INDUSTRY FOCUS: More Than Just Production And Plating
By Dominique Cantelme
From the May/June 2013 issue
The food processing industry interacts with farmers, livestock growers, distributors and consumers to convert fresh ingredients such as fruits, vegetables, grains, meats and dairy products into finished goods. It involves the methods and techniques used to transform raw elements into food for human consumption—removing toxins, easing marketing and distribution tasks and increasing food consistency and shelf life. Food processing also increases the seasonal availability of many foods and enables transportation of perishables across long distances, creating more diverse food opportunities.
Food manufacturing is one of the United States’ largest manufacturing sectors and the demand for processed food tends to be less susceptible to fluctuating economic conditions than other industries. New processed foods are continuously entering the market with a hungry public to match. For many companies, this is their main goal for the coming year. While improving existing products is always on the agenda (though some foods are perfect as they are), bringing new products to our tables will help them with future expansion opportunity.
Be it one off production, batch production, mass production or just in time, when processing food, a number of factors must be taken into account. Companies must consider hygiene, energy efficiency, waste, labor and cleaning stops. Innovation is also a driving force of the food processing industry, helping companies cut production expenses by reducing waste, employing effective manufacturing techniques, optimizing automation to lower labor costs and cutting down on input materials such as energy. Everything from where a food originates, how it is packaged and what it is packaged in to ease of preparation plays a part in a food’s success story.
Many people have gained valuable time replacing the longer task of preparing meals from scratch with buying or using food that only needs to be baked, boiled, heated or simply opened. What may have otherwise demanded an hour can be accomplished in less than 10 minutes, taking a strain off most families and individuals that may suffer from time constraints or lack of cooking skills. However, consumers do have a little legwork to do since they have been paying more and more attention to what is in their food. Some prefer not to eat high fructose corn syrup, MSG, trans fats, aspartame or genetically modified ingredients while others simply cannot eat nuts, gluten or soy due to food allergies.
The labeling of these ingredients is very helpful when people are deciding what they want to eat, what they do not want to eat and what they can or can’t eat pertaining to certain health issues. Currently, the FDA requires the labeling of over 3,000 ingredients, additives and processes. And if they keep up with 21st century food technologies, we will hopefully be seeing a lot more transparency when it comes to the packaging of our delicious treats.
For example, a report released this past February by the Mintel Group and Leatherhead Food Research indicates that in 2011 the value of natural colors surpassed that of artificial synthetic colors after the latter’s association with a stream of negative news. Food processing companies can use information like this to help change, update or produce new products that the market favors.
Food quality also is a major concern for many consumers and has therefore influenced the trend toward buying organic. Organic is a guarantee about how an agricultural product was grown and handled before it reached the consumer. It’s a set of requirements for farmers who grow food and for processors who manufacture food products. The food production cannot involve synthetic pesticides, chemical fertilizers, irradiation, industrial solvents or chemical food additives. Ingredients are tracked by using detailed record keeping and must be grown and manufactured according to the standards specified by the National Organic Program (NOP). Both the ingredients and the facility where the food is processed must be certified organic. It may seem like a tall order when it comes to the time and money a food processor needs to invest in an organic product, but with organic retail sales growing annually, it may be worth it in the end.
In addition to pleasing consumers through food safety, ingredients, taste, cost and ease of preparation, food processors also must consider their proximity to raw materials and their final destination. When dealing in food, here are some top shelf locations to consider.
Expansion In Oswego County’s Food Processing Sector
Oswego County is experiencing a growth spurt in the food processing sector. Over the last year, three companies have purchased existing facilities and are expanding their food processing ventures into Oswego County. The three projects (as outlined below) represent significant job growth for the area.
Champlain Valley Specialty (CVS) of NY, in the Town of Oswego, acquired the former Empire Fresh Cuts and Oswego Growers & Shippers buildings, totaling 100,000 square feet. This established their apple processing facility closer to their suppliers and market. CVS produces “Grab Apples” from locally grown apples that are sliced, packaged and shipped to local schools, retail markets, restaurants and their distributors. The $5.5 million renovation/expansion project will create 90 jobs.
Teti Bakery USA, Inc., is the newly formed US subsidiary of Teti Bakery, based in Toronto, Ontario. Teti Bakery’s recent acquisition, in the Town of Volney, is their first U.S. facility and is strategically located for product distribution in the Northeast and along the Atlantic coast. Teti makes Italian bread products that are sold in supermarkets and restaurants through such retailers as Wegman’s Food Markets and Costco. The $3.3 million project to acquire and renovate the 200,000-square-foot building will create 63 jobs.
