June 1, 2007
By Sam Gazdziak, Senior Editor
Many of the country’s top meat processors are looking to stay on top by adding new facilities or expanding on existing buildings.
All across the country, land is being dug up, walls are being built up, water pipes and power cables are being installed, and meat processors are adding new or expanded facilities to their portfolios. For many of the most successful companies, the best way to sustain the business is to keep adding onto it.
“As the world’s largest chicken processor, Pilgrim’s Pride always has a wide variety of projects moving forward in various stages,” says Gary Rhodes, vice president, corporate communications for the Pittsburg, Texas-based processor. “Our capex (capital expenditure) budget for fiscal 2007 is expected to be in the range of $150 to $175 million.” Among the current projects is a feed mill being constructed in Natchitoches, La.
Pilgrim’s latest construction project was the expansion of a Live Oak, Fla., facility, finished in November 2006. The facility, which was acquired as part of the recent Gold Kist Inc., acquisition, was a $70 million, 180,000-square-foot expansion, which doubled the plant’s capacity to produce value-added products.
The Live Oak expansion brought Pilgrim’s Pride the ability to produce air-chilled chicken, where birds are cooled using fresh, filtered cool air rather than water immersion. “This new product was developed to help supply the double-digit sales growth of natural foods in retail supermarkets,” Rhodes says. “Pilgrim’s Pride is the first major chicken processor in the United States to offer this antibiotic-free, air-chilled premium product line which is being marketed by Publix under its GreenWise Market label and also under our own Nature Select label.”
One of the newest meat-processing facilities to be built is a 200,000-plus-square-foot facility under construction in Tremonton, Utah, for West Liberty Foods. The further-processing operation will be able to process turkey, beef, pork, chicken and cheese, says Janelle Plantz, marketing manager for the West Liberty, Iowa-based processor.
“Our log fabrication/IQF facility will feature a ready-to-eat line specializing in whole breasts and tenders, nuggets, fillets, fritters, meatballs, patties, ribs, chicken wings and drumettes,” she says. “Our slicing facility includes the longest slice line in North America, in addition to nine other slicing cells capable of producing 150 million pounds of products annually.” The log fabrication and IQF portion will be operational in late August of this year, with the slicing portion to begin operation about a month later.
Several companies are working to expand their current buildings as well. “Bob Evans Farms will be expanding our current distribution center in Springfield, Ohio, by 66,000 square feet to accommodate the continuing volume growth of our food products business and to operate more cost efficiently,” says Mike Townsley, executive vice president of food products.
“Bob Evans Farms’ vision is to be the best in class in all of our food businesses. We feel that the expansion of this facility will ultimately help us meet the needs of our customers by increasing our volume,” says Townsley.
More than processing
It’s not just the processing and distribution side of the business that is the focus of attention among processors. One of the country’s largest meat processors has announced plans for a state-of-the-art research and development center, while another opened a new R&D facility this year.
Sara Lee Corp. has announced plans for a 150,000-square-foot R&D campus to support its retail and foodservice businesses, located at its headquarters in Downers Grove, Ill. “The Kitchens of Sara Lee” will be completed in early 2009, and it will include culinary facilities, product, packaging and equipment development testing, sensory services, a pilot operations facility, analytical and micro labs and product training facilities.
“The Kitchens of Sara Lee celebrates our heritage as a company that understands how to provide products that delight our consumers and is the cornerstone to our future success,” Brenda Barnes, chairman and CEO, said at the announcement of the construction.
Springdale, Ark.-based Tyson Foods opened its Discovery Center this March. The new facility, dedicated to product innovation and development, includes 19 test kitchens, a packaging lab, several testing rooms and a pilot plant that is USDA certified, allowing customers to process food products at the plant and make them available to consumers. The building, including the pilot plant, was designed in 2004 and completed at the end of 2006 to a tune of $45 million.
“This facility and the team members associated with it really support a major boost toward one of our primary growth strategies, which is adding value to product. The Discovery Center is all about our passion for creating new foods that meet changing consumer needs,” said Dick Bond, president and CEO of the company, during the opening ceremonies on March 6.
The construction thought process
There are many factors that play into a company’s decision to build a new facility or expand upon an existing one. Townsley explains that Bob Evans Farms takes several factors into consideration, such as: proximity to existing facilities, proximity to customer base, freight lines, workforce availability, cost of construction and return on investment. The approval process has been on a local level. Because this will not be a processing facility, the U.S. Department of Agriculture will not review the facility design.
For Dakota Turkeys, the location of its new plant was dependent on the location of its growers, which are all located in North Dakota, South Dakota and Minnesota. Its headquarters in Huron, S.D., is within about 40 miles of the epicenter of its live turkey population.
When it was looking for a facility in South Dakota, there were two communities wooing the company, says Kenneth Rutledge, president and CEO. Huron, which has been home to beef, pork and chicken processing facilities in the past, had several advantages. “The city infrastructure was set up to handle a processing facility, and the benefits and incentive package that was built to entice us to come to Huron was really an excellent one,” he says.
The fact that Dakota Provisions needed to hire roughly 400 employees at the start also played a factor. “The city of Huron was ready, willing and able to manage a minority population coming in, from the standpoint of the adults we’d be hiring and also in terms of the school system and the programs they had in place for dealing with minorities,” Rutledge says. Even the seasons came into play during the construction of the plant. Given the severity of South Dakota winters, the company ended up choosing a construction firm that had experience working on projects in all manner of weather.
West Liberty’s Plantz also notes the importance of finding just the right location for a processing plant. “We need to consider a community that is accepting of having a meat-processing facility and adequate infrastructure, including employees to support our operations,” she explains. “We are very active in the communities that we currently operate in and want to be welcomed in any new location.”
She adds that, on a practical standpoint, a new construction project must have the ability to enhance the economic return for the company’s owners. In this case, the Tremonton facility will enable West Liberty to expand the company’s product line and increase its distribution to the western part of the country.
Product innovation was also on the mind of Beef Products Inc. when it announced plans for a $400 million expansion of its flagship plant in South Sioux City, Neb. The construction, which is scheduled to begin this year, was spurred by the company’s latest product innovation, lean ground beef with a 5 percent fat count. The expansion will also include a $20 million cooked meats and pizza toppings facility, which will help open new markets for BPI’s product line.
Building a facility that will be profitable is of primary importance, and part of that process is making sure that the building is designed with food safety in mind. It won’t matter how large or how state-of-the-art the equipment is if the building itself poses potential risks to the meat products. Pilgrim’s Pride Rhodes says that the American Meat Institute’s Principles of Food Sanitary Design were incorporated into the design and construction of the Live Oak building. For example, processing equipment was arranged to facilitate sanitation, and cleanup stations were strategically placed throughout the plant floor. “[There is] separate ventilation for first and second processing and for water and air chilling,” he adds. “All production walls are either sealed precast concrete or stainless-steel insulated panels designed to minimize the potential for any microbial harborage and to maximize effectiveness of cleaning.”