Food Processing 2015 Industry Report - Area Development by Area Development

foodprocessing 2015

Whatâ&#x20AC;&#x2122;s Driving Location Decisions?

Innovations and Trends in Packaging

AREADEVELOPMENT S I T E

A N D

F A C I L I T Y

P L A N N I N G

Integrated Planning for Expansion

Re-evaluating the Supply Chain

Facility Design & Construction

Special Supplement to Area Development Magazine

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EDITOR’S NOTE

ore than 90 percent of food and beverage companies expect their sales to increase this year, and 13 percent expect to increase hiring, according to a study by WeiserMazars LLP, performed in conjunction with The Food Institute, AFI, and Stagnito Media. Along with the increased sales comes the need for food companies to innovate in response to changing consumer demographics and preferences. Millennials’ food preferences differ from those of baby-boomers, but everyone is more concerned about their health and the safety of the products they consume. This has put new emphasis on the food manufacturing supply chain. Food manufacturers’ top concern is getting their products in the hands of consumers in as efficient and cost-effective manner as possible, while maintaining product quality and safety. And this, in turn, has led to innovations in food packaging as well. These topics and more are addressed in the articles in our premiere Food Processing publication. They were written by a highly select group of experts in the field who can help with your next location or expansion decision. Also, contact information for the organizations sponsoring this publication is provided in the back of the magazine.

Editor

CONTENTS

INTEGRATED PLANNING FOR FOOD PROCESSING FACILITY EXPANSION Developing a successful facility expansion strategy requires focused insights from all teams led by a full-time project manager and often aided by outside expertise.

WHAT’S DRIVING LOCATION DECISIONS IN THE FOOD INDUSTRY? Changing consumer demographics and preferences require food-processing companies to quickly innovate, and they are locating in regions that have the assets to accommodate this need. KEEP IT FRESH: RE-EVALUATING THE FOOD MANUFACTURING SUPPLY CHAIN By continuously re-evaluating their supply chain, food and beverage processors can make sure their products are safely delivered to consumers in the most efficient and cost-effective manner.

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INNOVATIONS AND TRENDS IN PLASTIC FOOD PACKAGING From plastic cans to new labeling techniques, the latest trends in plastic food packaging support freshness, longer shelf life, and product branding and tracking.

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HOW FACILITIES ARE BEING ENGINEERED, DESIGNED & CONSTRUCTED TO SUPPORT THE FOOD REVOLUTION Food processors are leaving no stone unturned during the engineering and design phase to ensure their facilities can meet consumer demands for product safety and quality.

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SPONSORS DIRECTORY

PUBLISHER: Dennis J. Shea ART & DESIGN: Patricia Zedalis EDITOR: Geraldine Gambale PRODUCTION MANAGER: Jessica Whitebook FINANCE: Mary Paulsen PRODUCTION ASSISTANT: Talea Gormican

ADVERTISING: Bill Bakewicz Valerie Krpata

DIGITAL MEDIA MANAGER: Justin Shea BUSINESS DEVELOPMENT: Matthew Shea WEB DESIGNER: Carmela Emerson

BUSINESS SERVICES: Barbara Olsen

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INTEGRATED PLANNING FOR FOOD PROCESSING FACILITY EXPANSION By Cory Wendt, Senior Manager, Baker Tilly Virchow Krause, LLP

eveloping a successful facility expansion strategy requires focused insights from all teams led by a full-time project manager and often aided by outside expertise.

Expanding a business and positioning it for long-term growth and profitability are tremendous undertakings for any company. For any food processing company that is contemplating growth, whether it is achieved through an expansion or the construction of a greenfield plant, making an informed decision on how to proceed with such an effort goes beyond looking at the dollars and cents associated with any single activity. There are several key steps to consider when working through an assessment of the total cost of ownership for your facility expansion including agreeing on the business case, commencing with site selection, creating a utility plan, and identifying available credits and incentives to enhance the ultimate bankability. These aspects can be looked at as separate roles within a company’s day-to-day operations, but ultimately the integration of these functional areas needs to be the focal point upfront and throughout your effort of planning an expansion. Establishing the Business Case for an Expansion Are sales driving production or is production driving sales? It often depends on whom you are asking and what the ownership’s goals are for the company going forward.

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It may seem like a simple question, but ask your team and see what the responses yield. Each team function will know what it is supposed to do to succeed (sell more, produce more, minimize waste, minimize tax, etc.). But what team should lead a facility expansion? The owner, director of engineering, sales, marketing, finance, supply chain, plant manager, environmental director, or tax director? I have seen any one of these people leading the effort, but often with limited coordination of the company’s teams throughout the process. It takes an entire team working full time every day to run a company, and the same goes for designing a new facility. Without focused communication among all of these parties, you can often influence the direction of an expansion project before it ever begins and sometimes inhibit its occurrence. Before a project can get under way, the question of what the proposed expansion’s current and future purpose will be must be established by a company. That is the business case for why the expansion is happening. Your team should then be built around a lead project manager who complements the business objectives. Additionally, it will be the project manager’s task to quickly evaluate the limiting factors for the business case to succeed. This manager’s role will need to evolve into a full-time day job to assess the effectiveness of both the people and departments involved and identify where outside expertise needs to be brought in to augment any gaps. That expertise could be in disciplines related to engineering design, wastewater and utility infrastructure, state and local government regulations, tax structure, capital and incentives procurement, and/or construction management. At times, bringing in these parties is attempted to be a shortcut by use of lowest-cost strategy via a “turn-key” RFP. This could work for a food processing facility expansion. But generally, a low-cost equipment bid in an RFP never addresses the other 50-plus percent or more of the costs associated with the project because the design basis was unclear for those responding to the RFP. Additionally, the introduction of outside expertise in this process can be received with skepticism by the department heads already successfully running their areas of the company. But the reality is these same department heads, even if they are the best to assume this project manager role, are already using all available hours in the day to run core company functions. This initial step in establishing the business case for an expansion is far from an easy one, and it will take more

A financial model time and effort than your company’s teams want to typically invest to be able to end up with useful planning information. However, this process will provide a clear picture of design basis required to get the project done, and that will lead to the most cost-effective strategy. With agreement on the business case, and key supporting project information in hand, it is time to identify the best site to support your business case. Selecting the Site, Utilities, and Incentives How do you choose the site for an expansion, and is it worth moving from an existing site to accommodate a greenfield? Outside of the obvious factors that are required to meet the business’s operational needs, have you ever thought of the site you select as one of the key drivers affecting both the overall net capital and operating expenditures the project will incur? The right site can offer much of the balance of plant infrastructure that the project requires, a utility rate structure that is competitive, and a legislative framework to maximize federal, state, and local incentives. As food processors are large users of utilities, identifying areas

is only as good as what

with existing utility is supporting the infrastructure can numbers within it. count for as much as 10–20 percent of a project’s cost. Incentives, either in the form of an upfront cash benefit or abatement of future obligations, can offset as much as 25 percent of the project’s costs. It’s important to note, some of these incentives will be very specific to the actual address of the project, which in turn coincides nicely with the utility infrastructure and rate structure that exists at a given site. The key is to have a clear understanding of what you are physically building in advance, so you can initiate meaningful dialogue about what benefits you can obtain at any given site. Utility functions always have a cost to a company, especially food processors; the key, however, is to understand the “how and why” behind the cost, as well as develop an operational strategy that minimizes that cost. An organization’s understanding of how its process conditions affect service infrastructure of local electrical, water, and gas utilities, as well as how its future utility requirements will

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Food & Beverage Processing Firms Drawn By the Right Mix of Assets

he food and beverage processing industry is in the midst of significant upheaval, and regions with the right combination of economic assets have a unique opportunity to take advantage of those changes.

