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There could be several reasons for the lower number this year. For example, several catch-up projects begun after the 2007-2008 recession when more funding became available may have been finished in 2012. Or it may be because A&E/C firms had more proprietary projects that couldn’t be listed in the chart. Another possibility, noted by a few A&E/C firms, was that some consolidation has been reported as processors located larger facilities—or decided to build one large, up-to-date automated plant to replace several aging facilities. Yet another reason offered by some firms is that the cost of mergers and acquisitions (M&A) has sucked capital out of expansion projects for some processors.
Total projects in 2013 were actually up 6.32 percent over the eight-year (2006-2013) average of 522 total projects. While the number of new projects in 2013 totaled 197 (down 9.63 percent compared to 2012’s count of 218), it was still 5.21 percent above the eight-year average of 187 projects. Expansions and renovations accounted for 358 projects in 2013 (down 6.28 percent from 2012’s total of 382 projects). However, expansions and renovations were still approximately 7 percent higher than the eight-year average of 335 projects.
Finally, the food and beverage industry had fewer projects dedicated to warehousing and distribution in 2013 than in 2012. Thirty-one projects (expansions, renovations or new) in 2013 were totally devoted to warehouse space, falling from the 2012 number of 44 by 29.55 percent. For anyone keeping score, the number of projects dedicated to alcoholic beverages tied with last year at 42.
Key trends: Sanitation/food safety, efficiency
If you could sum up into two categories the key trends affecting projects in 2013, sanitation and efficiency would most likely be the drivers. Both, however, bring along baggage, challenges and successes. “The standards that govern the design and construction of process spaces, as well as sanitation requirements, are changing and, for the most part, are becoming stricter for all types of facilities,” says Troy McOmber, vice president of Fisher & Sons Design/Build. Food and beverage processors’ customers require adherence to food safety standards that, in the recent past, have been reserved only for plants with a highly sanitized environment, such as those needed for meat, dairy, juice and RTE processing.
“We see a movement for using construction materials and methods that vastly reduce surfaces and locations that harbor contaminants,” continues McOmber. Understanding how to design and build food-safe facilities is paramount to the overall success of a project and is a key factor in the amount of labor needed on an ongoing basis to maintain a food-safe production environment.
“This trend stems not only from the 2011 FSMA, which is beginning to influence key decision-makers in how they approach processing environments, but also from a number of highly publicized situations surrounding contaminated food [released] into the public domain,” adds McOmber. Suppliers want and need to assure consumers that they are taking all the necessary steps to produce safe food free of pathogens.
The concern about food safety continues to increase, according to Middough Inc.’s James Bingham, business development director. He has seen several clients undergo recalls and knows the economic and PR impact can be significant.
Hot trends affecting plant designs
These trends (not in any particular order) in plant design were submitted by several A&E/C firms. Most of these items were cited by two or more firms as issues affecting new plant designs, expansions and renovations.
• Safety, health and environmental concerns in plant design are being driven by product integrity, traceability and accountability.
• OSHA’s National Emphasis Program (NEP) targets flammable and combustible liquids and dusts, and any existing plant issues need to be fixed.
• Isolated hygienic zones within plants are a major focus. Likewise, zones with filtered air and a positive airflow keep bacteria out of hygienic spaces.
• Design and construction of process spaces and sanitation requirements are becoming increasingly strict for all types of food and beverage facilities. Designing to meet GFSI and FSMA guidelines is becoming commonplace.
• To make the most of limited storage space, high-rise AS/RS systems use less floor area.
• While LEED certification has lost some of its punch, placing an emphasis on sustainability, the environment and energy efficiency is a well-accepted way of doing business.
• Many processors are expanding overseas. International projects rely on US A&E/C firms for food-safe designs.
• Many processors are expanding existing plants according to new product line additions as opposed to building new plants.
• Plant consolidation is an emerging trend due to transportation, labor and taxes.
• Automation can solve labor shortage problems where people are hard to find.
