September 10, 2010
“Breaking new ground” was the headline introducing Meat&Poultry’s
construction and renovation report in 2002, the first of what would become an annual compilation of projects published each September. As the author of that construction trends story and in compiling the accompanying lists every year since then, it is easy to see why the number of new, large ($30 million-plus) processing plants built each year are fewer and further between than ever (see October issue of M&P, Page 34
). Careful and calculated discre tion are exercised before a project like Hormel Food’s Progressive Processing plant, with an $89 million price tag, cuts its ribbon as it did this past January. As the first new processing facility Hormel has built from the ground up in more than 25 years, such investments are not committed to without stakeholders having overwhelming evidence of their necessity for moving the company forward.
In the report we published eight years ago, we chronicled Future Beef Operations’ financial failure that led to it filing for bankruptcy and closing its doors just one year after opening the $94 million plant in Arkansas City, Kan. Future Beef represented the first beef-processing plant to be built in more than a decade and designers pulled out all the stops when it came to hightech bells and whistles. Future Beef served as the poster child for the strategic and careful investment in new-plant projects, especially in the post-9/11 era.
Many processors rolled the dice during the early 2000s by building new plants and investing in expansions. In early 2002, for example, Mississippi Beef Processors announced plans to build a $32 million (which ultimately cost $43 million) new plant in Oakland, Miss. Months later, Meadowbrook Farms, a co-operative owned by hog producers, began construction on a $28 million new plant in Rantoul, Ill. Shockingly, just four months after opening its doors in 2004, Mississippi Beef was forced to close the 154,000-sq.-ft. plant due to cost overruns and equipment failures. Likewise, Meadowbrook Farms closed in 2009 after filing for bankruptcy protection after several years of operation. Hints of slightly better economic times in the middle of the decade were evident in our 2005 annual construction listings, which included Triumph Foods’ $135 million hog plant in St. Joseph, Mo. Fortunately, the Triumph plant has thrived in Missouri after its opening in 2006.
Each year’s list is, in many ways, indicative of the state of the industry, which is usually directly correlated to the economy and market conditions.
Becoming more efficient and getting the most out of processing plants is a trend identified by Joe Bove, vice president of design services with Jacksonville, Fla.-based The Stellar Group. “Most [meat and poultry industry] construction work has involved plant remodeling or expansions due to consolidation,” he said. Bove affirmed that more dollars are being spent by processors on making their plants and products safer, more efficient and utilizing the most up-to-date facilities. “Our clients are increasingly looking to us for consulting services about which plants to refurbish, production and logistics effects of consolidating plants, analysis of their supply chains and layout of production lines,” Bove said.
With a cautious sense of optimism, there is plenty to be learned from the past as the industry moves boldly into the future.