As customer demands have changed, numerous new subsector opportunities have arisen in the food and beverage processing sector. The industry is becoming rapidly fragmented as consumer demand has divided across a wide range of eating preferences, and product innovation is being driven largely by evolving consumption desires in variety, health, and convenience. A sample of the developing food categories demonstrates the immense variety in the sector: ethnic, fresh, organics, restaurant-quality frozen, meal kits, handheld entrees, fortified, and gluten-free. Likewise, growth of the beverage market, characterized in the breweries and wineries subsectors, demonstrates the rising appeal of craft and unique local offerings. This upheaval presents substantial opportunities for new firm attraction and development, but only for regions with the right combination of economic advantages. This fast-changing industry requires a central location with a well-developed transportation infrastructure, a low cost of doing business, and the availability of agricultural products for food processing. The availability of water and sewer capacity and lines to industrial sites is crucial, as is a strong existing local pool of high-demand occupations. And finally, quality of place assets are of utmost importance, including ample opportunities for cultural activities, recreation, shopping, restaurants, and sporting events. Finding a region with the exact balance of these assets is no easy task. One example is the Lehigh Valley, the third-largest metropolitan area in Pennsylvania. Just 60 miles north of Philadelphia and 90 miles west of New York City, it boasts a well-developed transportation infrastructure and close proximity to the all the major northeastern U.S. markets. And as a result of superior water quality due to pre-treatment water facilities, Lehigh County is the home of more beverage manufacturing companies than any of the other 66 counties in the state, according to the Lehigh Valley Economic Development Corporation (LVEDC). “Food and beverage manufacturing has been identified as one of the key target industries in our region, and that’s because we have just the right mix of economic assets,” said LVEDC President and CEO Don Cunningham. “With multiple nationally known

grow, is critical to the success of any expansion effort. Taking the time and effort to develop an informed, long-term plan to approach utilities can literally save your organization millions, not to mention help facilitate growth and expansion. Taking steps to work with state environmental and regulatory agencies early in the site selection process to identify which utilities’ service areas may have the capacity to take on your expansion can significantly narrow your area of focus. Subsequently, advancing discussions with the identified utilities early on could yield a competitive rate arrangement or remove capital costs within your project scope if the utilities are looking to attract larger users into their service territory. As the range of available sites narrow that fit your facility’s utility profile, it is important to simultaneously look at state and federal programs that are typically tied to specific areas within a community. State or local incentive programs affected by site selection may include Tax Increment Financing; Property Assessed Clean Energy; property, sales, or use tax abatements; or utility rebate programs. On the federal side, programs affected by siting include the New Markets Tax Credit (NMTC) program or Historical Tax Credits. Since some of these programs are not entitlements, it becomes important to have a strategy for how to approach the development steps of your project to maximize any of these incentives, or a number of them combined. Ultimately, since credits and incentives can be so site-specific, like the utility infrastructure, it is important to identify if both can be applied to benefit your business case. Additionally, it becomes important to not take action with capital spends or announcements of a given location until you understand the value of the benefits at stake.

brands establishing a presence here — such as Ocean Spray, Kraft, Coca-Cola, Samuel Adams, Nestle — food and beverage production is becoming very identifiable with the Lehigh Valley.”

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Supporting the Financial Model With a clear business case com-

plete, and the range of sites that can help offset the capital spends, you can begin to hone in on the financial model that will ultimately support the project. A financial model is only as good as what is supporting the numbers within it. Too often, I see an elaborate financial model with a lot of effort placed on the ramp-up of sales, with gross generalization around the estimated capital costs and the financial structure that can support it. As noted earlier, part of the business case must be bringing on board outside expertise to help accurately assess the project capital requirements. Food processors need to work through a preliminary engineering phase with EPC firms (engineering, procurement, and construction) and technology suppliers to secure a detailed schedule of capital costs up front. This, in turn, allows for establishing the possible process configurations to maximize current and future operating scenarios. With these process configurations in hand, you can begin to run scenarios to sculpt the expected situations that the sales team have said are possible, and that the produc-

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tion team has agreed are feasible, at a given site. This is done by utilizing the available credits and incentives, under the actual utility rate arrangement you will experience, to accurately sculpt the cash flow required to approach your funding sources. Achieving Your Potential These integrated planning efforts of putting together a business case, commencing with site selection, creating a utility plan, and identifying available incentives are all part of the process of making your facility competitive for growth in the long term. A facility expansion does not happen overnight, but by taking a hard look at each of the above factors, you will be able to ensure a successful project is constructed with full visibility of the total cost of ownership. FP CORY WENDT is a senior manager for Baker Tilly, a Chicago, Illinois-based accounting and advisory firm, where he works with companies on facility growth strategies related to energy and manufacturing.

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WHAT’S DRIVING LOCATION DECISIONS IN THE FOOD INDUSTRY? By Scott Kupperman, Kupperman Location Solutions

hanging consumer demographics and preferences require food-processing companies to quickly innovate, and they are locating in regions that have the assets to accommodate this need. “Have you been busy recently?” is a question many of my friends and colleagues in the site selection/economic development profession frequently ask me. I usually explain to them that yes, I have been, due in large part to all the activity in the food industry, my particular industry of focus. “Makes sense” is a frequent response; “I guess everyone has to eat!!” While we all do need to eat, the growth and activity in the food industry has been driven by major shifts in consumer demographics, health-related concerns, and buying patterns. This activity has kept many of those assisting food companies with location decisions engaged, and economic developers interested in how they can effectively voice their regions’ value proposition to attract companies involved in food processing and the ancillary businesses that make up the industry. What’s Happening in the Food Industry? In order to put together a compelling package that is attractive to a food processing company, a fairly deep understanding of industry trends is paramount. Here are a few of the key drivers that have affected the industry most dramatically over the past few years and should continue to be of significant influence:

1. The rise of millennial spending — As the baby-boomer segment of the population falls to less than 20 percent by the year 2020, their spending on at-home food continues to drop as well, with some estimates as high as a $15 billion annual reduction. Filling that void are millennials, whose demographic segment will increase from 5 percent to almost 20 percent of the overall population between 2010 and 2020. More importantly, millennial spending on at-home food products increases at rates as high as $50 billion annually. The millennial segment has a distinctly different set of spending patterns, product interests, and shopping habits that are driving a great deal of change in the food processing industry. Millennials are: • Significantly more price-sensitive than baby-boomers • Interested in a wide variety of highly specific health and wellness products as well as convenience, and will use technology/social media to learn where and how a product is produced, and the level of environmental responsibility demonstrated by the manufacturer • Are highly brand “disloyal” and very willing to purchase products outside traditional grocery stores • More often than not, making decisions as to what they will eat within one hour of doing so 2. Food loss and waste become “top-of-mind” to food manufacturers — A third of all food produced worldwide is lost or wasted during harvest/processing/distribution or at retail and food service. That’s enough to feed an estimated 870 million hungry people! The desire to prevent loss by manufacturers is driving changes in production processes and packaging to meet changing consumption habits. This includes radical changes and technology advances in packaging, shelf stabilization methods, and container-sizing options, all of which can reduce waste and spoilage, while still offering the traditional product benefits. 3. Consumers want higher quality “food experiences.” • The desire for “fresh, whole, and real” drives decisions made at grocery, retail, and food service. • Food is becoming social content to be shared and traded, which drives entrepreneurism and influences future trends. • The food industry no longer is just for big companies; “craft-inspired” new product launches continue to grow. • Nutrition is becoming recognized as one answer to the

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The

presence of global healthcare budget crisis. The gluten-free food segment increased 63 percent from 2012 to 2104. There’s also increasing concern over preservatives, pesticides, growth hormones, and GMOs. 4, “Simple pleasures” at home… • The downturn drove an increase in home cooking. Price sensitivity continues to drive choices; quick and convenient are still preferred. • Sales of budget ingredients (cheaper cuts of meats, frozen fruits and vegetables) will continue to grow. • Private-label brands are growing in sophistication relative to packaging, flavors, and variety, all in an effort to appeal to price-sensitive customers.

existing food clusters is

ing line, where raw also a critical factor ingredients are being sought. ultimately turned into finished form and packaged in various sizes and quantities. The ability to quickly modify these lines inside a facility where there is ample column spacing, clear height, utility distribution, water and sewer supply and discharge locations, structural capacity (floor and ceiling) dock locations, and exterior space for large process utility equipment and vehicular movement should all be considered competitive advantages that support innovative manufacturing. Surrounding uses are also critical points to evaluate for

How Is This Changing the Focus of the Food Industry? The examples of key trends listed above (along with countless others) drive a tremendous need for constant innovation among food Incentives, Trained Workers Help Food companies. In order to survive and Processors to Grow grow, these companies must be able to put new ideas into production quickly. Facilities that churn ood processors and distributors often locate out a narrow mix of product “sku’s” in areas where they can be close to producare no longer viable for most food ers. They also look to areas where generous companies. Being able to quickly change or modify processing lines, incentives are available in order to lower ingredients used, waste streams, their costs. This is what executives at Allied packaging materials and sizes, and Specialty Foods, Inc.; Bridor, Inc.; and the Safeway Food Group had in mind when they brand messages and marketing chose Cumberland County, N.J., for their facilities. tactics will continue to be viewed by Bridor, Inc., a leading manufacturer of authentic European breads and Viennese pasfood companies as critical to their try for the retail and food service industry, is investing $32 million to expand an existing success. 136,000-square-foot facility to 183,000 square feet in Cumberland County. The company Location solutions that foster will grow its employee count from 132 to 177. and support this need for innovaAlso in Cumberland County, Allied Specialty Foods, a restaurant and retail food suption in as many ways as possible plier, is taking advantage of an incentive program called GROW New Jersey to secure are becoming sought after, and the financing necessary to carry out its 10-year plan to relocate and expand. economic developers who have A host of other local, state, and federal incentives make it attractive for food procesidentified various forms of food processing companies as target sors and businesses of all types to locate here including: industries need to notice and ar• Urban Enterprise Zones ticulate the way their own regions • NJ Economic Redevelopment and Growth Program measure up to this overall set of • Grayfield and Brownfield Cleanup Funding requirements.

• U.S. EDA Public Infrastructure Funding

Hard Assets Property solutions, as one would expect, play a critical role in driving the ability to innovate. Most food processing is done through a production process that takes the form of a process-

• Cumberland Empowerment Zone An added bonus to area food processors is the availability of a well-trained workforce. President and co-owner of the Safeway Food Group Frank Tedesco says he has successfully hired 200 additional full time workers for his company’s $3 million expansion. “We employed a strong workforce at our former location convincing us that a qualified labor pool would be readily available for our new operation,” he concludes.

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Continual product

activities that have thrived — is also a critical factor being sought. An existing food industry presence will typically be an indicator of: • A labor pool with relevant skill sets and experience in an increasingly complex and capital-intensive manufacturing environment • Workforce training resources that can support the industry-specific needs of food manufacturers, which now include elevated needs for skills associated with highspeed automation, robotics, increasingly stringent and complex sanitation and cleanliness requirements, and energy-efficient production processes • A regulatory environment (at both the state and local level) that has experience in approvals required both to construct and operate food-processing facilities and the various utility requirements, emissions, and waste streams Local Support that are often associated with their operations The presence of existing food clusters — reflected in • A local presence of suppliers, contractors, and technicians the form of legacy and recently located food-processing who can install, maintain, and maximize energy efficiency required for critical process utility systems and specialized production equipment, Food Processors Need which is increasing in sophistication Good Highway Access • Incentives geared to assist manufacturing by offering programs that mitigate infrastructure upood processing firms need efficient grade costs, reduction of taxes on transportation connections to receive real property and machinery and tools, and support for training raw materials and get their finished food facilities. Existing buildings and candidate development sites will all be carefully scrutinized to determine what activities are currently ongoing in both adjacent space under roof and on properties in close proximity. Future uses that are governed by zoning and/or private restrictions and covenants will also be analyzed to both confirm whether a broad range of desired processing is allowed by the manufacturer and to assess whether there could be future threats in the form of incompatible uses that would be harmful to ingredients or to end-product being produced.

innovation will remain a necessity for food processing companies.

products to markets, and a central U.S. location helps to ease the

distribution process.