• The design/build process speeds time to production and market.
“In advance of any effective standards to emerge from the FSMA, many US food producers have been looking to standards set by world organizations—ISO 22000 in particular—to stay ahead of the curve domestically and be better prepared to meet the demands of the world market,” says Mark Di Gino, E.A. Bonelli + Associates marketing manager. “We’re seeing an interest in separation within plants: clearer zone controls for personnel, equipment and product.”
“The use of isolated hygiene zones within plants is a major focus to control movement of both product and plant staff to limit potential contaminated sources,” says Tony LaShay, Excel Engineering business development director. This isolation starts at the perimeter of a site and goes all the way into the plants. The separation of plant personnel by manufacturing function is also growing, with companies keeping raw-side employees from the finished-product-side employees for food safety, adds LaShay. A good example of this separation can be found at the Plumrose lunch meat facility covered in “FE Sustainable Plant of the Year,” November 2013.
“Food safety continues to be a hot topic for everyone,” says Chris Jarc, Hixson Architecture & Engineering project manager. “With the Global Food Safety Initiative [GFSI] and its numerous schemes, people have gone from just thinking about daily operations to also thinking about how they can incorporate GFSI principles into projects.”
Another issue indirectly related to food safety, but more directly related to plant and worker safety, is OSHA’s National Emphasis Program (NEP), adds Jarc. NEP, which deals with flammable and combustible liquids and dusts, is pushing facilities not only to have food-safe designs, but also to mitigate existing plant safety issues and create new designs that are safe at the outset.
Safety and health concerns go hand-in-hand. “We’ve seen an increased emphasis on safety, health and plant design and operation,” says Robert Graham, The Austin Company vice president, food & consumer products. “These concerns are being driven by customer demands for greater product integrity, traceability and accountability.”
Making the operation more efficient
Efficiency is pushing processors to get the most out of their plants with the smallest number of inputs—whether it is energy, labor, consolidation of facilities or waste. Speaking of energy, LEED has been used as a tool to show that processors care about the environment—a way to boost the company’s image to consumers. But unfortunately, LEED has been applied more to commercial office buildings than industrial facilities. Still, LEED’s basic sustainability issues have value.
“These days, terms like sustainability, environmentally friendly and energy efficient are more than just a fad—they’re a way of doing business,” says Tim Gibbons, ESI Group USA vice president of design. “The environmental impacts of standard design, construction and operations on creating a LEED-certified facility are enormous.”
According to a National Research Council of Canada study, LEED buildings can use 18-39 percent less energy per floor than their non-LEED counterparts. However, the study found 28-35 percent of LEED buildings used more energy than their conventional counterparts.1 Not all buildings fit precisely with LEED specifications.
“In fact, refrigerated buildings are some of the greatest users of energy, so limiting or reducing energy use makes the most economic sense,” adds Gibbons. “Currently LEED is not tailored specifically for refrigerated cold storage facilities. To even qualify, some prerequisites need to be modified for refrigerated facilities.” For example, installing mechanically or naturally ventilated air that flows into the entire building is extremely inefficient for a freezer or cooler area, but is acceptable in an office or classroom area, according to Gibbons. The same issue would apply to many plant operational spaces where specially controlled airflow is specified for food safety, not for LEED points.
Another critical aspect that counts in the design of refrigerated spaces is space—that is, how much floor space is available. When it’s limited, designers go up, literally. “There are more projects considering high-rise AS/RS in their cold storage applications versus standard rack systems,” says Forrest McNabb, senior vice president, Big-D Construction Corp. Processors use AS/RS in an effort to combat property constraints (e.g., cost of real estate, location availability and available areas or existing operational sites) and reduce operational costs affected by labor and maintenance, according to McNabb.