The most recent acquisition was the purchase of the former BirdsEye plant in the City of Fulton by 607 Phillips St. Acquisition, LLC. They will manufacture frozen, value-added products. The $3.2 million dollar project is expected to create 183 jobs with an estimated annual payroll of $4.8 million.
Nobody will dispute that location is key to site selection. However, there are other important factors to consider. Oswego County has more to offer than an attractive location within hours of every major Northeast market.
Oswego County has a skilled labor force that is ready to work—many even have previous food processing experience. The county’s devoted Workforce Development Board looks for ways to bring potential employees and employers together and coordinates with colleges and vocational schools to provide courses that enhance worker skills.
In addition to locating close to their suppliers and markets, transportation is another key factor in selecting a site. Oswego County is truly multimodal with rail available at three of the county’s industrial parks. It also is located within minutes of major highways, has a deep water port and a local airport and is near to an international airport.
Many food processing facilities require water for processing. Oswego County supplies high quality water from Lake Ontario as well as capacity for industrial waste water treatment.
Oswego County has Greenfield sites that are ready to build on. Within the industrial parks, all sites have utilities and other necessary infrastructure in place and some have had comprehensive site profiles performed. These profiles expedite the selection process by eliminating much of the due diligence work for the potential purchaser.
The final benefits of Oswego County are the various potential incentives available.
The importance of manufacturing to the local, regional, state and national economies continues to be very significant and cannot simply be measured in the number of jobs. Due to dramatic technological changes and improvements in the manufacturing process utilizing state-of-the-art equipment, more product is being produced per man-hour. Manufacturing has truly become a capital intensive industry requiring huge investments at all levels to produce products competitively.
Manufacturing, of all kinds, continues to be one of the major economic drivers of the Oswego County economy.
Automation and technology advances have had an impact on the number of people employed in manufacturing, and this has been true over time in Oswego County. Ten years ago, there were approximately 4,200 employed in manufacturing. Today there are still over 3,000 employed in manufacturing in Oswego County, representing 9 percent of employment, which is equal to the national percentage. However, in the past year there has been resurgence in food processing with the attraction of Teti Bakery from Canada, Champlain Valley Specialties and the new owners of the BirdsEye plant. Combined these companies will create over 330 manufacturing jobs.
Oswego County as a whole has fared pretty well in maintaining its position in manufacturing. The attraction of manufacturers due to the significant economic impact they bring to a community is very competitive. It is the mission of Operation Oswego County to help facilitate the attraction of manufacturers and companies in other sectors in order to spur economic growth. To complement this initiative, providing assistance to help existing firms expand and become more competitive also plays a significant part of Oswego County’s overall economic development strategy.
Port Colborne Has All the Right Ingredients
Located in Port Colborne, Ontario, Carbohydrate Valley is the prime location for international companies looking to invest and succeed in North America’s bio-based economy. It offers all the right ingredients for success in today’s bio-food industry including a multimodal transportation network, a highly skilled labor force, affordable business costs and a location only 30 minutes away from Buffalo, NY.
Bio-processing in Carbohydrate Valley is strengthened by Port Colborne’s history in manufacturing and processing industries, a positive business climate, an educated workforce and close proximity to educational institutions specializing in the latest innovations in biotechnology research.
As the only location in Canada with local access to glucose and citric acid, Carbohydrate Valley provides several unique opportunities for new bio-food investment. The established supply chain includes internationally focused companies Ingredion, Archer Daniels Midland and Jungbunzlauer.
Carbohydrate Valley’s location in Port Colborne makes it part of a key multi-logistics hub in southern Ontario with highway, rail and port infrastructure. On Niagara’s South Coast, Port Colborne is situated on Lake Erie at the southern entrance of the Welland Canal, and is serviced by two of the largest railway networks in North America. Port Colborne is also just minutes away from one of the principal border crossings between Canada and the United States.
Port Colborne is part of Ontario’s new Gateway Economic Centre and includes an area designated as Niagara’s Economic Growth Zone. Projects are already well underway to expand transportation links and expedite the movement of goods. Due to the Gateway Economic Centre’s proximity to the United States, import/export industries are choosing this strategic location. Canada’s Foreign Trade Zone flexibilities are available in Port Colborne creating an opportunity for facilities located in the Gateway Economic Centre to import and reprocess goods with reduced or eliminated tariffs, as well as programs to offset sales taxes.
Port Colborne is linked to a sophisticated highway network which is part of a key trade route between the Eastern Seaboard and the Midwest. Several highways are currently being expanded, and a new highway is being developed which creates a second connection from Port Colborne to the U.S. border. In addition, the Port Colborne Harbour Railway serves many bio-food industrial sites in Port Colborne, connecting its clients to CP and CN mainlines adjacent to the community.
