The more pessimistic line of reasoning says the industry is preparing itself for a longer, drawn out recession or worse, by cutting back on planned projects and capital expenditures in 2009.

The more optimistic line of reasoning believes that the worst is over, and that the reduction of 2009 expenditures by processors is simply collateral damage reverberating its way through the industry.

Either way, the numbers provided by Clear Seas Research in its 2009 Capital Expenditure Survey don’t lie. Capital-expenditure projects for 2009 have been down, as expected, in the food processing industry compared to one year prior.

However, the meat/poultry/seafood industry appears to have tightened the fiscal belt more in 2009. A total of 61 percent of those surveyed in the protein industry said they’d spend less on capital expenditures than they did in 2008, compared to only 45 percent in the total food industry saying the same.

Yet, floating above much of the negative news and doomsday scenarios the consumer media loves to analyze is a deeper sentiment with many processors in the industry that the worst might not be far from over.

Consider that, among all food processors surveyed — of which 63 percent said they were involved in capital-expenditures planning/decisions at the corporate level — 82 percent hold a “positive outlook” for the future of their company and the food/beverage industry as a whole. The meat/poultry/seafood industry was slightly less optimistic, but nonetheless, with 79 percent choosing a positive outlook over the negative, tough times don’t appear to be long-lived in the minds of many in the industry. People in management positions comprised 54 percent of the respondents in the protein industry, and another 33 percent said they worked in the Production/Operations/Engineering departments of their companies.

Further positive news, expectations for capital expenditures in 2010 appear downright bountiful in comparison to 2009, according to survey responses. Forty-two percent of protein processors anticipate their companies will spend more on capital expenditures in 2010 than they did in 2009. Only 12 percent at the time of the survey believed that 2010 would see less spending than 2009 in this arena. Another 27 percent did not know or were unsure at the time the survey was conducted — which could be an indication that processors are waiting to see if the economic landscape improves.

The positivity of the outlook is one thing, of course; where the industry stands currently is another. Processors clearly have positioned themselves to weather the current wave of pessimism in the market, however long it does last.

Roughly speaking, for every company that has new capital-expenditure projects planned this year (and they are out there, with 36 percent of surveyed protein companies planning new projects), there is a processor who has reduced capital-expenditure plans for the same year (39 percent). Six percent of respondents explained that their companies have deferred projects beyond 2009, while 15 percent said their companies had no major capital-expenditure projects planned for 2009.

Making the commitment

Protein processors who were surveyed in the Clear Seas 2009 Capital Expenditures Survey also shed light on a variety of topics that help them decide when to plan for a capital expenditure and what benefits and features they look for in a solution.

Participants were asked to rate on a scale of 1-10 (1 being Not at All Important, and 10 being Extremely Important) how important a list of factors were in making sourcing decisions for these projects. It should come as little surprise that protein processors tabbed “Safety” as the top factor in sourcing decisions for capital-expenditure projects. In fact, not a single protein processor ranked “Safety” below a 7 or 8 on the scale. “Performance,” “Overall Product Quality,” “Sanitation” and “Contribution to Operational Efficiency” rounded out the top five factors, in that order, for protein processors.

Those are the factors protein processors use to source solutions, but what do protein processors look at when determining what projects to undertake? The primary reasons for protein processors’ 2009 capital-expenditure plans go hand-in-hand with the above sourcing factors. The responses represent a checklist of the hottest topics and challenges the industry faces on a macro scale today. Efficiency, capacity, labor and food safety are among the top five issues factoring into processors’ capital-expenditure plans for this year.

More about the survey

This article is a snapshot of an annual study examining capital-investment plans across the food/beverage processing industry. The conclusions are based on the opinions and behaviors of industry insiders who agreed to participate in the survey. This survey was conducted and findings compiled by Clear Seas Research. It was commissioned by The National Provisioner and several other BNP Media titles.

A total of 188 individuals actively involved in capital-expenditure planning and decision-making participated in the study, which was conducted in January of 2009. This in-depth research study provides up-to-date information on the key drivers in capital-expenditure planning, the factors of importance in sourcing decisions and a comparison between current and future capital-expenditure plans.

The comprehensive report is available from Clear Seas Research. For information about ordering or to find out more about Clear Seas Research services, contact Sarah Corp at corps@clearseasresearch.com.