2007 Captial Budget IV

Here is an interesting item in the Captial Budget.

Now, I am pro-business. Dreyers employees 250 employees. How much they contribute to the local economy? I don't know. But the County is spending $25M to expand this Water Reclamation Plant to handle the discharge from Dreyers' plant. What is Dreyer contributing to this in terms of taxes and Water and Sewer assessments? Is the County taking this on simply as a "cost of doing business"?

Dreyer's is continuing to expand their operations and I wonder if this $25M job is related to that and if it is will the upgrades be enough to sustain future expansion of Dreyer's facilities.

$25M for NITROGEN LOADING REDUCTION Budget Item Number: S6245

Because the Maryland Department of the Environment (MDE) has implemented "limits of technology" goals, which will require enhancement of nitrogen removal capability at the Little Patuxent Water Reclamation Plant (LPWRP). Plant capacity will also need to be expanded from 25 to 29 million gallons per day.
2. Reclaimed water facilities to be located at LPWRP and extending into lower 400 water zone near existing Guilford Tank. This facility will initially serve one customer, and expanded to serve additional customers as interest dictates. Construction FY06.
3. The additional wastewater from the expansion of the Dreyers Ice Cream Plant will overload the LPWRP and render it incapable of meeting MDE's nitrogen removal goals.
4. GRANT represents Chesapeake Bay Restoration Fund from the State.
5. Increases in construction costs for FY07 for both the Dreyers ice cream and reclaimed water projects.
6. Increase in reclaimed water design costs, FY07, due to the additional capacity and additonal reclaimed/sewer mains for Dreyers ice cream.

Project Schedule:
FY07 - Design of LPWRP enhancement and expansion. Design to be finied, and construction of Reclaimed Water facilities complete. Completion of facilities for Dreyers Ice Cream wastewater.
FY08 - Desi gn of LPWRP enhancement/expansi on. FY09-11 - Constructi on.
Operating Budget Impact: Annual Bond Redemption $1,436,162, Unknown at this time.

Dreyer's to be merged into Nestle unit
By Gabriel
Madway
Last Update: 5:38 PM ET Jan 17, 2006
SAN FRANCISCO (MarketWatch) --
Dreyer's Grand Ice Cream Holdings Inc. said late Tuesday that, as a result of the exercise of a put right by certain holders of Dreyer's stock to require Dreyer's to purchase their Class A Shares, Nestle Ice Holdings Inc., a unit of Nestle SA's Nestle Holdings, now owns 90% of Dreyer's stock. Oakland, Calif.-based Dreyer's said it has asked Nasdaq to halt trading in its shares as of today. After a short form merger, Dreyer's expects to become an indirect subsidiary of Nestle Holdings tomorrow. When the merger is completed, holders of Dreyer's Class B shares will have the right to receive a cash payment of $83.10 a share.

Given how poorly Dreyer's has been performing (although not reflected in their stock price in December 2005) one has to wonder how long this operation will be in place. Will Nestle Holdings keep this plant going? Nestle is a much stronger and better managed company and coming in and exercising their right to purchase Dreyer's may be good - lets hope they don't cut their losses and run or reorganize.

Dreyers is a key component in Nestle's strategy to dominate the world in Ice Cream revenues and Nestle did just that in 2005. But at what cost and now that they are the largest Ice Cream company in the world what is next? Dreyers wasn't making money, but that might not matter to Nestle now, but it will at some point. When will they start squeezing effeciencies out of Dreyer's operation so they can generate CASH - which Dreyer's didn't have much of anyway.

Sure hope the County is talking to Nestle about their plans because we are making a very large investment in Dreyers/Nestle S.A.