The presence of the Welland Canal in Port Colborne adds distinctive value and a competitive advantage for bio-food businesses. The Welland Canal serves as a vital link in the St. Lawrence Seaway System, connecting the Great Lakes to the Atlantic Ocean, allowing local businesses to reach markets around the world.
The City of Port Colborne and its partners in Carbohydrate Valley are committed to seeing new bio-industry investment. A serviced, 24.7 acre land parcel is currently available, located adjacent to Ingredion’s corn sweeteners facility and Jungbunzlauer’s citric acid plant. This site also has potential for rail and water access, and is competitively priced.
The City of Port Colborne offers a selection of various grant and rebate programs for capital investment on industrial land. When combined with location, transportation, workforce and market advantages, Carbohydrate Valley has all the right ingredients for the bio-food sector. When product is ready to be manufactured, Carbohydrate Valley in Port Colborne is the place to be.
Genesee County: Vying for the Yogurt Title
When most people think about New York State, they immediately think of New York City, skyscrapers and traffic jams. But just an hour or so to the North of the New York City metropolitan region begins a great expanse of farmland that extends hundreds of miles to the Pennsylvania border.
Here is perhaps a little known fact that most people in the United States do not realize—agriculture is the second largest industry in New York State behind tourism. In fact, in 2009, the agri-business cluster of industries generated $49 billion to the New York State economy.
In 2010, New York State ranked number two in apples and maple syrup production; number three in grape production; number four in dairy, squash and pear production; and number five in onion production. These field crops, fruits and vegetables have resulted in an 87 percent increase in commodity price increases since 2004.
In Western New York and the Finger Lakes region of New York State, which includes Genesee County, there are approximately 342 food processing entities and 670 farm equipment dealers, service companies and wholesalers. In 2011, the food manufacturing sector employed almost 16,500 people with an average annual salary of $54,081.
There is a higher concentration of employment in the food processing industry in Western New York and the Finger Lakes region than in many areas of the United States that are known as agricultural centers. It certainly helps that on average, a food processing worker here makes about $3,000 more in annual wages.
What is perhaps most exciting is that the food processing and agricultural industries in the region continue to grow, particularly in Genesee County, which was named as one of the top five fastest growing food processing region in the U.S. by Business Facilities magazine in 2010, 2011 and 2012.
New companies to the region include Barilla, Alpina and Muller Quaker Dairy. Both the crop and dairy industries are benefiting from the increase in food processors locating in the area and existing processors such as Perry’s Ice Cream, O-AT-KA Milk, Rosina, Kraft, Yancey’s Fancy’s and Rich Products continue to grow by taking advantage of new market opportunities.
This growth and opportunity is being recognized by the economic development community in Western New York and the Finger Lakes and they are therefore marketing the region as a growing cluster for food processing companies and related businesses.
The region has significant attributes to lure these companies given its proximity to Northeastern consumer markets. There is incredible dairy, crop and viticulture supply chains as well as outstanding natural resources, including a significant natural water supply.
The area is between two major metropolitan regions—Buffalo and Rochester—providing a highly educated, trained and productive workforce. There is a plethora of higher education institutions, not the least of which are the University at Buffalo, Cornell University, the Rochester Institute of Technology and the University of Rochester, in addition to New York State’s vast network of community colleges.
The success story in the region though is the growth of the food processing industry in Genesee County. This growth has been enabled by the development and completion of the 211-Acre Genesee Valley Agri-Business Park in the town of Batavia, NY. The development of the Ag-park was nearly a decade in the making, including a $10.5 million investment in infrastructure like utility hook-ups and water supply.
Success at the Ag-park has been evidenced by the introduction of two yogurt manufacturing plants in the region. The total construction investment of both projects was approximately $225 million.
The Alpina Foods plant started production in October and the operation has already grown to what it projected for its second year of business. There are 55 permanent employees with Alpina locally, and to help meet production demands, the plant sometimes uses up to 100 temporary employees. The company had received 525 applicants from eight counties for its original 30 production jobs. There are already plans on the drawing board to expand, and long-term Alpina has the potential to triple the size of the plant which could lead to a doubling of the workforce.
The other yogurt manufacturing plant, Muller Quaker Dairy, is a joint venture between Theo Muller—one of Europe’s largest dairy processors—and Pepsico, which leverages strong infrastructure, branding, financial capacity and distribution channels. The plant will initially create 186 production jobs with an anticipated opening in 2013.
Just as exciting as the construction of these two manufacturing facilities is the fact that economic development agencies are diligently working with other projects actively considering locating at the Ag-park. By creating this type of industry cluster, Genesee County has the potential of being the yogurt capital not only of New York State, but of the world.