Hilmar Cheese’s only CEO retires after 31 years

Twelve dairy farmers asked John Jeter in 1984 to research their idea for a cheese plant.

“This was designed to be a tiny thing,” Jeter recalled last week about the plans for Hilmar Cheese Co.

Tiny it’s not. The Lander Avenue plant has grown to be the biggest in the world, with Jeter in the top post from the start. He will retire Monday after 31 years that included building a second plant in Texas and becoming a major global player in cheese byproducts.

David Ahlem, 41, who has been chief operating officer, will succeed Jeter, 63, as chief executive officer. He is the son of Chuck Ahlem, one of the founding farmers.

Hilmar Cheese employs 930 people at the original plant and 400 in Dalhart, Texas. It will add 40 to 45 with the December opening of a milk powder plant in Turlock.

The company had sales of about $2.5 billion last year, making it the 17th-largest dairy company in the nation, according to Dairy Foods magazine.

The two plants turn out about 2.4 million pounds of cheese a day, including cheddar, Monterey jack, colby, mozzarella and Hispanic types. Almost all of it is sold under other companies’ retail labels and through restaurants and other food-service venues. The visitor center at the headquarters offers Hilmar-branded cheese and other foods, along with tours.

Jeter was 32 when the founders asked him to manage the $2.5 million startup. The Visalia native had a degree in economics from UC Davis and varied business experience, including a take-and-bake pizza shop in Lodi and management of what is now the Meyenberg goat milk plant in Turlock.

California had long been a major producer of fluid milk, but its cheese industry was just starting to emerge in the 1980s. The Hilmar founders expected to deliver just three truckloads a day to their plant. Today, the two sites combine for more than 500 loads a day from about 230 farmers.

“It turns out the milk was more valuable in cheese,” Jeter said. “That meant we could pay our dairymen more and we could make a profit.”

The initial plant included the retail shop in the Swiss chalet style that still stands along Lander Avenue. Early visitors could peer through a window to watch part of the process, as they can today.

By 1987, the plant was turning out 60,000 pounds of cheese per day. A decade later, it reached 555,000 pounds a day and was declared the world’s largest.

The whey and lactose powders left over from cheese making – about 527,000 pounds each day – are sold to makers of sports drinks, infant formula, baked goods, candy, pharmaceuticals and other products. The powders go to about 50 countries.

Hilmar Cheese came under scrutiny about a decade ago for applying salt-laden wastewater to nearby farmland. The company settled the matter by paying $3 million, divided between the state and a study on how to reduce such problems.

Today, Hilmar Cheese points to how it recycles almost all of the water left over after cheese and byproducts are extracted from milk. The water is used to clean the plant, irrigate cropland and landscaping, and operate boilers and a cooling tower. Organic matter in the water is digested by bacteria, producing methane to fuel the boilers.

“The discharge out of here is cleaner than our intake water,” Jeter said. “We spend more on water reclamation than any other food plant in the world.”

Ahlem, the new CEO, worked for Cargill Animal Nutrition before joining Hilmar Cheese in 2004. He managed the 2006 startup of the Texas plant and returned to California in 2011.

Ahlem’s exposure to the company goes back to his childhood, when he sat in on board meetings with his father and other owners.

“I have been in and around the business a long time,” he said. “I think it has exceeded all of our wildest dreams.”

Ahlem has nothing but praise for Jeter: “I think he made this business about people and caring for individuals and doing everything to serve our employees, our customers and our dairymen.”

Jeter cited a few reasons for the success of Hilmar Cheese, including the ability of leaders to make aggressive moves as a team, and of the processing lines to adapt quickly to customer needs.

“I was just looking for work, and these guys had a vision,” he said. “Turns out it was a good one.”

This story was originally published August 29, 2015 at 3:13 PM with the headline "Hilmar Cheese’s only CEO retires after 31 years."