersey and Quebec. Its brand is available in more than 20 countries throughout North America, Europe and Asia.
“As a 25-year-old company, we’ve been blown away by the enthusiasm and incredible demand for Oatly that we’ve seen here in the States over the past few years,” Mike Messersmith, Oatly U.S. general manager, said in a prepared statement. “Through this partnership with the state of Utah, our upcoming factory in Ogden will help us keep oatmilk in all the many coffeeshops, grocery stores and refrigerators that want it.”
The Oatly project is expected to result in new wages of $17.3 million over seven years and nearly $3 million in new state tax revenue during that period. The 50 jobs will have average annual pay of $56,650. The company also will spend $40 million to upgrade and add equipment to a vacant food-grade building at one time used by Southern Classic Food Group.
“It’s also important to realize this is a direct foreign investment, which is something that we’ve been cultivating for a long time, with minimal success,” said Jerry Oldroyd, the GOED board’s chairman.
Flynn acknowledged that Utah does have some significant companies involved in food manufacturing, including Frito-Lay and Dannon, but companies in that industry tend to use a lot of water and also need high sewer system capacity.
But Brent Brown, a GOED board member, said the project could lead to other companies considering Utah for their projects.
“This is an international company. That’s what we’ve been trying to get,” Brown said. “You bring in one company like this, the principals of that company go back home [and] they start talking about how wonderful Utah is. The whole thing starts to mushroom, and, in my opinion, that overrides almost everything.”
Ogden Mayor Mike Caldwell said Oatly’s commitment to healthy lifestyles “aligns well with Ogden’s values and unmatched access to outdoor recreation. Oatly is a great community partner and we look forward to their presence in the community.”
“EDCUtah is excited for Oatly to establish a significant presence in Utah,” said Theresa Foxley, president and CEO of EDCUtah. “This will be the company’s first operation in the western U.S., and their corporate values of sustainability and environmental friendliness align nicely with our vision for economic development in Utah. Oatly will help raise the bar for employee compensation in the food and beverage manufacturing industry, and we appreciate the support of GOED, Ogden City, the Business Depot Ogden, and other partners to bring this project to fruition.”
Val Hale, GOED’s executive director, said Oatly is “a great addition” to Utah’s manufacturing community and that Ogden “is a great fit.”