New plant projects numbered 157, and 355 expansion/renovation projects of $1 million or more were also uncovered. The number of greenfield projects fell by 12 percent versus last year, while the number of expansion/renovation projects remained flat.
Food and beverage companies are becoming increasingly reluctant to provide details about their plant projects for competitive reasons, leaving FE editors unable to confirm some projects. Despite this resistance, FE research still shows a drop in total projects.
Perhaps the fallout from the consolidation era of the late ‘90s is finally coming to an end. Since that time surviving plants had to reengineer in order to bring new products in house from the shuttered plants. Now, after September 11, 2001, food manufacturers are faced with a horse of a different color.
The top trends effecting new food and beverage plant projects, besides corporate belt-tightening, include food safety, plant security and gearing up for the Bioterrorism Act.
As food and beverage manufacturers cope with meeting the demands of mass merchandisers and answering the consumer call for safer foods, the factory floor strives to get processing and packaging operations up to peak efficiency.
According to Karl Landgraf, project manager with The Dennis Group, cost is almost always the operative principle in food and beverage plant projects. Landgraf attributes this to "corporations needing to get the swiftest payout possible on their investment."
Forrest D. McNabb, senior vice president with Big-D Construction Corp. says food and beverage companies are spending a lot more time on analyzing long-term cost solutions for operation and maintenance of facilities versus cost reduction methods to force projects into cost models. "It appears that (food companies) are considering life cycle costs along with operations and maintenance costs in lieu of just initial investment," he suggests.
The Austin Company is seeing a trend toward more automation to reduce personnel costs, particularly in more expensive states such as California. "Owners are more concerned with ROI (return on investment) evaluations on major capital equipment improvement projects," says Robert Graham, vice president, food and beverage facilities, for The Austin Company. "They are typically looking for a three-year or less payback on the investment," he adds.
Playing it safeAs the number of food and beverage plant construction projects stumbled in this year's survey, could the recent emphasis on food safety and bioterrorism be the culprit stealing budget dollars?
"Food safety remains one of the most important considerations when designing and building new food manufacturing and distribution facilities or rehabilitating existing ones," says Andrea Valasquez, vice president of A. Epstein and Sons International. "Since the events of September 11 and the subsequent Bioterrorism Act, what once may have been considered an extra when designing and constructing a facility has now become a necessity to maintain the safety of the nation's food supply," she states.
The entire project development cycle has been affected by the Bioterrorism Act, agrees McNabb. On the construction side, site selection, perimeter fence, security gates, guard houses, door access control and security monitoring systems are involved. The other impact of the act, he says, has been on the renovation side. "We have always worked in operating plants with proper product safety and security measures. But for the first time in my career, I see owners actually scheduling shutdowns to allow for renovation work."
While the current Bioterrorism Act does not specifically address plant design requirements, it focuses on threat response and tracking of suspect food. According to Greg Crnkovich, director of planning, food and beverage facilities, at The Austin Company, there are provisions in the act that may ultimately impact plant design. "Potential modifications will be security measures to isolate authorized personnel from visitors and unauthorized entry. Additional safeguards to ensure that storage facilities for both water and raw material are accessible only to authorized personnel may be considered as well as additional sampling and monitoring of ingredients prior to the process." Potentially, Crnkovich believes, all bulk storage and receiving systems will be installed in enclosed, controlled access locations within the plant.
Overall, most processors are sharpening the security and food safety plans that were already in place, including inspection of incoming raw materials, scrutiny of outgoing consumer shipments, HACCP plans, and alarm and password systems.
Maintaining controlThis year for the first time FE asked engineering firms serving the food and beverage industry if they see a trend toward processors specifying equipment without controls so that new equipment can be easily integrated. While more than half of our respondents said they are experiencing "quite the opposite" trend, 37 percent recognized this potential industry shift.
This is often the case with equipment sourced from overseas, says Landgraf. "For example, a foreign supplier may have Siemens as his standard electrical/controls components and the buyer wants Allen Bradley. Other times there is an issue of confidentiality, where even though the vendor would be only supplying hardware, the buyer thinks the vendor may be able to infer something about his process."
Some food processors wait until late in the project to specify control systems in an effort to integrate all process, packaging and material handling in addition to waiting for the latest version of the system, says McNabb. "It also appears that control selection is more toward simpler systems in an effort to allow modifications to on-line facilities as well as ease of operation."
Gary Smith, chairman of Webber/Smith Associates, sees his customers specifying control systems both ways. Joe Shaffer, CEO of Facilities Design, sees building systems being specified without controls so that they can be tied to a centralized control system. "This is particularly used on ammonia and HVAC systems," he adds.
On the flip side, most of those surveyed told us they continue to see food processors specify equipment with controls. Crnkovich says the trend is to "drive more sophisticated controls down to individual components such as labeling, case packing... so that changeover may be driven by the enterprise software."
Russ Cudmore, director of engineering at Suitt construction, says equipment is being installed with open controls architecture "so that modifications and/or additions can easily be put into or taken out of the system without redoing the entire system."
Help wantedAs food companies continue to trim engineering staffs and simultaneously squeeze more performance out of existing machinery and systems, outside engineering firms are picking up the ball.
"We are providing more up-front services including conceptual layouts, design and construction schedules, and budget costing for submission to CEOs and boards for project approvals, says Cudmore.
Food processors also require operational analyses. According to Bill Holden, executive vice president of The Facility Group, food manufacturers are asking for "more logistical analysis, more internal cost improvement projects and more capacity upgrades."
The Austin Company is seeing more renovation of existing facilities. "More value-added product is being produced by formerly commodity suppliers," says Graham. As a result, he says, "there is a greater emphasis on distribution chain analysis and location of regional operations to build national brand coverage."
Darryl Wernimont, director of The Haskell Company, says processors are focusing their limited resources on core product competencies such as ingredients, processing and packaging. With resources at a premium, he says, engineering firms and consultants spend more time discussing the client's products and the facility issues they face.
FE's 2004 Food Plant Construction SurveyProjects that were conceptualized, started or completed during 2003 appear here.
The following companies assisted Food Engineering in compiling this survey:The Austin Company
Kathleen M. Bast
Big D Construction Corp.
Case Lowe + Hart
The Dennis Group
Facilities Design, Inc.
Joe A. Shaffer
The Facility Group
Gleeson Constructors, Inc.
The Haskell Company
Hendon & Redmond
Seiberling Associates Inc.
The Stellar Group
Pharr & Associates
A. Epstein and Sons International, Inc.