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Reich Brothers says it will buy shuttered Oscar Mayer property

October 11, 2017 GMT

Reich Brothers Holdings, a company that buys shuttered factories and sells their assets, says it has agreed to purchase the former Oscar Mayer headquarters and hopes to bring manufacturing back to the East Side site.

The transaction is expected to close at the end of October, said co-CEO Adam Reich.

“We firmly believe anything we do with the property should be in concert with local and state officials, with the infrastructure, the economy and with the job base,” Reich told the Wisconsin State Journal. “We are looking to do something that’s going to attract jobs.”

Mayor Paul Soglin called it “excellent” news. “This is a critical step forward,” he said. “I look forward to the Reich Brothers, the city government and the community working together to make this a valuable enterprise.”

Kraft Heinz, parent company of Oscar Mayer, would not confirm the report.

“We are working with a potential buyer on the sale of our Madison facility. For now, the process remains ongoing and nothing is final,” Kraft Heinz spokesman Michael Mullen said.

The Madison site, at 910 Mayer Ave., was home to Oscar Mayer since 1919 and headquarters for the company until 2016. At its peak, in the 1970s, the plant and offices employed 4,000, processing and packaging hot dogs and lunch meats. For many local families, working at Oscar Mayer brought a strong sense of pride and was the primary source of household income for several generations.

Production ended in June as part of a corporate restructuring announced after former Oscar Mayer parent Kraft Foods Group merged with H.J. Heinz Co. in 2015.

Looking to ‘repurpose’

Reich said he has had his eye on Madison’s Oscar Mayer site for four years and started pursuing it “in earnest” about two years ago — not because he had inside information about the closing mandate but because he had worked with both Kraft and Heinz before and knew that with any merger, there are “typically going to be a lot of plant closures.”

He said the industrial vacancy rate in Madison, and around Wisconsin, is relatively low, so industrial space is needed.

Reich Brothers owns property in Milwaukee and will soon close on a property in Kimberly, and Reich’s son recently graduated from UW-Madison. “We like the state of Wisconsin,” he said.

Beyond that, Reich said, is a more far-reaching goal.

“What my brother and I have done for the past 20 years is repurpose,” he said. “We think it’s good for America, and America should be manufacturing. Maybe the plant (or) the industry is no longer viable, but that doesn’t mean the plant can’t be repurposed.”

Reich did not disclose terms of the deal. He said he is hoping the eight-story office building can continue as an office building, but some facilities on the 72-acre site may have to be demolished and some areas will need an industrial cleanup.

“It’s a 100-year-old-plus facility. There are significant infrastructure decisions that need to be made,” he said. For example, the power plant is outdated and some areas will require environmental remediation, both of which are “complicated and expensive,” Reich said.

He estimated development costs at $20 million. “We’re prepared to make a significant investment in this,” he said.

Reich said he would like to attract another manufacturing or food manufacturing company, but one company probably would not be able to fill what’s now 1.7 million square feet of space. “I may turn some into warehouse, light manufacturing or e-commerce,” he said. He said it’s too soon to estimate a timetable for redevelopment.

‘A 10-year horizon’

Mayor Soglin recently named 13 members to the Oscar Mayer Strategic Assessment Committee, including Ald. Larry Palm, 12th District, who represents the Oscar Mayer area.

Palm said Reich Brothers’ decision to buy the property is “a positive sign that we could eventually have a future use of the site.” He said he expects there will be opportunities for the public to weigh in on plans for the property.

Palm said it could take a while for the city to develop a strategy for redevelopment. In a “best case” scenario, some of the existing offices could be fixed up and occupied within two years, but realistically, it’s likely to take much longer to revitalize the entire property.

“I would anticipate a 10-year horizon. It’s a big site,” Palm said. “Nothing’s decided right away.”

Soglin said he told Reich Brothers the city wants to return “quality jobs” to the Oscar Mayer site, not housing or extensive retail shops. “They indicated they were well aware of that and that their goals were consistent with our objectives,” he said.

Reich said it’s too soon to predict a timetable, but he plans to start meeting with local officials in early November.

“We fully expect to hit the ground running,” Reich said.

Soglin has suggested the site for a possible medical manufacturing plant for Foxconn, which plans to build a massive electronics plant in southeastern Wisconsin. There’s been no word on whether the Taiwanese manufacturer is considering that option.