Anchored by the Joplin, Mo.-Miami, Okla., metropolitan area and the Pittsburg and Parsons, Kan., micropolitan areas, the Joplin region is in the heart of the U.S. The transportation system, particularly highways, provides food processors with efficient access to raw materials and to more than 30 million people within a 350-mile radius. In addition, that transportation system extends from coast to coast and from Canada to Mexico. Interstate 44, which connects the Midwest to the Southwest, and Interstate 49, north-south, are key highway corridors for food processors. These are enhanced with a number of other federal and state highways that make for an efficient highway system serving the entire seven-county region as well as points beyond. Along with shipping of raw materials and finished products, this highway system also provides efficient routes for the region’s workforce of nearly 200,000. Further, the seven-county Joplin Region alone produces 13.7 million bushels of wheat, 12.2 million bushels of corn, and 346,000 head of cattle each year. In addition to raw materials, food processors need affordable fresh water, and the Joplin region can provide huge volumes of that as well. Local workers, many of whom grew up on and around farms, understand the importance of food. And the Joplin region gets high marks from area employers, who note employees’ work ethic and commitment to ongoing training.

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In addition, economic developers should be aware of local and regionally grown ingredients and other food product components (such as packaging supplies) that support a supply-chain model that draws from a more concentrated geography. Tying It All Together Continual product innovation, while delivering more products for less money, will remain a necessity for food processing companies over the foreseeable future. Economic developers who have identified food processing as a target industry stand a better chance for success by understanding the trends and resulting influences that are driving competitive success in the industry and shaping a value proposition centered on supporting innovation. FP

KEEP IT FRESH: RE-EVALUATING THE FOOD MANUFACTURING SUPPLY CHAIN By John Vaught, Senior Vice President, Transwestern Tenant Advisory Services

y continuously re-evaluating their supply chain, food and beverage processors can make sure their products are safely delivered to consumers in the most efficient and cost-effective manner.

If you consider the cumulative miles traveled by the ingredients in a basic Cobb salad, you’ll quickly be reminded why, for most of human history, food was sourced locally. Despite a growing interest in the farm-to-table movement, the reality is that most of our food and beverages are — and will continue to be — transported from manufacturer to consumer through a highly complex supply chain. Like any manufacturing company, food and beverage manufacturers’ top concern is getting their product in the hands of consumers in an efficient, cost-effective manner. But within this manufacturing niche, it’s not simply a matter of beating competitors to the punch; in many cases, the quality and safety of the product depend on it. After years of analyzing, building, reconfiguring, tweaking, and re-engineering, one might think that food and beverage companies have struck the perfect balance between cost-control and speed to market. However, ongoing cultural, technological, and economic changes continually push manufacturers to revisit their assumptions and decision-making processes when it comes to real estate.

Greater Flexibility Due to Intermodal Although the qualitative and quantitative factors considered by food companies are the same as those with other site selection projects, when it comes to siting a food processing plant, how those factors are weighed and evaluated can be quite different. Companies across industries such as meats, fresh produce, beverages, candies, chemical flavorings, and nutraceuticals are likely to assign different degrees of importance to factors such as transportation, proximity to raw materials, and availability of economic incentives. Understanding what factors have the most impact on the bottom line is critical to determining where to locate the manufacturing plant. Proximity to suppliers is often a primary driver when sensitive products like fruits and produce are involved in manufacturing. Transporting delicate products like fresh, ripe tomatoes for our Cobb salad or oranges for juicing to a distant processing plant can be inefficient and expensive. Fortunately, the growth of sophisticated intermodal distribution facilities has provided greater flexibility regarding where to locate a food processing facility. Scattered throughout major U.S. markets, these facilities can cut transit time dramatically and have emerged not a moment too soon, as the country struggles with a shortage of truck drivers, especially for longer routes. The Renaissance of Rail For years, shipping by truck proved the most reliable and fastest means of transport for food products. And consistently low oil prices allowed manufacturers to depend on trucks without sacrificing profit. But when oil prices rise, rail transport has greater appeal. Fortunately, thanks to more sophisticated technologies, moving food and beverage by train is very different today than it was just a few decades ago. Take, for example, TransCold Express, a hub-to-hub refrigerated boxcar service operated by McKay TransCold that runs bi-directionally between Wilmington, Illinois, and Selma, California. As the first refrigerated boxcar unit train connecting the Midwest and West Coast in over half a century, TransCold Express presents produce growers and meat and dairy producers the opportunity to distribute products more cost-effectively and provides a valuable link to all U.S. destinations. TransCold Express, with a hub in the RidgePort Logistics Center, a 1,500-acre industrial park 40 miles southwest of

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Chicago, operates on BNSF Railway, with cargo being transferred from truck to boxcar through a new refrigerated building operated by National Logistics and Cold Storage. TransCold Express hauls products such as vegetables, fruit, cheese, and butter from California to the Midwest and carries meat, eggs, cheese, butter, finished goods, and dairy creamers westbound, connecting to transportation hubs on both ends. The TransCold Express service takes four days to reach the Midwest from California — the same speed as by truck, but at a significantly lower cost. Depending on the circumstances, a shipper could save between 5 and 25 percent by using the boxcar service versus trucking. The practical construction by Ridge Development enables cargo to be efficiently transferred between trucks and boxcars. The 49,000-square-foot refrigerated facility is approximately 700 feet long, allowing for eight boxcars to be unloaded at once, and only 70 feet wide, providing a minimal transfer distance between the two modes of transportation.

les

Dependence on Reliable Infrastructure It’s one thing to make a supply chain look good on paper, but because aging transportation infrastructure is a growing concern across many regions of the U.S., ensuring primary methods of transport are reliable is crucial to a company’s success. Understanding what improvements and investments will be made over the short and long term can give decision-makers more confidence in their supply chain’s uninterrupted performance. For some operations, such as beverage manufacturing, infrastructure like water or electric power can be a primary driver of where to locate. For example, when BrewDog, one of the fastest-growing craft beer brands in the country, was looking for a new facility, Ohio-based Buckeye Power Inc.’s ability to provide adequate supplies of high-quality water helped the state secure a new 100,000-square-foot brewery that could ultimately expand to 300,000 square feet. Adapting to Environmental Sensitivities It is estimated that the average American meal travels about 1,500 miles to get from farm to plate. The amount of fossil fuels used daily in transporting food and beverage worldwide is practically incalculable, and the resulting carbon dioxide emissions have a negative effect on air quality. Companies are assuming more responsibility for sustainable business practices, if not because they are positive corporate citizens, then because they are feeling the pressure from consumers who are factoring in this variable when making purchasing decisions. The fact is, consumers want to support companies that share similar values, and if a food manufacturer can demonstrate ef-

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The average fort at reducing its negative environmental impact, it will fare well among a growing percentage of the population. When examining the supply chain, the greatest impact on the environment comes from distance traveled. But the form of transportation is also an important factor. One boxcar holds the same volume as four trucks, making it four times more fuel-efficient. Airfreight generates 50 times more carbon dioxide than shipping by sea. Of course, the lengthy transport times needed for sea shipping aren’t feasible for many operations. Consumers also are becoming more averse to food additives. When produce is transported long distances, it is often picked while still unripe. Gasses may be used to ripen the food during or after transport, or the food is highly processed with preservatives to keep it suitable for sale. Health-conscious consumers who have knowledge of such practices may shy away from these products, no matter how inexpensive or accessible they may be. The Immigration Question Ever present with a discussion of agriculture and food processing is a consideration of U.S. immigration policies

