34th Annual Plant Construction Survey
Though 2010 wasn’t the year for processors lacking reserve cash to find bank loans to finance greenfield sites, fine-tuning and expanding existing facilities were certainly in vogue, according to FE’s 34th Annual Plant Construction Survey. To a certain extent, processors are finding expansion and renovations necessary to meet regulatory requirements and the demands of their customers-like Walmart and Costco, both of which have quality and traceability mandates in place.
The survey table on pages 56 to 76 lists food and beverage plant projects underway, completed or in progress in calendar year 2010. While new plants were down ever so slightly from 2009 (0.7 percent or one project), expansions and renovations tracked upward at 8.5 percent (27 projects) compared to the previous year, showing some light at the end of the recessionary tunnel.
Although 2010 was slightly better than 2009 in total projects (490 vs. 464), 2010 was still considerably below the 2007 banner year in plant construction that boasted 613 total projects. Plant projects dedicated to warehousing and distribution increased from 40 reported in 2009 to 50 in 2010, a 25 percent increase. This category did not track combined projects where both manufacturing and warehousing space were increased. These are indicated in the table by + D/W (plus distribution/warehousing).
According to ZweigWhite, a research group that monitors architectural and engineering/construction (AE/C) firms, 2010 was a tough year for both processors and AE/C firms. However, a majority of AE/C principals are optimistic that business will pick up this year. According to ZweigWhite’s 2011 Principals, Partners & Owners survey, 11 percent of those responding think business will be much better in 2011 than in 2010, and 57 percent said business will be somewhat better than last year.
When it comes to international opportunities for US AE/Cs, principals are beginning to see projects abroad as a viable option, according to the ZweigWhite study. The survey indicated that 16 percent of AE/Cs are already doing international projects, and another 18 percent are looking favorably to international projects in the future.
“Greenfield projects have been few and far between in the domestic market with the majority of greenfield activity occurring in the international markets-China, Russia and India tending to see more activity,” says Darryl Wernimont, POWER Engineers’ market specialist for food, beverage and consumer products.
Besides the lack of CAPEX for greenfield projects, there is another factor contributing to the small number of startups, says Tyler Cundiff, manager of business development at Gray Construction. He points to the large number of greenfield sites built during the mid-2000s, which have provided necessary production capacity.
In the US, several issues-the economy being the biggest-are driving renovations and upgrades. William Vaughn, VCP&A principal, sees overall economic fears hindering new construction, but fostering process upgrades and renovations.
With the austere economic climate, processors expect more from AE/Cs. “Ten years ago ‘faster, safer, cheaper’ was a differentiator for many AE/C firms, today, [they are] still factors to a client, but no longer are differentiators,” says Wernimont. Schedule, safety and price are mandatory.
The same holds true for green/LEED, bundled services and plant security. They are no longer a new trend or differentiator; they are expected, says Wernimont. “Today, if a firm is not abreast of sustainability, safety and plant security and doesn’t have the ability to bundle and manage a variety of services, it will have difficulty in meeting a client’s expectations,” he adds.
Due to short product lifecycles and innovation in food products, processors have been compressing the time scale for the design and construction phases of a project, says Ian Howkins, SSOE Group’s senior project manager. Processors have a strong desire to meet market demands, but typically release capital spending on a “just-in-time” basis.According to Howkins, the same issues-efficiency, food safety and innovation-are driving projects, but with more intensity. There is a strong drive for increasing overall production efficiency-beyond the reduction of energy usage alone. Key considerations are reducing the time required for cleaning and changeovers; making production lines multifunctional; and minimizing idle equipment.
Green and safe“Quality-of-life” projects are driving processors to upgrade existing lines, and these projects are often considered by the public to be healthful and green, according to Ray Schieferecke, Burns & McDonnell’s director of food and consumer products construction. “There is a lot of emphasis on making [manufacturers’] products healthier, their production processes more efficient and their waste streams cleaner.”
