Wringing costs out of operations and overhead is great for short-term profitability, but where are the new processes and products that kick-start growth?

Winemaker Erick Olsen stands in the fermentation room at Geyserville, CA-based Clos du Bois winery. With degrees in fermentation science and food science, Olsen brings the craft of enology, while the engineering staff is focused on the creative problem-solving of MES. Source: Clos du Bois.

Lead, follow or get out of the way was a bumper-sticker message sported by speed-obsessed motorists in the days when CB radios were the wireless communications technology of choice. The same advice applies to food companies. Unless they invest in new products and breakthrough technology, they are doomed to take a defensive, reactive approach to a changing marketplace.

Consolidation is blamed by some for the exodus of engineering talent from the country's largest food companies, the so-called brain drain. While many engineering and production responsibilities have been outsourced over the last two decades, not all companies are determined to slash the in-house expertise that leads innovation and boosts productivity. In last year's State of the Food Manufacturing survey, more Food Engineering readers indicated engineering staffs were being expanded (16%) than reduced (13%). Wells Dairy Inc., the Le Mars, IA, ice cream manufacturer, grew 70 percent to $850 million in sales between 1997 and 2004. Seven years ago, Wells hired its first full-time engineer. Today, there are more than a score are driving process improvements.

One former Kraft/General Foods engineering manager disputes the notion of a brain drain. "I outsourced 300 engineers at Kraft, until I could no longer support my salary grade under the Hay compensation system," recalls this food-industry professional, who requested anonymity. "Now companies have to spend on new-product development to grow total volume, and people who were outsourced are going to get moved back into the organization-though not at the same compensation level."

The quandary for large, publicly traded food companies is finding an innovation leader for new products and production-system improvements, the Kraft alum believes. Those firms are reluctant to work with architectural/engineering firms because they fear their competitors will gain access to their intellectual property. On the other hand, the people who knew how to execute productivity improvements no longer are part of the in-house staff. "Who's the visionary who will make improvements happen?" he asks. "Certainly not top executives who know the cost of everything but the value of nothing."

Risk-aversion therapy

OEMs' technicians and engineers can be a source of innovation talent, and major food companies often turn to those suppliers for help in developing first-to-market specialty equipment. "Pulling an OEM's engineers from working on their next generation of extruders and other projects requires a big commitment; at General Mills, we bought a lot of equipment, and that was a reason for OEMs to work with us," notes Jim Getchell, who retired as vice president of engineering at Minneapolis-based General Mills two years ago. "If you have a relationship and a trust at a senior level with a company, then you have an opportunity to tap in to their expertise."

Huge contact freezers were designed by BPI to lock in lean ground beef’s moisture, a quality improvement that helped the firm become a dominant supplier. Technological innovation drives the company’s growth.

Few food manufacturers have the purchasing power to cultivate those types of relationships. Fewer still have the capital to commission new-to-the-market technology. As a result, most OEMs focus on machinery that can be modified slightly to meet a large number of manufacturers' needs, allowing them to pro rate engineering costs across many orders. Manufacturers sacrifice exclusivity and a competitive edge in return for lower costs.

That's bad news for the handful of suppliers who specialize in design and construction of distinctive systems. One is Foster-Miller Inc., the Waltham, MA-based technology company that boasts a staff of more than 265 engineers with expertise in mechanical systems, robotics, chemical processes, electrical systems, software and other disciplines. To increase its involvement in food companies' new-product development efforts, Foster-Miller encourages clients to file patents on any intellectual property Foster-Miller's experts help them to develop.

"There has been a tremendous drop in product innovation in recent years, with food companies focused on paying off debt and not investing in innovation," observes Ed Goldman, senior vice president at Foster-Miller. "Most projects today are related to cost savings, but there is a lot more financial potential from innovative products that succeed." Innovations like the sliced and freeze-dried strawberries in Special K Red Berries cereal from Kellogg Co. used to be common; now they are few and far between. "Companies have to take high risks to be unique, and if you never failed, you never tried to make anything that wasn't a me-too product," he observes. "But if you fail, you're out on the street." Confidentiality agreements prevent Goldman from discussing Foster-Miller's recent work. A project from the distant past was Fruit Gushers, the General Mills snack food with a liquid center. "Coextrusion is the logical approach to making a product like Gushers," Goldman says, but coextrusion didn't work, and developers had to find an alternative technology, one which he declines to identify.

Although Gushers debuted a score of years ago, "there are very few people who can knock it off, even today," General Mills alum Getchell adds. "There are usually only a couple of innovative new products a year like that," and if they click with consumer desires, they can be long-time contributors to profitability.

Leap of faith

Blockbuster new products begin in R&D, with manufacturing and engineering involvement coming later. Given the current dearth of new products, as opposed to new packages, production specialists must direct their creative energies toward line improvements. Creativity requires a tool set, and food and beverage manufacturers increasingly are recognizing that manufacturing execution systems (MES) are essential tools.

