For business owner Sandra Tung, if there was one saving comfort during the recession, it was food.
“That is what we do,” the Palm Desert resident said. “We feed the nations. We feed them cheese.”
In 2008, Tung founded dairy product supplier MBC USA, Inc. Over the years, she began shipping more bulk orders of cheese, dry milk powders and butter to foreign buyers across the world, from South Korea to Mexico, Algeria, India, Columbia and Taiwan. Now Tung is expanding the company’s exports to match the growing global appetite for American cheese.
Tung plans to edge into a niche of the dairy exports world. Other American exporters sell cheese in big blocks. But Tung will slice and cut them down into packages customized for smaller foreign grocery markets and retailers, some possibly under private label. To do so, Tung will need specialized machinery. And a big loan.
Tung is seeking to borrow more than $1 million to buy and move heavy equipment into a 26,000-square-foot warehouse in Thousand Palms. The proposed loan is a packaged sum of money from her down payment, Enterprise Funding Corporation in Redlands and Pacific Premier Bank in Palm Desert. Enterprise Funding, a Certified Development Company, helps secure special loans backed by the Small Business Administration.
“We couldn’t do this without the SBA,” Tung said.
The warehouse sits empty while Tung waits for the SBA to approve her loan. Long lines of tape mark the ground where machines will soon chop 640-pound blocks of cheese into smaller 40-pound chunks. Depending on the customer, the cheese can be cut down even further, including 2-pound bricks, 5-ounce pieces and shredded bits. Cheese production rooms will have the sanitary grade of an operation room to maintain high standards of cleanliness, Tung said
Tung hopes to export goods mostly from California dairy farms, which produce the state’s leading commodity. In 2013, the state produced $7.6 billion of milk and dairy products in annual sales by volume, according to the California Department of Food and Agriculture.
Globally, U.S. dairy production lags behind New Zealand and Europe. The two regions together supply nearly two-thirds of the world’s dairy products, according to industry trade group U.S. Dairy Export Council.
Demand is growing, however. In 2013, the volume of U.S. dairy product exports increased 12 percent from the year before. Mexico is a top buyer of American dairy products. Southeast Asia, the Middle East/North Africa region and China are also key customers.
“Most of the incremental growth in U.S. dairy growth has been sold overseas,” said Alan Levitt, a spokesman for the U.S. Dairy Export Council. “Of new milk (produced), more than half of that volume has sold overseas. The industry recognizes that’s where the opportunity lies right now.”
In Palm Springs, the Coachella Valley Economic Partnership has identified supply chain management and logistics companies as a potential catalyst for the desert economy. The industry’s higher-paying jobs could help expand the valley beyond its tourism-based retail and hospitality sectors. A supplier like MBC USA could be one example.
Sandra Tung built a long career as a dairy product exporter. Her jobs spanned the world from managing a plant on the Isle of Man near Great Britain to being an export dairy trader in Canada. Over time, she built a network of contacts in California and in 2006 moved to the Coachella Valley.
In 2010, Tung underwent treatments for breast cancer, she said. When she recovered, she had a clear vision for the future of MBC USA, which she says collected $13 million in export sales last year. In February, she began planning a major expansion.
Tung hopes her business would leave a legacy for future employees and the community. “I had to decide quickly how I could make a difference,” she said.
Made in the USA
From the beginning, Tung determined that every piece of equipment, down to the 1,500-foot rolls of plastic film used to wrap cheese, would be American-manufactured.
One of the main machines will be an industrial scale. It weighs and sorts products into different funnels for packaging. A new one made by an American manufacturer costs $280,000, Tung said. A new one made in China costs $130,000. She eventually found a refurbished American model for $80,000. But she still needed to buy conveyor belts and other supplies.
Tung turned to Enterprise Funding Corporation for help. Through the SBA 504 loan program, the organization offers loans for major fixed assets such as machinery, equipment and real estate. The loans are offered at below-market, fixed interest rates for 10 or 20 years.
“A lot of businesses aren’t aware of the fact that we can package their loan without them going to bank to bank to bank,” said Jeff Sceranka, president of Enterprise Funding. “We do that for free. We can package their loan and we can shop it to all the banks in Southern California, including the ones in the Coachella Valley.”
Under the program, MBC will put down 10 percent, Enterprise Funding provides 40 percent, and a lender provides the remaining half for the total loan amount. Over the past several years, Enterprise Funding has been expanding into the Coachella Valley, providing loans to businesses in Indio, Palm Springs and Thousand Palms.
“We love companies that are manufacturers, that are creating product and creating jobs in areas where there aren’t a lot of new deals for manufacturing such as the Coachella Valley,” Sceranka said. “They have a large population base, and we feel that the population base deserves jobs.”
Tung has other ambitious plans: The plant will process 7,000 pounds of shredded cheese an hour. A DNA lab on-site will scan samples for bacteria to prevent foodborne illnesses. Packaging, plastic film, boxes and pallets will all be sold as recycling, and non-potable water used to wash the plant equipment will be recycled as gray water.
Tung hopes her business will become a mainstay of the desert community.
She plans to hire as many as 132 employees to open the plant sometime this fall. They’ll be trained in food processing to become skilled food handlers who will earn a salary and benefits. Eventually, employees might share part-ownership of the business. MBC USA has already sold out its first batch of orders, she added.
“I’ve thrown everything I have at it,” Tung said, chuckling. “I don’t even have a car.”
Dominique Fong is a business and real estate reporter for The Desert Sun. She can be reached at (760) 778-4661, email@example.com and on Twitter @dominiquefong.
Enterprise Funding Corporation
Enterprise Funding offers Small Business Administration-backed loans for long-term fixed assets, such as buildings, heavy equipment and machinery. Enterprise has been financing more business expansions in the Coachella Valley. Here are a few:
• Honey Harbor Investments, LLC, $1.6 million
• Indio Jefferson Petroleum, Inc., $4.8 million
• Villa Royale Inn and Europa Restaurant, $3.1 million
• SolTerra Builders, Inc. and Acme House Company, $1.5 million
• Pro-Tech Mats Industries, Inc., $2.2 million
• MBC USA, Inc., in progress
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