A mixed bag

by Bryan Salvage
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Despite struggling domestic and international markets, a sagging economy and a host of other industry challenges, progressive meat and poultry companies of all sizes remain active in a variety of construction projects – ranging from renovations and expansions to building new plants (see project chart in this feature).

One of the largest projects is Downers Grove, Ill.-based Sara Lee Corp.’s new sliced luncheon meat manufacturing facility in Kansas City, Kan., which is to become fully operational by 2011 and will employ more than 250 people.

"This industry-leading facility will reinforce our competitive advantage in value-added meats, one of Sara Lee’s top strategic categories and long-term growth drivers," said C.J. Fraleigh, executive vice president and CEO of its North American retail and foodservice division. "It will help us further build our Hillshire Farm and Sara Lee brands, both leaders in the fast-growing category of premium lunchmeat."

Sara Lee plans to invest more than $130 million in the 187,000-sq.- ft. facility, which was formerly used to process Armour-Eckrich lunch meats before closing in 2007.

"We are completely renovating and modernizing an existing facility in Kansas City, Kan." a Sara Lee spokesman says.

Without discussing the details of the operations in the new facility, the spokesman says the new technology will enable innovation in cooking, chilling and packaging, all in an environment dedicated to food safety and quality.

"The state-of-the-art plant will integrate multiple processes and control technologies not used by other competitors and give Sara Lee the scale to achieve a leading production cost position," he says.

Kansas City was chosen as the site because of its central location, accessibility to transportation and the availability of workers.

In April 2009, Sara Lee opened The Kitchens of Sara Lee, its new North American innovation campus. The 120,000-square-foot research and development center, located at the company’s headquarters in Downers Grove, Ill., houses more than 100 research and development professionals, including chefs, scientists, engineers and packaging designers. The facility serves as headquarters for all of the company’s North American food and beverage research and development capabilities under one roof.

The Kitchens of Sara Lee allow R&D teams to test product, processes and preparations before implementing mass production. The facility includes meat labs, packaging labs, foodservice-style kitchens and sensory assessment capabilities.

Sanderson Farms on the move

Late in July, the board of directors of Laurel, Miss.-based Sanderson Farms Inc. approved plans to proceed with constructing a new poultry processing complex in Kinston, N.C. The project includes a new feed mill, poultry processing plant and hatchery on separate sites in Kinston. In April 2008, the company first announced plans to build the complex, but two months later the project was postponed due to declining conditions in the poultry market.

"We are pleased that better overall market conditions, our financial performance and a strong balance sheet have put us in the position to continue to grow our company," said Joe Sanderson Jr., chairman and CEO, when the project was recently revived.

The Kinston facilities will include a poultry plant with the capacity to process 1.25 million birds per week for the retail market. At full capacity, the complex will employ approximately 1,500 people, require 130 contract growers, and will be equipped to process and sell 6.7 million lbs. per week of dressed poultry meat at full production. The company plans to begin construction later this summer, with initial operation of the new complex scheduled to begin during the first quarter of fiscal 2011. The company expects to invest approximately $126.5 million in building the plant.

Mike Cockrell, treasurer and CFO, said: "Kinston had all of the factors we looked for. When we begin looking for a site, we have a list of 50-plus things we review."

The poultry plant will feature two lines, both of which will ultimately operate on double shifts.

"Our experience has been the closer the plant is to the customer, the better we can service that customer and more likely we’re going to be able to establish a good long-term relationship with them," he adds. "We have a few customers in North Carolina we’re servicing out of our South Georgia facility. But that’s as far as we can go from Georgia. If we go into Virginia., Washington, D.C., Pennsylvania and New York, we needed a plant closer to that area and this [Kinston] plant will do that for us."

Cockrell says the company’s mode of operation remains to consistently grow.

"Once we get a plant up and running well and get it sold out well, we’re ready to do something else," he says.

Renovation required

In April this year, Dawsonville, Ga.-based Gold Creek Foods LLC, a further-processed poultry company, signed a letter of intent to buy and renovate the 340,000 sq.-ft. former Mohawk Industries carpet manufacturing plant in Dahlonega. Gold Creek Foods is a subsidiary of privately held Agora Inc., also of Dawsonville. Terms of the deal were not disclosed, although state and local government incentives played a role in this planned purchase.

" T he m anufac t ur i ng site i n Dahlonega is a natural expansion for us as it is in the heart of the poultry industry and located adjacent to a major interstate spur. It also has a suitable workforce and a civic history with the industry," Mark A. Sosebee, co-founder and CEO, says.

"We expect to have some production in the [Dahlonega] plant by the end of 2009 and about 100 new jobs," said Michael Farmer, executive vice president and co-founder. "With so much in place already, this plant could have the capacity to employ more than 1,000 at full production."

Founded in 2003, Gold Creek Foods produces specialty food products for restaurant, retail, institutional and grocery customers.

In March, Smithfield Packing Co. announced plans to expand a plant in southern Kentucky and add up to 250 new jobs. Tim Schellpeper, Smithfield president, said the company plans a $7 million expansion of the Cumberland Gap plant in Middlesboro, which will include new smokehouses and new packing equipment. The plant will become part of Smithfield Packing Company, which will shift production from other Smithfield facilities as part of a restructuring of the company’s operations. The facility will process smoked meats under the Cumberland Gap and Smithfield brands. Earlier in March, parent company Smithfield Foods Inc. announced plans to cut 1,800 jobs and close six plants in a reorganization of its pork business.

Last October, West Liberty Foods LLC completed the second phase of the expansion of its Tremonton, Utah facility. The expansion was designed to accommodate recent growth in both the individually-quick-frozen and the slicing operation. The 24,000 squarefoot IQF addition features a replica of the initial line that became operational in September 2007. The slicing expansion utilizes an existing interior

shell, dividing it into five singlecell slice lines. WLF’s 217,000 square-foot, world-class flagship co-packing facility in Tremonton opened on Aug. 7, 2007.

Things are looking up

Looking ahead, one insider sees brighter days for business, in general.

"Meat and poultry company executives have been waiting for signs of an improved economic environment before increasing spending on new infrastructure," says Joe Bove, vice president of engineering, Jacksonville, Fla.-based Stellar. "We believe the nation is now beginning to see positive economic indicators, such as increases in consumer confidence and expanded use of new technology to reduce energy costs. Because of these factors, we anticipate an increase in construction investment."

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