Food Industry Trends and Location Drivers

Food Industry Trends and Location Drivers Presented to: IEDC 2012 Spring Conference June 11, 2012 Presented By: Michelle Comerford Managing Director,...
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Food Industry Trends and Location Drivers Presented to:

IEDC 2012 Spring Conference June 11, 2012 Presented By: Michelle Comerford Managing Director, Austin Consulting The Austin Company

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Austin Consulting – Who We Are • Professional site selection consulting firm within The Austin Company • Assist clients to develop and implement location strategies based on operating requirements • Specialize in complex operations manufacturing, technical, distribution, back office

• Experienced -

Over 60 years / over 1,700 assignments completed

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Food Processing Industry Trends Today • More perishable products - including fruits and vegetables (Shorter timelines to market)

• Fresher foods, more organic - less man-made preservatives, more “natural” type products

• Increased demand for vegetarian – including soy and soy-based products

• Specialty product development - targeting smaller, more-affluent consumer market

• More innovative packaging – to preserve

freshness and enhance appeal to consumers, including “portion control” packaging

• Multi-product facilities – producing products

that require multiple compliance (ex. Bakery & Meat Processing – USDA & AIB) 2

Food Processing Industry Trends (cont’d) • Health and wellness oriented food - expected to grow exponentially over the next five years

• Promotion of green manufacturing – supply as much locally-grown products to reduce inbound transportation costs and reduce carbon footprint

• Food Safety – using technology and tools to track ingredients, goods in transit, etc

• Research and Development – linking universities and public-private partnerships to foster research, new product development, and start-up operations

• Availability of state and local grants - for food processors to promote the local agri-business market 3

2012 Food Processing Industry Projections 44% expect to add workers

75% expect revenues to increase

Conclusion: Food Processing Continues to be in 62% a Growth Mode and 43% a will be expect improving to increase Viable Target for Economic sustainability their capital investment Development Expansionof operations

Source: Fast Facts on Food Processing, Grant Thornton Food & Beverage Practice, 2012 Outlook

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Food Industry Location Drivers  Time to Market - reach consumer market faster than ever due to shorter shelf life  Customer Service - new locations to serve faster-growing population centers  Innovative Production - on-going replacement of aging production plants with newer, more-automated and efficient operations  Rising Energy Costs – for production and distribution of product  Proximity to suppliers – and raw materials  Transportation considerations – overcoming obstacles including shortage of drivers and equipment, traffic congestion  Major customers considerations - Wal-Mart, Costco, Target, Kroger and other major retailers 5

Food Industry Expansion Strategies What areas are prospective expansions coming from / where are they going? Origins Include: California New England - New York Upper Midwest Destinations Include: Southeast Midwest South-Central Southwest

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What Does a Community Need to Attract Food Industry? 1. Quality industrial park (avoid heavy industrial neighboring uses) 2. Available properties (”Shovel-Ready” sites and buildings – including community owned “spec” building) 3. Assortment of rail / non-rail properties 4. Presence of food processors in area

5. Pro-business community – assistance programs / expedited permitting process in place 6. Absence of community impact development fees 7

What Does a Community Need to Attract Food Industry? 7. Third-party cold storage facilities in area 8. Available electric power and natural gas – nearby substations with excess capacity / gas lines at property boundaries 9. Municipal water - quality / reliable water availability – plan for future expansion 10. Municipal sanitary sewer – excess capacity / ability to accept high effluents (BOD, TSS) – plan for future expansion 11. Strong water pressure including looped water / sanitary service

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What Does a Community Need to Attract Food Industry? 12. Low start-up utility costs (i.e. utility connection and impact fees) 13. Available Skilled work force including refrigeration and repair technicians, maintenance mechanics, two-year science / biology technicians, quality control 14. Area community / technical colleges offering curriculum for food industry 15. Work force with a background / experience in food processing

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Hydroponics Production and Distribution Plant Location – Project Case Study Project Investment:

$45.0 Million

Labor Requirement:

290

Site Size:

Approximate 100 acre sites with reasonable site development costs

Building Size:

500,000 + (in phases)

Search Area:

Southeastern U.S.

Austin Services:

Regional Climate Analysis, Community and Property Selection, Due Diligence, Incentives Negotiation

Outcome:

Selected 110-acre site in Overton County, Tennessee; preliminary engineering work by The Austin Company

Major Location Factors: •

Favorable climatic and growing conditions for Hydroponics production



Convenient access to major highways



Competitive local wage and benefit practices



Available workforce



High-quality, abundant municipal water supply



Aggressive start-up schedule

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Site Aerial

Organic Frozen Food Production and Distribution Plant Location - Project Case Study Project Investment:

$50,000,000 +

Labor Requirement:

700 Employees

Site Size:

10 Acres

Building Size:

120,000 Square Feet

Search Area:

Southeast United States

Austin Services:

Favorable Area Analysis, Labor Analysis, Community and Property Selection, Due Diligence, Initial Incentives Negotiation, Additional South-Eastern U.S. Building Search

Outcome:

Purchased 120,000 Square Foot Former Bakery in Greenville, South Carolina

Recommended Building Greenville, SC Southeast Building Search Area

Major Location Factors: • Convenient access to existing and future customer markets • Former food processing operation with freezer/cooler space • Good labor availability with competitive labor and benefit structure • High quality and abundant water availability for product processing • Ability to handle company’s high wastewater discharge effluents • Availability of state and local incentive and assistance programs11

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THANK YOU Michelle Comerford Managing Director, Austin Consulting The Austin Company Email: [email protected] Phone: (440) 544-2682 Twitter: @mmcomerford