Efficiency looks like many things. “Industry-wide, food and beverage organizations are increasing their spending on equipment, information technology and new product development,” says Joseph A. Bove, Stellar vice president. Consequently, there are more building renovation and process conversions plus improvement projects than new construction, a fact most A&E/C firms pointed out, and the numbers in the graph show it. Processors are also conducting energy optimization and water and waste reduction projects. Continuous improvement programs, technical training and outsourcing engineering services also help processors squeeze more efficiency out of their operations.
Where it makes sense, some processors have looked seriously at renewable energy installations, says Karl Landgraf, principal of The Dennis Group. “While owners do not always opt to go solar at the outset, they are not averse to adding five to 10 psf to their roof loads to enable retrofitting their facility with solar panels at a later date, when the economics are more favorable.”
For owners with multiple plant locations, consolidation is emerging as a trend primarily due to transportation, labor and taxation factors, according to Jon Miller, A M King director of business development. “Owners can often realize a reduction in expenses and improve efficiencies by consolidating facilities. They invest in the improvement, renovation and expansion of existing facilities in lieu of developing and constructing new greenfield facilities. The idea of ‘getting more out of what you already have’ continues to be a trend and pattern.”
To step up efficiency, processors also are optimizing facilities by volume aggregation and bringing multiple product bases into new facilities, says Gerry Dyer, Faithful+Gould program director-food and beverage. In addition, Dyer points out there is a continued rationalization of labor cost, with investments in automation and more efficient processing and packaging lines.
Is the money there?
Well, it depends.
“I’m not sure there is much more capital available via the financial institutions,” says Big-D’s McNabb. “The lending institution restrictions have not necessarily changed drastically, but more capital [mostly private equity] is being invested by owners in the food and beverage industry.” McNabb notes he has observed more greenfield growth, whereas in the previous five years, expenditures were primarily limited to additions and renovations.
Jack Michler, ESI Group regional manager, also has seen an increase in the release of capital for food-related construction. But there is more scrutiny. “The private banking and institutional lenders have significantly increased their due diligence requirements in the application and approval process and are more closely monitoring and ensuring subcontractors are following procedures.” The monthly draw process has also taken a large revamp, with subcontractors needing to provide additional lien waivers, proof of received job materials and insurance throughout the project, according to Michler
|The following companies assisted Food Engineering in compiling this survey:|
A M King
The Austin Company
E.A. Bonelli + Associates
Burns & McDonnell Engineering, Inc.
Case, Lowe & Hart, Inc.
The Dennis Group
ESI Group USA
Fisher & Sons Design/Build
Food Tech, Inc.
Gleeson Constructors & Engineers, L.L.C.
The Haskell Company
Ryan Companies US Inc.
Shambaugh & Son, L.P.
Southern Idaho Economic Development Organization
“Many of our food manufacturing clients are well capitalized and are making serious investments in both process equipment and facility improvements,” says Excel Engineering’s LaShay. The focus continues to be on improvements in sanitary designs and environments, which range from room finishes to improved airflow and quality within existing and new plants, he adds.
While the recession dragged on, many processors focused on increasing their market share through production improvements. They waited in hopes of seeing stability in Washington’s economic leadership platform. After years of waiting, the pent-up demand for modernization outweighed the risk of an unpredictable economic outlook, says Fisher’s McOmber. “In mid- to late 2012, the number of food processing building and equipment modernization projects across the nation dramatically increased, despite the fact retail, office and institutional work continued to languish.” After four consecutive quarters of heightened growth, many new processing facilities and systems brought online within the second quarter of 2013 are now up and running. McOmber believes this trend will continue at an accelerated pace well into 2015 until the deferred demand for projects is met. Time will tell if the market will then resume the typical, methodic pace of growth historically common to the food and beverage industry.
“For most of our food processing clients, capital expenditures have remained fairly steady throughout the recession and its slow recovery since they registered modest increases in the sales of prepared foods due to people eating out less,” says SSOE Group’s Jerry Rudie, senior project manager. “So far, we are not seeing an increase in new plant construction, but a focus on expansions to existing plants. The capital budgets of our clients with a growth by acquisition strategy have contracted as they go through the merger process.”