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American

and how those may change meal travels 1,500 miles over the coming to get from farm to plate. years. The availability — or lack of — seasonal labor could have a tremendous impact on the very first step of the food manufacturing supply chain. Companies heavily dependent on fresh fruits and vegetables harvested by an immigrant population are engaging labor analytics specialists to construct a picture of the labor pool today — and what it might look like five or 10 years down the road — when making decisions about where to locate a new facility or how to structure transportation contracts. Communication Enhancements The importance of flexibility in the supply chain cannot be overestimated, and improved means of communication have been a major contributor to more flexible operations. Modern warehousing that can accommodate advanced shipping notification (ASN) and system-directed

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Henry County REMC Meets Energy Challenge of New Boar’s Head Facility

oar’s Head Brand, one of the nation’s leading providers of premium delicatessen meats and cheeses, broke ground on a new manufacturing and research facility during a public ceremony late last year in New Castle, Indiana. The ceremony marks the public launch of a mutually beneficial agreement between the Sarasota, Florida-based meat manufacturer and

the community of Henry County. Boar’s Head first contacted Henry County about a potential site in March 2014 and

broke ground seven months later. According to New Castle/Henry County Economic Development Corporation President Corey Murphy, that’s the equivalent light speed for any similar deal. Boar’s Head is initially investing $80 million in its new facility, which qualifies for a tax abatement that will provide $5.5 million in savings over the first 10 years. Boar’s Head will construct a state of the art 150,000-square-foot food processing facility and distribution plant. The facility will occupy land at an existing industrial park on the south side of New Castle. This is the first production facility Boar’s Head has constructed from the ground up. The company will fill more than 200 permanent jobs by 2018 in processing, transportation, technology, and manufacturing — areas in which New Castle’s workforce skills skew strongly. And while New Castle already boasts technology and manufacturers, Boar’s Head will be the community’s first food production plant, a notable “score” for diversifying the area’s economy. “The company knew exactly what it wanted,” says Shannon Thom, Chief Executive Officer of Henry County REMC. “It presented some unique challenges, since we hadn’t serviced industrial clients in the same industry. Fortunately, Hoosier Energy, our power supplier, stepped up to offer their experience from similar arrangements with other REMCs in southern Indiana. This will be, by far, our largest load. We also worked out financing on the equipment that everyone is happy with.” “Boar’s Head looks forward to building a state-of-the-art manufacturing facility in New Castle and we would like to thank Henry County and the state of Indiana for their support in making this possible,” remarks Michael Martella, president of Boar’s Head Brand. “We look forward to the beginning of a long-term cooperative business partnership with the state of Indiana. The state offers a low-tax climate and an experienced workforce that create an ideal business environment.” The new plant is projected to open in spring 2016.

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replenishment has tightened up the supply chain considerably. Dock doors can be used with highest efficiency and food product can get to its destination more quickly. For perishables, cross-docking is more easily achieved with ASN, saving the manufacturer time and money. Effective vendor compliance programs go hand in hand with ASN. Suppliers reduce waste by implementing best practices to ensure food product is configured for minimal damage and easy handling. The most effective compliance programs are those developed via collaboration between manufacturer, supplier, and warehouse or distribution center. More and more frequently, manufacturers are employing fulltime vendor compliance managers to oversee this element of the supply chain. Companies that hire experts to examine their supply-chain operations are able to identify inefficiencies. Often, cost-saving improvements can be made with little or no financial investment. For example, a study that counts how many times a product is touched or moved from the start to the end of a company’s supply chain may highlight processes that are compromising product freshness. Or engaging in a costbenefit analysis may yield surprising results if it has been some time since a company has examined different transportation options. Ultimately, it is inevitable that technology, consumer preferences, economic conditions, and other variables will change over time. What is most important is that food manufacturers periodically re-examine both internal processes and the impact of external variables on operations to ensure optimal results. FP

INNOVATIONS AND TRENDS IN PLASTIC FOOD PACKAGING By Clare Goldsberry

rom plastic cans to new labeling techniques the latest trends in plastic food packaging support freshness, longer shelf life, and product branding and tracking. Applications for food and beverage packaging are one of the largest uses of plastics globally and are expected to grow. In fact, demand for rigid plastic food containers is forecast to advance 5 percent annually to $5.4 billion in 2017, representing 118 billion units. According to the Freedonia Group, a Cleveland-based industry market research firm, growth in rigid plastic container demand will outpace the overall food container average based on its advantages over glass, metal, and paperboard alternatives. There are a number of reasons for this increase in demand such as plastics-processing technology improvements including advances in co-extrusion techniques that provide oxygen barrier systems, heat resistance, and other performance characteristics. When Is a Can Not a Can? Is a plastic can still a can? Most certainly! Just ask Silgan Plastic Food Containers, one company that has revolutionized the “can” by making it plastic. The Straight Wall Plastic Can is compatible with standard canning systems, which is a primary attribute to making the new can acceptable

to food processors. According to Silgan, it can be doubleseamed and sterilized in traditional retort systems without the need of overriding pressure. Existing assets can be retrofitted to handle this container making any migration project affordable and easy to implement; best of all, it runs at similar speeds. All of that is good news for food processors. For the consumer the benefits of the Silgan Straight Wall Can are that it’s microwaveable, reusable after opened (re-closable), dent-free, lighter weight, and easily recyclable. Milacron, a global manufacturer and supplier of turnkey co-injection molding systems to the plastics and packaging industries, has developed a new multi-layer packaging technology designed to meet the needs for a successful high-barrier technology. The technology provides a robust, multi-layer plastic package, delivered with the same highvolume production efficiencies and cycle times as monolayer plastic containers without barrier properties. Milacron co-injection technology can be applied to production of PET blow-molded containers, PP blow-molded containers, thin wall containers, closures, and more. Most recently, Milacron co-injection developed the Klear Can, an alternative to metal cans and something the company calls “revolutionary” for food packaging. The Klear Can, produced by Kortec, a Milacron division, provides a shelf life of up to five years and the ability for brand owners to show the quality of the product to consumers.

Milacron, a global manufacturer and supplier to the plastics and packaging industries, has developed the Klear Can for food packaging, which has a shelf life of up to five years and the ability for brand owners to show the quality of the product to consumers.

2015 / F15

With the goal of

being close to the food processors, packaging companies tend to locate multiple plants throughout the U.S. to reduce shipping time and costs.

