May 18, 2024

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Oberweis Dairy plans to close the plant and lay off 127 workers

Oberweis Dairy plans to close the plant and lay off 127 workers

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Oberweis Dairy Inc. announced It will lay off 127 workers at its North Aurora plant, after filing for Chapter 11 bankruptcy.

The company, known for its ice cream shops and glass-bottled milk, notified the state that the job cuts would begin June 11 due to the plant closing, in a filing under the Illinois Worker Adjustment and Retraining Act.

Oberweis Dairy did not immediately respond to requests for comment.

On Friday, Oberweis filed a voluntary petition for Chapter 11 bankruptcy protection in the Northern District of Illinois, court records show. The company reported that it owes more than $4 million in total unsecured claims to its 20 largest creditors, with its largest debt of more than $774,000 to a Hudson-based carrier.

Oberweis employs about 1,100 people, including many part-time workers in its stores. In the summer, when demand for ice cream reaches its peak, its workforce often swells to more than 1,500 people. Its workforce is not unionized.

In a lawsuit Monday, Oberweis Dairy President Adam Carper said the company will continue to operate while it searches for a buyer. He said in a statement to the court that this path would create the best value for creditors and preserve more than a thousand jobs.

Business and financial challenges led Oberweis directors and principals, Julie and Jim W. Oberweis, to put the fourth-generation family business up for sale last fall.

Oberweis Dairy is owned by the family of Republican state politician Jim Oberweis.

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Talks progressed with a suitor who would have immediately taken over the company's entire production capacity. But the unnamed buyer withdrew its offer in late March, forcing Oberweis to file for bankruptcy protection last week.

Carper detailed several challenges facing the business, including a steady decline in milk consumption in the United States and a growing appetite for protein-rich plant-based alternatives. Over the past 50 years, per capita milk consumption in the United States has been cut in half; This trend accelerated further between 2010 and 2019.

The Covid-19 pandemic and lockdown initially gave the company a boost, especially its home delivery service. Oberweis' total annual revenue reached an all-time high of $116 million in 2020 from $79 million in 2019, then fell to $113 and $104 million in 2021 and 2022, respectively.

However, expenses and inefficiencies were also high, and the company made numerous mistakes, including underinvesting in manufacturing equipment and overspending on distribution, including trucks and equipment it did not use.

The dairy company also failed to place its products in national grocery chains. He tried unsuccessfully to enter markets in Asia; It moved to using amber milk bottles in retail grocery stores, which customers did not like; Among many other things.

The company was founded in 1915 by Peter Oberweis, an Aurora dairy farmer who began selling milk out of the back of his horse-drawn wagon, according to the company's website.

It opened its first ice cream store in Aurora in 1951. The company has 40 locations in four states, including Illinois.

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It's not clear if any of the ice cream shops will close, but the court ordered Monday to continue paying employees' wages and benefits. Otherwise, its workforce “will find other jobs, at a time when the debtors need them most,” the filing said.