“Decisions to invest capital are still based on a variety of factors and depend on each company’s business,” says Bill Sander, Hixson senior vice president and project manager. “Rather than building greenfield plants, companies are maximizing the longevity of existing facilities through renovations and additions. In addition, there are many vacant facilities on the real estate market, and these buildings are still a good bargain in today’s economy.” Keeping costs down is certainly one reason for renovating an existing plant, but renovation also is a faster way to get products onto store shelves. Since speed to market is of the essence, some food companies would rather minimize the complexity of the zoning and building permitting process for a greenfield plant, according to Sander.
However, when every part of a project is synchronized, the design/build process for a new greenfield site can speed time to market. “A great example of this is the new Chobani 1 million-sq.-ft. Twin Falls, ID state-of-the-art facility,” says Paul Meyers, Jr., Shambaugh & Son president. This facility was up and running within 11 months of breaking ground (See “Plant of the Year: Chobani,” FE, April 2013.) But fast tracking this project would not have been possible without some help from the Southern Idaho Economic Development Organization (SIEDO), which has also worked with several other processors locating in the area.
“Southern Idaho has experienced a significant increase in food manufacturing and research and development facilities as the economy has recovered,” says Jan Rogers, SIEDO executive director. “Seven companies have either opened or announced their intention to site or expand their facilities in southern Idaho from December 2012 to October 2013. Those companies include: Chobani, Glanbia Foods, Monsanto, Calva/Brewster, McCain Foods, Clif Bar and Frulact.”
Ready for FSMA: Update old or build new?
FSMA is still in a state of flux, with some sections out for public comment and others in the rulemaking process. This has caused a lot of confusion as to whether old structures can be updated to meet FSMA sanitary design requirements. Would it be easier and cheaper in the long run to build new structures designed from the ground up to meet FSMA’s sanitary design requirements—or GFSI or simply current GMPs? “Food facility finish standards that were acceptable three to five years ago are being reassessed to assure plants are capable of meeting current and future food safety requirements,” says Don Oberlies, Alberici Constructors market leader.
“Sanitary design has always been at the forefront of all food and beverage facilities, but the FSMA is really taking food safety to a new level throughout the lifecycle of the entire project from design, construction, operation and maintenance,” says Big-D’s McNabb. “FSMA incorporates GMP and HACCP requirements, along with other industry standards, with an unmatched accountability for all vested parties. I don’t know if there is a concern in regard to ‘older structures,’ but owners are definitely considering FSMA’s impact on all operations, both new and old.”
Case, Lowe & Hart clients with older structures that don’t meet FSMA requirements will simply renovate their facilities until they meet the requirements, says Rita Peterson, secretary-treasurer.
“We do not know of any new facilities being built as a result of food safety concerns,” says SSOE’s Rudie. “But small projects have been undertaken to address food safety hazards in existing facilities.” Most of SSOE’s clients have tried to stay ahead of the curve because food safety is critical to their business, and no one wants a food safety incident.
“Project changes, such as engineering services to accommodate FSMA, are client driven,” says Austin’s Graham. “Most processors will not contemplate a new plant as the answer to meet these new standards, but will focus instead on the renovation of existing facilities or outsourcing products to contract manufacturers with more modern facilities.” When new plants are developed, BRC, ABS, FDA and USDA regulations and standards are routinely “designed in” as part of the plant planning process, according to Graham.
“Older facilities, where it is cost prohibitive to meet the new standards, present great challenges to engineering teams, especially when the construction of new facilities is not financially feasible, or the facilities are landlocked,” says ESI Group’s Michler. “Often, the most reasonable solution is the relocation of processes to other plant areas [e.g., warehousing space].”
