Although the US economy continues sputtering along, industry plant expansion/renovation projects are surprisingly strong. Some new plants have even recently opened, while many others are under construction and still more are in the planning stages.
Instead of waiting for the return of better economic times, forward-thinking packers and processors have opted to move ahead on expansion/renovation plans as well as new plant construction projects for a variety of reasons, such as taking advantage of relatively recent new construction-friendly regulations and requirements; consolidating operations and plants; investing in more expensive, longer-term solutions versus settling for the less-expensive quick fix; and expanding production capabilities to better meet emerging consumer and customer opportunities, just to mention a few.
Here are some of the major industry projects that are turning heads.
Sara Lee goes hands-free
Sara Lee Corporation’s new slicing facility in Kansas City, Kan., a Brownfield project, opened its doors on June 3. Sara Lee renovated the 25-year-old former Armour Eckrich plant it bought from Smithfield Foods in 2009 and committed to a $140 million makeover. The 200,000-sq.-ft., highly automated facility, which is the company’s eleventh meat plant in the US, began limited production in the first quarter of 2011.
During an opening-day media tour, John McAndrew, vice president of operations, said, “We are four months into a nine-month ramp-up.”
The facility’s location made it logistically appealing for Sara Lee to invest in this project. So did having access to a qualified pool of workers to fill many high-tech positions, he added.
By incorporating numerous robotic and other automated technologies, Sara Lee officials claim the “no-touch” plant requires only half the number of employees usually needed for an operation of this size while at the same time slashing processing time by 50 percent. The new slicing operation is part of an effort to grow sales of the company’s Hillshire Farm brand of products to the $1 billion mark, with about 50 percent of its sliced meats production, including products from the Sara Lee Deli brand, coming from the new facility, said CJ Fraleigh, CEO of Sara Lee North America.
“It is a big deal. It’s the single-biggest capital investment we have made in the past few years,” he boasted.
Columbus Foods’ renovation
On the West Coast, Columbus Foods, the San Francisco Bay Area processor of authentic Italian salami and premium deli meats, celebrated the grand opening of its new $31 million slicing and packaging facility in Hayward, Calif., in late July. This plant slices and packages the company’s extensive line of authentic, Italian-style salame products and premium deli meats.
The new plant is a 60,000-sq.-ft. renovation of the company’s existing 120,000-sq.-ft. distribution center located on San Antonio Street. The expansion includes 70 incremental employees and three production lines for slicing and packaging the company’s products into ready-to-eat packages. The additional capacity will help Columbus satisfy growing national demand for its products.
The renovation project was designed to increase line efficiencies and implement some of the highest product safety and handling standards in food manufacturing, including high-pressure processing (HPP) technology. This technology uses ultra-high pressure to protect against harmful bacteria without affecting food products’ taste, texture, appearance or nutritional value. Products are treated using HPP technology from NC Hyperbaric.
Columbus worked with Stellar, a Jacksonville, Fla.-based design-build firm with expertise in food processing, packaging and manufacturing facilities. The Stellar team developed the architectural design, line layout, equipment purchase recommendations and construction of the project.
“The new plant, our first major project in decades, reflects Columbus’ potential for growth, as well as its unwavering commitment to quality, safety and production excellence,” said Tim Fallon, Columbus Foods CEO.
Tyson keeps pace
Despite the economy, Tyson Foods Inc., Springdale, Ark., continues to reinvest in its business and expects capital expenditures will total approximately $650 million for fiscal 2011, according to Worth Sparkman, spokesman. “While this is down from our previous estimate, the anticipated projects are still ongoing, but were not able to be completed in fiscal 2011 as previously expected. Our preliminary capital expenditures plan for fiscal 2012 is similar to fiscal 2011.”
This amount reflects numerous capital projects that will continue to benefit Tyson in the future, with enhanced production and labor efficiencies, improved yields and sales mix, Sparkman says.
“We feel it’s important to continue to invest in our business for competitive reasons and to ensure we are our customers’ ‘go-to’ supplier, both in the near term and in the long term,” he adds. “An example is our recently announced $48 million capital improvement at our cooked meats plant in Council Bluffs, Iowa, scheduled to take place in the first and second quarters of fiscal 2012. We’re converting the plant into a dry sausage and pepperoni operation to help meet demand in the areas of pepperoni and pizza toppings.”
Tyson is the largest foodservice industry supplier of pepperoni and pizza toppings in the US.
Tyson Foods has a number of expansion/conversion projects underway (see chart), but the Council Bluffs project stands out. This plant will become Tyson’s fifth dry sausage and pepperoni operation. It currently operates one pepperoni plant in Kansas, one in Wisconsin and two in Texas.
The conversion will involve installing new equipment as part of a 60,000-sq.-ft. addition.
“This is a major investment we believe will help us maintain our position as a leader in pepperoni production,” said Boyd Bulger, senior vice president and general manager of Prepared Foods for Tyson Foods. “Council Bluffs is the right location for this project because of the existing facility and excellent workforce, its proximity to raw material supplies and the access to interstate highways.”