Kortec introduced the Klear Can with Milacron at this year’s National Plastics Exposition. With its three-layer plastic construction (polypropylene outer and inner layers, with an EVOH barrier), the Klear Can is suitable for retort up to 130oC (265oF). It has been tested and approved for both retortability and the integrity of the double seam, which is designed to allow the plastic can’s flange to accept traditional (easy open and non-easy open) metal can ends. This means that food processors can easily shift from traditional metal cans to the use of plastic cans, with no need for investing in new downstream equipment, according to Kortec. “These plastic cans use the same steel or aluminum can ends, same filling equipment, same seaming equipment, and the same retorting and cooling equipment,” notes Russell Bennett, Kortec vice president of Sales and Marketing. “For the canner and the brand owner, there is no need for significant modifications over what happens today. We see this as a major advantage.” Other Trends in Rigid Plastics Packaging Consolidation and vertical integration among plastics packaging processors is continuing as the large players expand their reach to food processors, not only nationwide but globally as well. M&A activity is high in this industry as growth continues and demand for plastic packaging increases. In July, Berry Plastics Group Inc. entered into a definitive agreement to acquire Avintiv Inc. from private equity funds managed by The Blackstone Group LP. It appears that Berry is becoming a more vertically integrated company, as Avintiv Inc. is one of the world’s leading developers, producers, and marketers of specialty materials used in infection prevention, personal care, and high-performance solutions. With 23 locations in 14 countries, an employee base of over 4,500 people, and the broadest range of process technologies in the industry, Avintiv’s strategically located manufacturing facilities position it as a global supplier to many of the same leading consumer and industrial product manufacturers that Berry Plastics supplies. Berry Plastics itself has more than 90 facilities worldwide, and the company continues to expand its footprint. With the goal of being close to their customers, i.e., the food and beverage processors, packaging companies tend to locate multiple plants throughout the U.S. to reduce shipping time and costs. For example, Silgan has 19 manufacturing facilities located throughout the U.S. and Canada.

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Yet, with M&A activity often comes consolidation. For example, in August, Amcor Rigid Plastics announced it would consolidate its Des Plaines, Ill., manufacturing facility into its Itasca, Ill., manufacturing facility to better meet changing customer needs. The “phased” consolidation will take place over the next 12 months to ensure there will be no service disruptions to customers. Amcor Rigid Plastics acquired the Des Plaines facility from Alcan Global Pharmaceutical Packaging in 2010. With more than 180 manufacturing operations in 40+ countries, Amcor Rigid Plastics is one of the world’s largest manufacturers of rigid plastic packaging for the food, beverage, spirits, and a wide range of consumer markets. Combating Counterfeiting Global supply chains and manufacturing bring one big problem that continues to plague many companies: counterfeit products. To help solve this problem companies are looking to packaging to designate product authenticity. Amcor just announced a partnership with Kezzler AS, a provider of serialization business services, to offer Amcor’s customers a full service, advanced packaging serialization backed by a cloud platform. The new product, MaXQ, offers brand owners unique identification codes printed on every package. The dynamic codes can be used for digital consumer engagement, anticounterfeiting, track and trace, and other activations. The unique codes are generated and printed on each package, seamlessly integrating with customers’ existing packaging supply chain, notes Amcor. Bob Travis, president of InkWorks Printing, a company focused on advanced digital imaging and label technology that creates value for its customers, commented that digital watermarking is the next big technological advancement in packaging that offers a hidden mark that the eye cannot see. “However, as you pass your smartphone over the package, a filter on the phone picks up the information and the consumer is immediately engaged. It’s the brand experience they want people to have,” he explains. “The unseen digital watermark is there without disrupting the logo on the package.” Additionally, Travis notes, it brings more engagement at point of contact. “The digital watermark takes the consumer right to the brand owner’s website with one wand-over, eliminating transaction fatigue caused by the number of clicks people have to make to get there,” he says. “Digitally watermarked images provide a number of benefits that other ways of marking or identifying products don’t, including the ability to track and authenticate products.” In-Mold Labeling The North American market is expanding for in-mold labeling (IML) applications driven in part by big brand promotions, new IML functional labels, new brands coming

into the market, and new product segments. In-mold labels can often be more than just labels when it comes to food and beverage packaging. However, there continues to be some reluctance among the large food brand owners and processors to implement IML because of the initial costs for molds and required automation equipment. Additionally, since brand owners typically have a vast number of SKUs, molding rigid plastic containers with the labels on them makes any required changes difficult. Often this can result in all the IML containers for a specific SKU having to be recycled if there is a label change because with IML the label becomes part of the container. However, new IML functionality along with innovation is creating more demand in North America for IML. New technology such as using IML for barrier packaging — in which the label actually becomes part of the oxygen or light barrier — is getting attention. Creating marketing appeal — such as labels with textures, metallic looks, and tactile properties, as well as variable information — is also driving demand. In an age when shelves are filled with competing products, labels are becoming more critical to catching the consumer’s eye, differentiating products, and providing functional properties. IML is certainly becoming a big part of that trend. FP

During its 2014 expansion, Hickman’s Family Farms added 90,000 square feet for two additional poultry laying houses. This was Hickman’s second expansion at its Ak-Chin location.

Native Environments Can Offer Long-Term Advantages to Food Processing Facilities

hen looking for new sites, food processing facilities typically want to be in operation in 6-12 months. To reduce the time involved, companies often limit their search to sites with existing buildings that can be retrofitted, but may be less than ideal in the long-term. Concentrating a search only on conventional locations may lead

companies to overlook the truly unique advantages offered by Native American reservations. Many federally recognized tribes can offer unparalleled tax advantages, incentives, and project fast-tracking abilities that most states, counties, and municipalities simply cannot. Any hesitancy may come from a lack of understanding of how reservations work. However, if companies look for reservations with an established agricultural supply chain, close proximity to workforce and transportation, and an in-house development and approval process to speed projects to market, even a build-to-suit facility can be completed in a short time frame. This is what attracted Hickman’s Family Farms to the Ak-Chin Indian Community’s industrial park, Santa Cruz Commerce Center, in 2003. Located in Arizona’s agricultural heartland with its own successful farming operation, Ak-Chin offered Hickman’s advantages that never expire — like accelerated depreciation, low electric costs provided by the reservation’s own utility, and a structured lease that allowed for construction costs to be amortized over the length of the lease. As a result, Hickman’s built its first phase in 10 months and has expanded two times since. When it comes to lowering long-term costs, considering locations like Ak-Chin’s Santa Cruz Commerce Center certainly is food for thought.

Find the Right Location for Your Next Project. FacilityLocations is a GIS map-driven, online economic development directory used to research potential locations during the business re-location or expansion process.