Processors are also paying more attention to Safe Quality Foods (SQF) criteria and food plant operating standards, says Robert Graham, vice president of food and consumer product for The Austin Company. Quality and food safety are actually being driven by “top-down” demands from end-users (customers), such as the retail chains and big-box stores, and competition from other processors touting safe and quality products, adds Graham.
Getting the highest-quality product out the door might be helped along by combining Six Sigma and lean manufacturing techniques, says Wernimont. Six Sigma initiatives seek to identify and remove causes of defects and errors in the manufacturing process. The lean initiative focuses on the reduction of waste and the increase of productivity. These techniques can be applied to flow processes, equipment performance, ergonomics and error prevention.
Sustainability has multiple benefits, says Bob West of AM King Construction’s business development group. They can let consumers know about corporate responsibility, decrease energy costs, reduce a plant’s carbon footprint and are often rewarded by both federal and state governments with incentive programs.
“There is a progressive, increasing focus on green initiatives, which will often result in tax savings/credits in addition to any long-term reduction in energy costs,” says Howkins. But processors should remember that while green initiatives have an intangible factor for a project gaining corporate or public relations support, they can’t always be quantified by normal engineering criteria, he adds. The trend, however, is for companies to incorporate green initiatives into all aspects of their business-from renewable energy resources, reduced packaging and overall awareness of reducing their carbon footprint.
Controlling allergens, managing food safetyWhether a new site or a retrofit, protecting food from airborne contaminants and allergens is increasingly important to processors, says Karl Landgraf, project manager at The Dennis Group. Landgraf reports increased insistence on isolating cooked food from raw, allergens from non-allergens and open product from the environment. This can be facilitated through partitioning, good HVAC design (air pressurization and filtration levels) and personnel practices (e.g., gowning and air curtains).
Joe Bove, Stellar’s vice president of design services, reports an increasing interest in hygienic zoning and filtration and separation, due to growing concerns about airborne contaminants and the management of allergens. He also reports an increase in compartmentalizing food processing activities, due to the increasing cost of space.
When it comes to food safety, there is increased focus on self-performing audits, rather than relying on outside firms, for processors’ production facilities as well as their ingredient suppliers, says Howkins. Established manufacturers are looking at existing facilities and processes and making substantial investments to increase food safety by reducing the risk of microbiological contamination.
Food safety and food security are two important reasons that Hendon & Redmond’s clients cite for renovations and expansions, says Jim Larva, project manager. Food safety and security have greater importance as processors are concerned with potential terrorism. New regulations are also driving the importance of food safety and security.
For those building greenfield facilities, food safety is assumed, and quality management is a parallel requisite. “One of the primary trends in new plant design and construction is placing heavy focus on resources and technologies to enhance food safety and [its] general awareness,” says Gray’s Cundiff. There are definitely advances in building materials and equipment that help reduce the risk of food contamination, but there are other advancements with technologies to aid already sophisticated quality management systems, he adds. Contractor/engineering quality management systems can now be more easily integrated with a processor’s food quality strategies to create a higher awareness and measurable/predictable results in plant construction projects, adds Cundiff.
New regsBoth the Global Food Safety Initiative (GFSI) and the Food Safety Modernization Act (FSMA) will no doubt help promote safe food for consumers, but many processors that follow HACCP and GMPs are already be in good shape.
The GFSI was written in 2000; The American Meat Institute (AMI) task force published guidelines for equipment in 2003, and for facility design in 2004, says Bove. Therefore, the industry has implemented better design practices in the areas of hygiene, allergen and species separation, temperature control and other preventive control measures. Design and construction firms are now more aware of the ongoing food safety requirements and compliance issues, adds Bove.
Landgraf thinks FSMA will create a lot of talk and more studies, inspections and committees initially, but it is long overdue and can only benefit an industry still smarting from tainted peanut butter, dust explosions and frequent hamburger recalls. “The US will probably lag behind the rest of the world in adopting standards and enforcing them. On the other hand, many far-sighted US companies will embrace them and insist that their plants be ‘ahead of the regulatory curve,’” adds Landgraf.
Meeting regulatory demands could mean shifting funds from other projects. Projects will be tailored to modernizing food and beverage plants to comply with the new regulations, says Larva. This will decrease the number of plant additions and renovations.