Tyson is also planning to spend $1 million to expand its deboning plants in Berryville and Green Forest, Ark., and intends to add up to 300 jobs at the two plants.
“As part of continuing efforts to operate more efficiently, we’re starting a new chicken deboning process at our Berryville and Green Forest plants,” Gary Mickelson, Tyson spokesman, said earlier this year. “This move will involve the installation of some new processing equipment and the addition of approximately 200 to 250 production jobs at the Berryville plant and about 50 production positions at Green Forest.”
Cargill Innovation Center
On July 15, the new Cargill Innovation Center in Wichita, Kan., opened amid plenty of fanfare and attention from the media and local dignitaries. Cargill executives were eager to show-off their $14.7 million, 75,000-sq.-ft. center, which is located one block away from the headquarters of several major Cargill businesses the center supports.
The new, two-story structure can handle product/process development; cooking/preparation instructions; nutritional profiling; food safety/HACCP assistance; retail and foodservice simulation; pilot production process and equipment testing; consumer sensory research; recipe/menu development; shelf-life testing; tenderness/textural analysis; product labeling; microbiological and chemical analysis; regulatory agency assistance; packaging process testing; and ingredient and seasoning development and testing.
The center’s 11,000-sq.-ft. USDA-inspected pilot plant processing facility is where Cargill produces raw and ready-to-eat meat products and refines packaging requirements on a smaller scale for research, development and applications purposes. Utilizing the latest meat-cutting and processing equipment, highly trained scientists and technicians work with customers to test and formulate product solutions unique to their needs.
The retail presentation room is where chefs test consumer products and recipes in simulated, real-world environments, such as a grocery store meat case, convenience store, deli counter and full-scale home kitchen. The foodservice presentation room replicates an actual restaurant setting where chefs work with foodservice customers on culinary solutions to their unique needs. Its expansive kitchen is complete with a full array of top-line foodservice equipment on wheels.
Approximately 70 Cargill associates work at the innovation center.
Danish Crown’s jewel
On Aug. 25, Danish Crown announced it is ready to proceed with plans to build a new Plumrose USA cold-cuts plant in Council Bluffs, Iowa. Solid organic growth and extensive cooperation with the largest American supermarket chains in recent years have challenged Plumrose USA to keep pace with the growing interest in its products.
“We are experiencing increasing competition worldwide, also in the US,” said Flemming Enevoldsen, Plumrose USA chairman. “However, we have managed to generate organic growth over the years – despite the fact our factory structure is outdated. It is therefore vital we build a new facility to meet future demand. In recent years, the present factory has been running six to seven days a week to keep pace, but the cold-cut production line is now fully utilized. Gearing Plumrose USA for the future thus requires that we build a new cold-cut factory.”
Construction of the new Council Bluffs plant is planned to begin Oct. 1, and the new facility is expected to be completed within 12 months.
Buckhead builds for the future
Buckhead Beef, a business unit of Sysco Corp. and supplier of meat-based proteins to the foodservice market, plans to build a new beef processing facility in College Park, Ga., that will open in the spring of 2012. The new facility will replace Buckhead’s current facility in Atlanta. The company is also opening a new plant in Charlotte, NC, later this summer.
The College Park plant will be built on land already owned by the company, and will feature 67,000 sq. ft. of production space and serve as the company’s headquarters. The facility also will have a culinary center the company will use to work with customers on product development projects.
“This new facility will be much larger than our present one and incorporate the most advanced technology, allowing us to be more efficient and increase production,” said Chad Stine, president of Buckhead Beef. “We will be able to better service our clients, continuing to provide them with our full product line, including Certified Angus Beef, veal, poultry, fresh seafood, wild game, lamb, pork and specialty prepared foods.”
The new 24,000-sq.-ft. production facility in Charlotte will eventually serve both North and South Carolina. Buckhead currently services Charlotte through its Atlanta plant .
“We are excited about the opportunity this new facility will give us to offer restaurants and chefs in the Charlotte area with the same high level of quality products they have previously enjoyed but with a greater level of personal service,” Stine said.
“Now chefs can request unique cuts with little lead time, allowing them more creativity in the kitchen,” he added.
JBS USA on the move
Utah’s Board of the Governor’s Office of Economic Development met and approved a post-performance tax rebate to allow JBS USA Holdings Inc. to expand its presence in Hyrum, Utah. The company plans to invest more than $30 million in developing a new and expanded meat packing and processing facility in the state.
When completed, the expansion will employ 420 new full time staff in addition to the nearly 1,000 current employees at the location.
“We feel this expansion will help us sustain our presence in the state by improving efficiencies and adding production capacity that will and provide a solid foundation for years to come,” said Jerry Petersen, JBS director of operations at the Hyrum plant.
JBS USA Holdings Inc. – formerly Swift Foods Company – is a wholly owned indirect subsidiary of JBS SA, headquartered in São Paulo, Brazil.
Expect industry construction projects, ranging from new plants to plant expansions and renovations, to continue – and even accelerate once the economy is back running on all pistons again. Equally important, expect industry brick-and-mortar projects to ramp up as global demand for meat and poultry products increase. Those companies ahead of the curve will be best able to cash in on anticipated increasing demand.