FacilityLocations.com 2015 / F17

HOW FACILITIES ARE BEING ENGINEERED, DESIGNED & CONSTRUCTED TO SUPPORT THE FOOD REVOLUTION By Phil Seale, Executive Vice President, Manufacturing Market, Food & Beverage Market, Gray Construction

ood processors are leaving no stone unturned during the engineering and design phase to ensure their facilities can meet consumer demands for product safety and quality. With the industry anticipating 18 percent sales growth in 2015, it’s no surprise that food and beverage manufacturers are hungry to capitalize on growing consumer demands. As these demands become more specific, manufacturers are met with the unique challenge of building facilities that will maximize efficiency and profitability, while not neglecting the unique and often challenging needs of consumers. Optimism Abounds in Food and Beverage Manufacturing Despite industry competition being extremely high, companies are generally feeling optimistic right now. In fact, 2015 is slated to be a big year for the industry. The WeiserMazars LLP Food & Beverage Industry Study,1 performed in conjunction with The Food Institute, AFI, and Stagnito Media, cited a staggering 92 percent of food and beverage companies anticipate increased sales this year, with an expected 13 percent increase in employment. As the industry continues to grow and its economic impact becomes even greater, companies are also confident in forecasting industry expansion. So much so that 43 percent believe that the sector will expand in the year ahead,2 and 42 percent will be considering additional financing for equipment. Domestic manufacturers are not the only ones eager to jump on growing market opportunities — the U.S. market is also being targeted3 by private equity and international companies as a prime investment opportunity.

F18 / foodprocessing

Consumer Demands Are Driving More Innovative Facilities It’s common knowledge that the public is growing increasingly concerned about their health and the safety of their food. One very obvious example of this is the consumer’s pursuit of organic, fresh foods. According to the Organic Trade Association,4 organic food sales have more than tripled over the last decade and increased 11 percent last year alone, hitting $35.9 billion. At Gray Construction, our customers are very attuned to this trend and are leaving no stone unturned during the engineering and design phase to ensure that their facilities will be built to amply address these concerns. They are proud of their increased responsibility for overall food safety and quality and making it a priority from project onset to completion. Chelten House Products, Inc., for example, which is a leading provider of salad dressings, pasta sauces, salsa, and other condiments, really began to notice a growth surge when they moved to private-label organic and all natural foods. The family business began in Bridgeport, N.J., but due to its growth, partnered with Gray to design and build a second food processing facility in Las Vegas, Nev. Similarly, our customers are emphasizing an increasing interest in knowing where food comes from. In other words, consumers want to know whether food is local, how it’s been processed, and how to properly address traceability, which means these areas are becoming driving factors in how new food manufacturing facilities are being engineered, designed, and built. Incidentally, this trend is growing far beyond just human foods — it’s taking over the pet food industry as well. For instance, our customer Champion Petfoods has built an enormous customer base largely on its commitment to making pet food from biologically appropriate, fresh, regional ingredients that are never outsourced, also known as the company’s BAFRINO mandate. This has obviously been a critical motivator during the engineering, design, and construction of Champion’s first U.S.-based kitchen in Auburn, Ky., which will be operational in early 2016. The controls were designed specifically to track all ingredients for each recipe as they come through the supply chain, and the data collection system was developed to enhance consumer awareness of the product’s traceability. The kitchen will also meet human food safety standards, fully adhering to USDA and FDA regulations. Likewise, Clemens Food Group recently called on Gray for design-build services of its 550,000-square-foot fresh

to the evolution of consumer needs, we also must be pork processing facility in Coldwater, Mich. Once operaproactive in tailoring our approach to address the constantly tional, the facility will process 10,000 hogs per day, all changing requirements of the consumer to best serve our of which will be sourced through several regional family customers. FP farms. As a leader in the pork industry in animal well-being initiatives, it was paramount that the Clemens facility be For information about mentioned projects, go to www.gray.com/ designed to meet the highest standard of animal care durprojects/food-and-beverage-plant-construction. Notes: ing all phases of processing. 1 http://weisermazars.com/uploads/src/uploads/foodbeveragesurvey2015.pdf 2 http://www.americas.gecapital.com/GECA_Document/GECapital_Food_Beverage_ Technology and the innovation of select equipment CXOSurvey_Exec_Summary_2Q15.pdf 3 will play a vital role in the production process. The use http://www.lek.com/sites/default/files/Food-Beverage_StateOfTheIndustry_LEK_ ExecutiveInsights2015.pdf 4 of robotics and computer-controlled processing equiphttp://www.ota.com/ ment will allow Clemens to produce a premium quality, consistent product with improved efficiencies resulting Food Manufacturers Need To Be in in a positive impact on worker safety. Proximity to Resources and Key Markets Specific systems are being integrated to offer a holistic approach to the entire supply chain. The building itself is a ith a vital economy, skilled talent, and primary component of the supply chain, as all systems have been designed access to markets, Ontario, Canada, specifically to deliver wholesome food helped put Dr. Oetker’s pizza in North products to the consumer while mainAmericans’ freezers. In 2014, Dr. Oettaining control of every process from ker opened its first North American farm to fork. frozen pizza plant in London, Ontario. This strategic location put Dr. Oetker in the heart of the As one of several food safety proNorth American market, close to Ontario’s abundant farm produce with access to the region’s cess controls, highly efficient chilling highly skilled workforce. procedures will also be implemented Dr. Oetker Canada had been selling frozen pizza in Canada since 2002, shipping the to assure that the product is safe, and pizzas to North America from Germany. Nearly one-third of all frozen pizzas sold in Canada that flavor and nutritional aspects are were made by Dr. Oetker. In recognition of its growing customer base, Dr. Oetker Canada preserved. Once chilled, the pork is wanted to build a frozen pizza production facility in North America. It needed a location cut into products using sophisticated close to its key markets, and with an abundant supply of high-quality raw ingredients for equipment in large processing areas, which are designed to maintain strict pizza production, as well as the workforce to put all the ingredients together. cleanliness of the entire processing The solution for Dr. Oetker was London, Ontario, for its new Canadian pizza manufacenvironment. The facility is scheduled turing facility, warehouse, and distribution center — a $113 million investment. In 2014, to begin operations in fall 2017. Dr. Oetker began manufacturing frozen pizza for the North American market — a US$19

