Natural Balance Pet Foods closing its manufacturing operations out of Pacoima, California, following company's acquisition by Del Monte; operations being moved to Georgia

Nevin Barich

October 27, 2013 (San Fernando Valley Business Journal) – Natural Balance Pet Foods Inc, is closing its Pacoima manufacturing operations to move them out of state now that the company has been acquired by Del Monte Corp.

The pet food maker filed a notice with the state Employee Development Department earlier this month that disclosed the closure of its operations at 12224 Montague St.. where 92 employees will lose their jobs when the move is complete Dec. 31.

The company's nearby corporate headquarters and distribution center are remaining and are not affected by layoffs, said Chrissy Trampedach, a Del Monte spokeswoman.

Natural Balance was purchased in June by San Francisco-based Del Monte in a deal valued at $341 million.

Natural Balance will move manufacturing to a more advanced contract facility in Georgia. For competitive reasons. Trampedach would not disclose the exact site.

"This closure is consistent with plans that were already in place before the acquisition," she said, adding the move will "streamline processes and provide additional flexibility to launch new, innovative products."

The loss of jobs is a big hit for the working class community, which has been the site of Natural Balance's operations since the company was founded in 1989. What's more, the company has been growing. It only moved to Montague Street from a nearby building in June 2011, more than tripling its space.

The company got its start after actor and animal welfare advocate Dick Van Patten was a guest on the "John Davidson Show." Van Patten linked up with Joey Herrick, a drummer with the show's band, to start the company. The two set out to make healthy pet food with no wheat, corn or soy.

Natural Balance was a pioneer in producing natural pet food. And its prices still reflect the company's position. A case of a dozen 6-ounce cans of duck and potato formula costs about $20. In contrast, the same dollar amount can get you two dozen 13-ounce cans of popular Pedigree brand dog food.

Over the years, the brand grew, expanding from dog formulas to add cats and even zoological formulas that can be consumed by lions, tigers, polar bears and wolves.

Herrick left the company as part of the acquisition. while Van Patten remains a company spokesman.

Kenn Phillips, vice president at Sherman Oaks business development group Valley Economic Alliance, said the sale is a big bruise to Pacoima.

"It's not just 92 jobs; it's a company that has a long and rich investment in the community," he said.

[ILLUSTRATION OMITTED]

Del Monte is one of the largest suppliers of pet food in the country, with a bevy of brands under its umbrella, including Meow Mix and Kibbles 'N Bits. It had revenue of about $3.7 billion last year. Herrick told the Business Journal last year that Natural Balance revenues were "way over $200 million" annually.

Money trail

Earlier this month, Del Monte agreed to sell its canned fruits and vegetables business to Del Monte Pacific Ltd., a Singapore-based company that already sells food under the brand in India and the Philippines, for about $1.7 billion. The deal is expected to close early next year.

Del Monte Foods Chief Executive Dave West said the sale was made so his company could focus more heavily on its expanding specialty pet food business.

"We look forward to focusing on expanding our pet products business, which operates in one of the most attractive categories across the U.S. consumer packaged goods industry," West said in a statement when the Singapore deal was announced.

Del Monte Foods is owned by an investor group consisting of New York firms Kohlberg Kravis Roberts & Co. LP, Vestar Capital Partners and Centerview Partners. The group paid $19 a share for Del Monte, delisting it from the New York Stock Exchange in a deal valued at about $5.3 billion in March 2011.

In acquiring Natural Balance, Del Monte took on a company with roughly 500 employees, the Pacoima headquarters, distribution center and manufacturing plant, and a distribution facility in Gaston, S.C.

Herrick could not be reached for comment, but in a statement he issued after the Del Monte acquisition he noted that the sale was made to help grow the brand he founded 25 years earlier.

"Natural Balance looks forward to working hand-in-hand with Del Monte to leverage their strong distribution, supply chain and innovation resources that will help the brand achieve its next level of growth." he said in the statement.

Among its competitors in the field of natural pet food are Natura Pet Products Inc. of Fremont, Neb. and Blue Buffalo Co. of Wilton. Conn.

Natural Balance has faced some challenges over the years.

In 2007, the company issued a pair of recalls for its dog and cat formulas, after finding some of its products were contaminated with melamine, causing animals to vomit and some to experience kidney failure.

Herrick told the Business Journal last year the company invested about $1.4 million in a testing lab to ensure future products would be contaminant free.

Natural Balance is not the first manufacturer to leave the Valley area this year.

In July, Camarillo biofuels startup Cool Planet Energy Systems Inc. decided to move its headquarters to Colorado, where it will open its first manufacturing plant, after receiving state tax rebates from the Colorado Economic Development Commission. Though the company's manufacturing will be done in the Denver suburb of Greenwood, it maintains its research and development facility in Camarillo.

In May, Cooper Lighting LLC announced plans to shut down its Van Nuys manufacturing plant, resulting in the loss of 69 jobs. Cooper is consolidating the work done in the San Fernando Valley to a plant in Denver. And in March, Circor Aerospace closed its Sylmar manufacturing plant as the company consolidated facilities, a move that claimed 51 jobs. The rum is based in Corona, but is a subsidiary of Circor International, a Burlington. Mass, manufacturer for the aerospace, energy and industrial markets.

Phillips from the Valley Economic Alliance said holding on to local manufacturing jobs should be a priority.

"Any manufacturing loss at all is a detriment to the San Fernando Valley," he said. "The elected officials have to work closer together to keep our good-paying jobs in the region."

Part of the problem could also fall on the aging industrial buildings around the Valley. Natural Balance leases 113,549 square-feet of space in its Pacoima building, which was built in 1979, according to real estate data film CoStar Group Inc.

Del Monte is so eager to make the move that it has decided to absorb the costs of the Natural Balance's lease, which doesn't expire until December 2014. At the time the lease was signed, the three-year deal was valued at about $1.7 million. That would mean Del Monte will pay out about $567,000 in rent for the remaining year on its lease.

David Hoffberg, senior vice president at the Van Nuys office of Delphi Business Properties Inc., who is the leasing broker for the Pacoima building, and the owner, Michael Lichstein, declined to comment.

By ELLIOT GOLAN Staff Reporter

(c) 2013 CBJ, L.P.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.