Andy Woehl of Geyserville, CA winery Clos du Bois reached that conclusion a couple of years ago. "Employees inherently want to do a great job, but they aren't given anything to tell them if they are," Woehl recently told an audience at Rockwell Automation's Manufacturing Perspectives conference in St. Louis. MES packages like Rockwell's Line Performance Solution supply the necessary metrics for improvement at both the operator and manager level, though they require a small leap of faith at the implementation stage.

"If I install a variable frequency drive on an air compressor, I can give you an ROI, but data by itself never will save you money," says Woehl, the winery's process engineer. "I can never promise what MES might save. But if I don't know what the problem is, I can't offer a solution."

The winery produces two million cases of premium priced wine a year, with 85 percent of production handled by a seven-year-old bottling line. Line efficiency is only 64 percent; if overall equipment effectiveness (OEE) could be increased to 80 percent, 225 days of bottling production could be reduced by 27 days. At 85 percent OEE, 170 days of production would suffice, giving the plant added capacity to accommodate growth well into the future.

Engineers like Woehl require information-management systems as a starting point for productivity improvement. "If there isn't executive sponsorship, it doesn't happen," notes Walt Staehle, former director of manufacturing execution & shop floor information systems at Kraft Foods and currently senior industry manager-food & beverage for Siemens Energy & Automation Inc., Spring House, PA. Staehle's MES project at Kraft required a $32 million investment, and by the second year the sponsors demanded, "Show me the money," he relates.

The Kraft project, in which Rockwell's MES solution was installed at 48 plants with 500 production lines, came after Staehle wrestled with a product recall situation. "It was sheer dumb luck that we were able to hold it to an $11 million recall; it could easily have cost three times that much," he shudders. Unfortunately, manufacturers remain in a reactive mode to issues like tracking and tracing and productivity improvement, and that retards deployment of infrastructure improvements such as MES, particularly at small and mid-sized companies. "Those who go through a recall are instantly converted to MES," he says.

Real-time, accurate, meaningful data allow managers to correct immediate problems and identify changes that result in productivity improvement, Staehle says. How the same information is presented to line supervisors and operators has to be significantly different. "Cost per clock hour" is important to a vice president but meaningless to an operator, he says. "The shop floor usually isn't involved in determining what metrics they need to see, but presenting operators with complex specs in manuals and control charts when the workforce has no idea what ‘the sum of the squares' means won't improve productivity. When implementing MES, I did something extremely radical: I asked people what they needed to see."

The US norm for reading and math skills is at the 6th grade level, Staehle points out. On the other hand, the video-game generation has come of age, and HMIs that present operating data in an easy-to-grasp format can overcome literacy constraints. "If you make it graphical, if you make it colorful, people understand the data immediately," says John Cavalenes, director of MES solutions at Alpharetta, GA-based Citect Americas.

Innovation Inc.

Few companies have pushed the innovation envelope as far as Beef Products Inc., the Dakota Dunes, SD-based processor of boneless lean beef. Founded as a recovery operation-BPI's four plants separate lean meat from the fat in beef trimmings-the company has evolved into a category leader by improving the finished product, making it more moist and with a lower microbial load than standard ground beef. Contact freezers and a unique air-purification system at the South Sioux City, NE, plant are examples of the quality, food safety and process improvements that set the company apart. Perhaps the most important innovation is a pH enhancement process that has been validated to achieve up to an incredible 8.5 log bacteria kill.

The pH enhancement process is a phenomenon BPI founder Eldon Roth encountered as a young man, while performing oxy-acetylene welding in a packinghouse where an ammonia leak had occurred. Dissolved in water, ammonia forms ammonium hydroxide, which raises the pH of meat and acts as a powerful antimicrobial. It also increases the absorptive properties, enabling meat to retain more moisture.

Understanding the chemistry would come later; at the time, Roth noticed the sweet, pure odor created when an extra hydrogen atom joins the ammonia molecule. Packinghouse workers raved about the flavor of the outer layer of meat, which they cut away because of its appearance before salvaging the rest of the carcass.

Roth remembered that experience in the wake of 1993's E. coli deaths linked to Jack in the Box. Seven years and countless hours of staff time were invested in developing a system to sterilize meat under vacuum with an ammonium gas without leaving an aftertaste. Four years ago, commercial application at the South Sioux City facility commenced.

"We had to create the system ourselves because there are no experts at putting ammonium into meat," explains Roth. "To use it in production required a great leap of faith, but we spent the money and made it happen." The investment was significant-"not nine figures, but it's a huge cost," he says-but the process created a value-added product. BPI now is negotiating with other meat companies interested in licensing the technology for their own operations.

"As a company, you have to be able to make a leap of faith," says Roth. "At BPI, you're not going to get fired because a project failed."

Innovative systems and creative new products are the lifeblood of all food and beverage firms, whether they are public or private, big or small. Automation can remove people and increase volume, but only if the same product is produced day after day. To grow, today's processors have to produce many products well. Skilled personnel with the resources to leverage their creativity will be essential in that environment.

For more information:

John Cavalenes, Citect Americas,

Ed Goldman, Foster-Miller Inc.,

Charley Rastle, Rockwell Automation,

Walt Staehle, Siemens Energy & Automation Inc.,