Food and Beverage Beyond 2015 Though 2015 is quickly drawing to a close, we expect many of the same trends we’ve seen emerge this year will carry over into the New Year as well. With the average consumer being more educated than ever before about health and food safety benefits, high-quality products seem like less of a commodity and more of an expectation. The challenge for food processors is to find an engineering solution that brings together industry experts, vendors, designers, and contractors, who together can reach their stringent budget, quality, and production demands. After completing more than 172 food and beverage projects, Gray Construction is well equipped to meet this challenge through a collaborative, fully integrated design-build approach. As food manufacturers continue to adapt

trillion marketplace under the North American Free Trade Agreement. Ontario’s highly skilled and reliable workforce was a significant factor in Dr. Oetker’s decision to locate in Ontario. About 95,000 people power Ontario’s food manufacturing operations, with another 100,000 more working in related sectors. The province’s manufacturing sector workers average over 10 years of on-the-job experience. Ontario’s workforce is among the best educated in the world. Twenty-five universities and colleges are training the next generation of workers through world-class programs in agriculture, food and nutritional sciences, and culinary arts. Dr. Oetker’s London, Ontario, Canada location puts it in the heart of North America. Ontario’s strong transportation, telecommunications, and utilities infrastructure move people and goods quickly and easily in and out of Ontario. The plant is within a day’s drive of 141 million people. Three border crossings are reachable in less than two-hour’s drive. Ontario’s packagers, warehousing, distribution, equipment, specialized storage, and transportation suppliers know the food business. The province has 52,000 farms and more than 200 agricultural commodities, giving Dr. Oetker fast access to abundant fresh ingredients for pizza-making, such as flour, cheese, tomato sauce, and meat toppings. Ontario has all the right ingredients for food and beverage production expansion. What’s more, Ontario business consultants provide companies interested in the province “one-window” access to all the information, contacts, and resources needed to discover how to expand in Canada’s largest food and beverage manufacturing jurisdiction.

2015 / F19

Food Processing Presents Energy Industry Opportunities

ir Liquide is just the latest food grade proces-

explains Andrew Gregory, who manages CO2 sourcing for Air

sor to build in Tulare County, the largest food

Liquide. To his surprise, Gregory says he experienced one of

production region in the nation. Because of

the fastest permitting processes he has seen during his career.

its central location in the heart of the state,

“Tulare County was extremely business-friendly, and they han-

coupled with California’s famously sunny skies,

dled the environmental review process in house, which made

Tulare County’s largest business clusters are oriented toward

our plant construction go very quickly,” Gregory says.

agribusiness, goods movement, and clean energy. This confluence of business opportunities has resulted in

Calgren recently added a large anerobic digester to its ethanol operation. Dairy waste is pumped in liquid form from

some interesting partnerships. A derivative economic result

nearby dairies to Calgren’s facility, where the digester strips

of the food processing industry has come together with eth-

off the methane to produce clean energy. The heat generated

anol production to create a lucrative opportunity to harvest

by burning the methane aids ethanol production, and has the

another greenhouse gas, carbon dioxide produced through

additional benefit of consuming harmful greenhouse gases.

ethanol production. Ethanol production in turn releases carbon dioxide. Air ETHANOL PRODUCTION Air Liquide Industrial U.S. LP (Air Liquide) recently com-

Liquide saw an opportunity to capitalize on this chemical process to capture CO2 and purify these troublesome gases into

menced operations at a new state-of-the-art carbon dioxide

a lucrative source of food grade carbon dioxide that can be

liquefaction plant in Pixley, one of Tulare County’s unincor-

used in products such as sparkling mineral water and sodas.

porated communities. The new 450-ton-per-day facility is one of three carbon dioxide liquefaction facilities owned and

The facility created four local jobs and will soon hire

operated by Air Liquide in California. The facility captures

drivers to deliver the product statewide. Air Liquide hired 85

carbon dioxide emissions from Calgren Renewable Fuel’s

workers to help construct the plant. The Pixley location was

ethanol plant in Pixley.

chosen because of its direct access to State Highway 99 and its central location to the company’s northern and southern

Air Liquide captures CO2 gases from Calgren Renewable Fuel’s ethanol plant, then purifies the gas and converts the

facilities. Air Liquide has two other facilities in the state, one in Martinez, Calif., and another in Wilmington, Calif.

CO2 gases into liquid form before marketing the grade gases to customers in the food, beverage, and manufacturing industries in the Central Valley and Los Angeles region.

FOOD PRODUCTION DOUBLED “Processors typically go where raw commodities grow and where transportation infrastructure allows for efficient goods

“We were hesitant to build in California because the state is notorious for having a formidable regulatory environment,”

F20 / foodprocessing

movement to ports and lucrative foreign markets,” says Mike Washam, Tulare County Economic Development Manager.

In less than a decade, Tulare County has doubled its food production. Ag officials just announced crop sales

by means of aneorbic digesters that can transform unwanted greenhouse gases into clean energy.

topped $8 billion last year, up 10 percent from 2013 values. The top commodity, dairy, was valued at $2.5 billion

“There’s a synergy to all this dairy production. If you have

in 2014; cattle brought in $980 million, while oranges

a lot of cows, you have a lot of milk products,” Washam says.

brought in $963 million. This bump in wholesale crop

“Cows also produce ‘brown power’ — their waste can be

production has consistently bolstered growth in food

captured and converted to methane.”

processing capacity. The growing increase in Tulare County crop production valFood processors continue to migrate to the Golden State’s Central Valley — drawn by the proximity to raw

ues continues to feed processor growth. Tulare is the largest dairy-producing county in the United States.

commodities and the desire to locate along major transportation routes. And perhaps no other agricultural region

CaliCheese is in the process of working with the City of

has seen the recent growth in food processing capacity as

Tulare to construct a 300,000-square-foot cheese plant that

Tulare County.

is expected to hire 212 workers and to process four million pounds of milk daily. Company officials say the plant will

Why the recent love from processors? Served by State Highway 99 and an adjacent rail freight line, Tulare County is

produce cheddar cheese and whey cream, whey protein concentrate, and permeate powder.

traversed by one of the busiest freight corridors in the nation. Its central location also means that processors can transport

CaliCheese will add to the local dairy-processing capacity.

commodities to major ports in either southern or northern

California Dairies, Inc. (CDI), the largest dairy-processing coop-

California in about three hours.

erative in California, recently commissioned a third evaporator at its Visalia, Calif., plant. Co-owned by dairy producers who

“In the last couple of years our county has received

ship 18 billion pounds of milk annually, CDI manufacturers but-

tremendous interest from food processors,” Washam says.

ter, fluid milk products, and milk powders. CDI also plans to

“We are getting a reputation for being efficient at assisting

construct another standalone processing facility just outside

clients with navigating the local land use process and the state

the city limits of Visalia.

regulatory landscape.” Air Liquide officials say the company made the right move SOLAR AND “BROWN” POWER This business assistance has helped the county reap huge

by locating its new greenfield facility in Tulare County: “This new state-of-the-art carbon dioxide facility reflects Air Liq-

economic benefits from the creation of a vibrant build-out of

uide’s continued commitment to supply high-quality products

more than 360 megawatts of utility grade solar generation in

and services to customers safely and reliably,” notes John

the past 24 months.

Buckley, CEO of Air Liquide USA LLC. “We are proud to work alongside Calgren Renewable Fuels in this venture as we grow

Tulare County’s burgeoning food processing cluster is now

in California, and we are appreciative of the support we have

attracting additional green energy production facilities. Anoth-

received from the local community and from our customers in

er emerging market is harvesting methane from dairy facilities

this region.”

2015 / F21