Like most industries these days, the food processing sector faces a variety of challenges. Terrorism issues represent just one hurdle the industry battles as it strives to remain vigilant about food safety and bioterrorism concerns.
However, work force woes are perhaps behind the industry’s most intense worries, as labor typically makes up the majority of most food processing companies’ operating costs. Couple that with the fact that good people are hard to find, and often harder to keep, and it becomes clear that this industry has little choice but to chomp down on major issues as it keeps pace with changing times.
Companies within the industry frequently feel the pinch of profit margin pressures and are turning to automation in order to increase efficiency and keep up with technology.
But consumers’ love affair with food continues, as they simultaneously demands more — and healthier — food choices at lower costs. As a slew of business expansions show, this is good news for companies involved in food production, packaging and distribution, as there are plenty of appetites to feed.
For Bud Antle Inc., an indirect subsidiary of Dole, the world’s largest fruits and vegetables producer, North Carolina proved to have just the right mix of assets for a substantial business project.
Bud Antle chose Bessemer City in Gaston County for a new vegetable processing plant, bringing an investment of $54 million and about 525 new jobs within three years and 900 jobs by 2016.
“Locating the plant in Gaston County will expand Dole’s distribution network and facilitate delivery of its salad products to its Southern and East Coast customers,” said David H. Murdock, chairman and CEO of Dole. “The location, the incentives and potential work force were all strong factors in making the decision to locate in North Carolina. I look forward to working with state and local officials to bring this project to fruition.”
The new facility is Dole’s first foray into North Carolina and represents good news on many fronts. Aside from the job creation totals, Murdock said that farmers in the state might benefit by supplying some of the produce for the new plant, as well as for a potential frozen fruit plant.
Production workers at the new plant will take fresh vegetables and process them into bagged products for distribution in the southern and eastern United States.
Partnerships are Paramount
As evidenced by a variety of food processing-related projects in recent months, successful partnerships at state and local levels can help give companies an edge. Such was the case for Grain Millers Inc., which expanded its St. Ansgar, Iowa, facility in June.
Thanks to a $26.7 million investment, Grain Millers expects to add 44 jobs to its ingredient processing operations there over the course of three years.
“The St. Ansgar area has been very good to us, and we are happy to make this expansion here,” said Steve Eilertson, president of Grain Miller. “Our business is a partnership between the people of this community, our customers, and the employees and owners of Grain Millers. It is one that has benefited all of us in the past and will continue to do so in the future.”
Privately held Grain Millers supplies processed grains, principally oats, to North American food companies. The ingredients are subsequently used in such processes as cereal manufacturing, baking, as well as in the snack industry.
In the Midwest, a PacMoore ingredient processing facility project is coming to fruition in Mooresville, Ind., a project largely secured by an accommodating state government.
“Several finalists were under serious consideration,” said Larry Gigerich, managing director of Ginovus, the economic development services firm that led the company’s site location search. “But the willingness of Mooresville and the state of Indiana to partner with PacMoore on making this project a success was the determining factor.”
PacMoore will have a newly constructed 110,000 square foot manufacturing facility with technology that will allow clients to custom manufacture their ingredients in one place.
Hammond, Ind.,-based PacMoore processes more than 150 million pounds annually of dry food ingredients for customers such as Proctor & Gamble, General Mills, Kraft/Nabisco, Kellogg’s and Archer Daniel’s Midland.
Financial Incentives Seal the Deals
For food processing and related companies, anything that can take a bite out of operational costs is beneficial. States and communities offering lucrative incentives often catch the eye of industry firms looking to expand.
For food goliath Tyson Foods Inc., the Lone Star Start held the right real estate and the right incentives for the company’s new case ready meat plant.
At a price tag of $100 million, a former Oscar Mayer plant in Sherman, Texas, will be transformed into Tyson’s largest case ready operation. Employees at the plant, currently under renovation, will produce prepackaged cuts of fresh beef and pork that are ready for retail grocers to place directly into the meat case.
Nearly 1,600 jobs will eventually result from the project. The state of Texas awarded a $10 million incentive package to Tyson. The package comes in the form of a $7 million grant from the Texas Enterprise Fund and $3 million in work force training grants from the Texas Workforce Commission.
A portion of the Texas Enterprise Fund has been designated a “deal closing fund,” which is designed to allow the state to respond quickly and aggressively to business opportunities that demonstrate a significant return on investment.
“The strong business climate put Texas in the running for this new operation and the Governor’s Enterprise Fund closed the deal,” said John Tyson, chairman and CEO of Springdale, Ark.,-based Tyson Foods.
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