To ensure food is safe will require additional expenditures for some processors. On a practical level, says Haskell’s Hall, the ability to clean food processing equipment and the surrounding area becomes more critical. As manufacturing companies invest in their facilities, extra focus and attention will require upgrades to equipment, as well as to facility infrastructure. CIP systems will need to be more robust.
According to William Sander, Hixson Architecture & Engineering senior VP and project manager, delivering a quality, safe product is definitely at the forefront of the strategies of food and beverage producers; however, rather than the GFSI or regulatory changes, most recent safety improvements are being driven by customers such as Walmart, Costco and Kroger, whose club memberships and/or customer loyalty programs provide an unparalleled level of traceability that ratchets up accountability for suppliers. Furthermore, the desire to avoid the huge cost and negative publicity of a recall and the desire and benefits of being seen as the highest-quality provider are other reasons for food and beverage companies to manage/mitigate risk by improving food safety, adds Sander.
While this regulatory discussion has centered on food safety, parts of the new regulations also include defense, and these will have an impact on most, if not all, food processors, says Robert J. Hope, senior physical security analyst with Burns & McDonnell. The impact to these entities can be broken down into three cost categories:
1. Identifying deficiencies in the current security posture of the facility and how the current security posture measures up to the expectations of the regulation
2. Identifying the measures needed to meet the expectations
3. The ongoing cost of developing, implementating and managing additional security policies, procedures and technology.
Utilizing another federal program mandating security as a benchmark, Chemical Facility Anti-Terrorism Standards (CFATS) developed by the Department of Homeland Security, a food processor can begin to understand the impact these regulations may have on its particular operation, both financially and culturally. Depending on the current security protocols in place, additional security improvements could increase the number of barriers between people (employees and guests or employees to employees) and the equipment and/or ingredients. This action alone can affect productivity by increasing the amount of time taken for an employee to conduct his or her daily tasks by having to pass through different levels of security, adds Hope.
Saving energyBy the end of this year, electrical rates will have been deregulated in most of the US. According to Hall, in many cases, the projects associated with energy reduction are economically justified on their own merit. For new sites and renovation projects, the LEED program offers many design standards that allow for reduced energy usage. Even when a processor is not pursuing actual LEED certification, the design principles can be leveraged at a minimal cost to the overall project, adds Hall.
“Most of the companies we are working with have developed long-term targets for reduction of energy costs, so the impact of deregulation on its own is not a unique driving force,” says SSOE’s Howkins. However, many processors believe energy costs will continue to rise, and have now set lower hurdle rates for approval of energy-reduction projects.
Examples of methods to curb electrical energy usage include:
• Specification of higher-efficiency and variable speed motors
• Consideration of variable frequency drives for more applications, e.g., ammonia and air compressors
• Selection of energy-efficient lighting
• Improved control of lighting for unoccupied spaces
• Shutting down equipment when not in use
• Monitoring peak loads, and shifting usage patterns if possible
• Monitoring and adjusting power factors when practical
• Installing occupancy sensors in conference rooms and warehouses.
Finally, Wernimont suggests the development of an energy plan/matrix or a thorough energy audit to understand where energy can be saved. In addition, some more active measures can be taken to convert wasted energy or create new energy, such as:
• Integration of wind for electricity generation
• Rooftop solar PV for electricity generation
• Cogeneration for process heat and electricity
• Waste heat recovery for electricity generation
• Biomass conversion (e.g., waste to methane or fat/trims to oil).
Food processors are facing challenges to upgrade their lines and equipment to be more efficient and save energy while meeting the demands of new food safety regulations. Processors that have always made food safety an integral part of their processes will find it easier to upgrade, innovate and compete while maintaining a responsible corporate image.
The following companies assisted Food Engineering in compiling this survey:AM King Construction
The Austin Company
Big-D Construction Corp.
Burns & McDonnell
The Dennis Group
A. Epstein and Sons
Faithful + Gould
Gleeson Constructors LLC
Hendon & Redmond Engineers/Architects