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Klement's to use $5M loan to build inventory ahead of temporary plant closure

Tuesday, December 4, 2018   (0 Comments)
Posted by: Patrick Leary, Milwaukee Business Journal
As part of its headquarters expansion, Klement Sausage Co. plans to use a $5 million Milwaukee Economic Development Corp. loan to build up inventory before it temporarily closes its main plant.

Klement's broke ground on the estimated $7.5 million expansion in October and said at the time that the company's Chase Avenue headquarters in Bay View would need to close in spring 2019 to accommodate the expansion. Klement's CEO Tom Danneker said plans call for the main plant to close on March 4 and re-open sometime in June.

In the three months before the closure, Danneker said Klement's will build up roughly $5 million in inventory with help from the MEDC loan, which was approved Tuesday. Klement's other production facility, located on Lincoln Avenue in Bay View, will remain open while the Chase Avenue headquarters is closed and add a second shift to meet production demands.

January, which is usually a slower period for Klement's, will be anything but, Danneker said.

"We're basically going to produce $5 million in excess inventory over the next three months," he said. "Our folks are going to be very busy."

Danneker confirmed that there won't be any layoffs attached to the plant closure, and that employees will be moved over to the Lincoln Avenue plant while the Chase Avenue facility shuts down. He added that the company plans to use some of the closure period to focus on employee training.

"We're going to take it as an opportunity to really intensify our training protocols so that when the plant does open back up, we're even better," Danneker said.

In October, Klement's put a $7.5 million price tag on the expansion, but MEDC documents put the expansion-specific estimate at $8.8 million. Danneker said he still views the expansion as a $7.5 million project, but said the $8.8 million number accounts for potential overrun.

As for what's driving the expansion, Danneker said at a Milwaukee Business Journal panel event in October that the company grew by double digits in the past year, powered by what he called a "protein snacking trend" among consumers.

"I wish I could take credit and say we're incredibly smart and we saw this huge trend, but we just make a great product that fits a trend and we're executing like heck to keep up with it," he said.

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