Plant Construction Survey

March 28, 2003
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Food Engineering's 23rd Annual New Plant Construction Survey finds food manufacturers cleaning house instead of moving out as renovations and expansions outnumber new plants by more than two to one.

Product line extensions, new safety initiatives and technological advances are some of the key factors stimulating plant construction, according to Food Engineering's 23rd Annual New Plant Construction Survey. Respondents representing food manufacturers, government institutions and architecture/engineering firms from around the nation reported a total 753 food plants built, expanded or renovated in 1999. And following last year's trend, the majority of those projects -- a whopping 68 percent -- involved expansion or renovation instead of greenfield construction.

Explaining this expansion/renovation trend, survey respondents cited two fundamental reasons for the weak state of new construction -- time and money. "The most notable trend involves the speed at which projects move from inception to completion," said Alex McLaughlin, manager of the Research Division of the West Virginia Development Office (Charleston, W.Va.). According to McLaughlin, food companies are moving faster than ever to expand their offerings in response to increased competition. Therefore, they elect to renovate or expand their existing facilities, which is typically faster and cheaper to do than starting from scratch. And cheaper is a big issue. One plant owner summed up the industry's economic situation in this way: "If we had a 'dot com' after our name, maybe then we'd be able to garner the capital needed to build new."

In addition, the industry has seen a significant number of consolidations over the last few years, notes Jim Thonn, vice president of business development with Suitt Construction Co. (Greenville, S.C.). As a result, companies are reorganizing and renovating newly acquired plants to quickly come up with the best and most economical mix of production locations.

With a limited number of stomachs to feed and increased competition, food makers are watching their pennies as they aggressively battle for a bigger share of the market. Accordingly, recent construction projects are dedicated to giving manufacturers an advantage over the opposition.

Line improvements

"U.S. food companies are focusing on projects that will improve line efficiencies, increase capacity and/or provide flexibility to their existing plants," states Patrick McRoberts, director of business development, food and beverage, with engineer/contractor Morrison Knudsen (Cleveland, Ohio). Considering the cost of a new product introduction for a major national brand ranges from $50 to $70 million, McRoberts said, manufacturers are seeking ways to minimize cost by maximizing their existing commodities.

"A lot of existing plants these days are dealing with something we call 'facility creep,'" said Mike Steur, director of client development - food industry with architect/engineer Hixson (Cincinnati, Ohio). "This refers to a plant that has been added onto in bits and pieces to accommodate immediate needs without planning for the future. The result is something of a hodgepodge." According to Steur, the current trend is for owners to take a step back and figure out how to organize what they have, and how it will serve them in the future.

Robert Graham, vice president, food and beverage with architect/engineer Austin Co. (Cleveland, Ohio) agrees. "Owners are taking a 'look ahead' approach and planning for expected growth," he said. "Clients are looking more at 'portable' lines within plants that can be moved, reconfigured and rerouted as new products and systems are added."

Consequently, owners increasingly are turning to computer-controlled systems that can manage a broad range of diverse production lines and equipment. "The ultimate benefit is that plant personnel are hired and trained to run computer systems that operate several pieces of integrated equipment/lines, as opposed to 'hands on' running of the individual lines themselves," said Graham.

This focus on technology has altered conventional workspaces, says Steur. "In new and existing facilities, owners are incorporating more sophisticated training facilities and team planning areas on the plant floor."

While some owners are working to bring employees together on the plant floor, others are motivated to keep them apart. "In the meat industry, there is growing use of physical separations between employees in processing and post-processing in order to minimize possible contamination," said Bill Washburn, president of Foodpro (San Jose, Calif.).

Advances in safety

In addition to a physical barrier between areas, Washburn advises his clients to monitor the paths of employees as well. For example, plant supervisors who walk through the entire plant should be required to pass through a washdown area to prevent them from transferring bacteria from one work space to another. He also encourages owners to offer separate coffee break areas, locker rooms and restrooms for employees in each stage of production.

In addition to new production line configurations and contamination concerns, new safety initiatives and technologies are certain to reshape plant design. With the deadline for HACCP compliance having passed this January, plant owners are intimately familiar with the changes these regulations required -- such as the reconfiguration of refrigeration spaces and humidity control systems -- and are ready to do more. According to Steur, many owners are looking ahead and making their plants compliant with the International Association of Food Industry Suppliers' 3A Standards. "What we are seeing is that the 3A standards used for the dairy industry are being worked into meat and other processing plants," said Steur. "While it's not a standard required by the USDA, owners think it might become required later, so they might as well be prepared."

With owners pushing for enhanced safety measures and the USDA's recent approval of the irradiation of meat, many respondents expect a plethora of new questions to affect plant design, such as, how will the facility accommodate it? Can the facility be expanded to accommodate irradiation in the future? And are there special structural considerations?

"Currently irradiation is in the spotlight," says Darryl Wernimont, director of business development with architect/engineer/contractor Haskell Co. (Jacksonville, Fla.), who expects similar interest in pulsed energy, microwave and ultra-high-pressure processing to follow.

Another new technology taking hold is ozone decontamination. Ozone, a powerful oxidant that destroys microbes, is currently being used in a handful of plants around the country. Currently, Stahlman Engineering (New London, N.H.), is introducing the system in a new fishery in Boston, where ozonated water will be used to clean processing surfaces. "This process has been used in Europe for years, and its time is about to come in the U.S." said Scott Pribula, Stahlman vice president.

Delivery methods

In a fiercely competitive market where companies are racing to market, fast is the only option when it comes to food plant delivery. "You might just call fast-track the norm these days -- and in reality we are in situations that we would term hyper-track," said Steur.

Just what method to use to provide fast delivery is the question that has survey respondents standing firm in two separate camps -- design/build and design/bid/build. Design/build involves the owner contracting with one firm to provide all architectural/engineering design services and construction services. A design/build facility typically begins construction while design documents are being developed, allowing for a quick start.

With design/bid/build -- considered the more traditional delivery method -- the owner hires a design professional (either an architect or engineer) to prepare drawings and specifications, which are then used to set bids or negotiate with a general contractor. Construction typically begins after design documents are complete.

For better or worse, many respondents have witnessed a growing acceptance of design/build in the industry. "The benefit of design/build is a seamless blend of design, engineering and construction working as one team for the benefit of the client," said Wernimont, who calls the method the true "buck stops here" approach.

Many respondents were not as enthusiastic about the method, instead preferring design/bid/build.

According to Washburn, one reason for his firm's discontent with design/build is the number of change orders required in the field. "Design/build tends to minimize functional planning, which leads to higher cost and less desirable construction later in the process," said Washburn. "While design/build may appear to be fast and less costly, what we've found is that the number of change orders needed because of unspecific preliminary designs typically extends the construction schedule and ups the cost," he said.

Nonetheless, some design and construction firms realize they must bend to the growing acceptance of design/build by the food industry in order to stay in business. "We know we are going to have to adapt to design/build because that is where the trend is going," said Pribula.

Echoing the predictions of the majority of respondents, Pribula foresees design/build being used for the majority of food plant renovations and expansions. "Owners are primarily concerned with updating their existing facilities or newly acquired plants as quickly and inexpensively as possible, which means few greenfield developments over the next years," he said.

FE's Plant Construction Survey results are compiled from several sources, including Conway Data (Norcross, Ga.); FE's own survey of architectural, engineering and construction firms serving the food industry; state economic development centers; and corporate financial reports, interviews, news releases and clippings.

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