For sure, FSMA will motivate processors to consider upgrades, no matter the form. “Expenditures for new or upgraded items may rise for these facilities, but these are expenditures that should be made anyway as a course of good business policy,” says Hixson’s Jarc. “The process of food production is expensive, and the potential business risks [exposure to people or inventory] are high. If the production process is damaged in some way—for example, from a poorly designed building envelope system—the business interruption will cost much more than getting the facility up to FSMA standards in the first place. Therefore, quality assurance and insurance/loss prevention are perhaps even stronger drivers than FSMA.”
“Prevention will be a significant portion of FSMA, so design and construction firms will need to incorporate greater preventative measures into both new and existing facilities for food companies to conform to the regulations,” says A M King’s Miller. “The processors we work with are already beginning to incorporate anticipated FSMA requirements into their existing facilities. For example, they are increasing their focus on air pressure and quality improvements with monitoring and recordkeeping abilities.”
“Allergen separation has become a key issue because new process procedures require full separation and sanitation between products containing incompatible allergens,” adds Stellar’s Bove. Designated lines, utensils and equipment are being used to separate allergen-containing materials and warehouse/storage. Processors also have increased their focus on pest control and dock equipment, along with supply chain management and control.
Based on an FSMA interim rule released on December 24, 2013, changes to the design of plants and machinery may be necessary to address potential intentional adulteration, according to R.J. Hope, Burns & McDonnell Engineering section manager, global security. For instance, facilities may need to be designed/redesigned to minimize non-essential employee and visitor traffic near key activities as defined by FSMA to make people, or actions, out of place easier to detect.
“We also anticipate changes in equipment design to limit access to key activity types as identified by FSMA,” adds Hope. “The four key activity types of bulk liquid receiving and loading, liquid storage and handling, secondary ingredient handling, and mixing and similar activities are core functions at many food manufacturing plants.”
Automate where it is beneficial
Automation is beneficial for high-speed, large or complex installations (those that require a large number of people or where there is a high risk of injury). For example, the Plumrose facility (mentioned earlier) and the Paramount Citrus facility (See FE, December 2013) are essentially fully automated.
Food safety is a factor for many of the automation projects Hixson is undertaking, according to Bill Sander, senior vice president and project manager. “With automation, you can create a repeatable process that reduces the risk of human error, provides traceability, reduces contamination risk and delivers consistent output.” The trend is toward tracking: creating the ability to isolate and qualify the smallest batch possible to identify inconsistencies and other issues before they reach or affect consumers, adds Sander.
SSOE’s Rudie reports that, on the process side, new projects are usually near full automation with very limited hands-on operations. “The current trend is toward continuous processing instead of batch because [the former] requires less material handling. Bulk material handling system retrofits on existing processes often have too much material handling by operators. On the packaging side, more facilities are going toward robotics, particularly on new packing lines. These projects tend to pay for themselves in reduced labor costs fast enough to justify their additional capital cost.”
According to Stellar’s Bove, one tool that has taken off is wireless technology, such as laptops, smartphones and tablets, which technicians can leverage in troubleshooting, startup and maintenance. Touch technology, data collection and analysis, and handheld devices to monitor temperatures, cycle times, traceable data and more also can help with meeting operational and regulatory requirements.
“The automation of non-value-added tasks and those having an impact on quality and productivity is still in the lead,” says Bill Sokolowsky, Burns & McDonnell, business development. “Online inspection is frequently requested along with robotics for multi-line palletizing and trash/scrap collection [AGVs]. These all come at a cost, which in some cases, can create unexpected costs if processors are not prepared to address them quickly. For example, automated or online inspectors, e.g., cameras or turbidity meters, are far more capable than a tiring human eye. So, if defects exist in the operation, these inspectors are going to find nearly every one and add them to the scrap pile in short order. Replacing a person with a machine can produce savings. But these can be quickly overrun by the costs associated with the rework and waste generated by a vision system that sees all and rejects much. It’s a simple case of ‘Watch what you ask for, you may get it.’”
1 “Do LEED-certified buildings save energy? Yes, but...,” Newsham, G.R.; Mancini, S.; Birt, B.; National Research Council of Canada: NRCC-51142, August 2009.