While it might seem unusual to talk of expansion during a recession, a survey of Food Manufacturing readers revealed that numerous companies are not only staying afloat, but growing. In fact, 21 percent of respondents reported a planned plant expansion project within the next few months, while 48 percent have plans for expansion within the next few years.
With recent media attention and plant closings surrounding food product recalls, it is not surprising that 68 percent of plant expansion projects promise to yield a plant that is more focused on food safety and sanitation. Additional expansion goals include plants that are:
- More energy efficient - 61 percent
- More ergonomically designed to speed workflow - 55 percent
- More focused on food security - 40 percent
There are conflicting strategies about investments during tough economic times. While some may feel as though holding onto capital is the safest best, others recognize that investing during a recession may provide more opportunities, as prices are generally lower during these times. Our survey revealed that 87 percent of recent plant expansions involved investing in new equipment/machinery. Sustainable practices during economic downtimes also can be questionable. While some companies do not feel they have the initial capital to invest in sustainable practices, others feel that a relentless pursuit of waste elimination is an ongoing necessity for a successful business. Survey results indicated that 27 percent of recent plant expansions involved a switch to more energy efficient plant equipment.
|
Time and money are of course key considerations during any expansion project. While the majority of survey respondents (38 percent) reported spending less than $5 million on expansion projects in the last ten years, 22 percent reported having spent over $50 million. Most plants (79 percent) spent a year or less on construction. Perhaps more important was that 86 percent of plants remained operational during these expansion projects.
Whether your goal is to keep your plant in operation during expansion, or just to make sure expansion goes as quickly and smoothly as possible, knowing when and where to look for assistance is important. Approximately 75 percent of respondents employed the services of an outside design/build firm for their expansion project. Their reasons for choosing specific design firms were based on:
- Flexibility in order to accommodate specific needs - 45 percent
- Track record of success with other food manufacturers - 22 percent
- Affordability - 22 percent
- Impressive presentations at tradeshows/in industry publications - 12 percent
Despite economic hard times, the food industry appears to still have faith in the American economy. While other industries are choosing to move their manufacturing plants abroad to cut costs, survey results indicate that 65 percent of respondents plan to keep manufacturing in the U.S. for the foreseeable future, while another 10 percent considered expansion abroad but decided against it. These results are identical to the results from the same questions asked last year, in a more favorable economic climate.
Hopefully the food industry's willingness to invest in its companies continues to pay off and expansion projects continue to build the industry, putting food companies in an even stronger position when the economy improves.
Food Manufacturing, Advantage Business Media,
Email for more information
Email to a colleague
