Food Industry Trends and Location Drivers
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1 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 0
2 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 1
3 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
4 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
5 2012 Food Processing Industry Projections 75% expect revenues to increase Conclusion: Food Processing Continues to be in a Growth Mode and a 62% expect to increase their capital investment Viable Target for Economic Development Expansion 44% expect to add workers 43% will be improving sustainability of operations Source: Fast Facts on Food Processing, Grant Thornton Food & Beverage Practice, 2012 Outlook 4
6 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
7 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 6
8 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
9 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 8
10 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 9
11 Hydroponics Production and Distribution Plant Location Project Case Study Project Investment: $45.0 Million Labor Requirement: 290 Site Size: Building Size: Search Area: Austin Services: Outcome: Approximate 100 acre sites with reasonable site development costs 500,000 + (in phases) Southeastern U.S. Regional Climate Analysis, Community and Property Selection, Due Diligence, Incentives Negotiation 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 10 Aggressive start-up schedule 10
12 Organic Frozen Food Production and Distribution Plant Location - Project Case Study Site Aerial Project Investment: $50,000,000 + Labor Requirement: Site Size: Building Size: Search Area: 700 Employees 10 Acres 120,000 Square Feet Southeast United States Recommended Building Greenville, SC Austin Services: Outcome: Major Location Factors: Favorable Area Analysis, Labor Analysis, Community and Property Selection, Due Diligence, Initial Incentives Negotiation, Additional South-Eastern U.S. Building Search Purchased 120,000 Square Foot Former Bakery in Greenville, South Carolina 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 programs 11 Southeast Building Search Area 11
13 THANK YOU Michelle Comerford Managing Director, Austin Consulting The Austin Company Phone: (440)
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