2008 annual manufacturing trends survey - food processing€¦ · it wasn’t just meat and...

2008 Annual Manufacturing Trends

Survey

Sponsored by

Safety First

2 Sponsored by

METHODOLOGYFOOD PROCESSING’s seventh annual Manufactur-

ing Trends Survey was conducted by an e-mail survey

sent during November 2007 to 18,982 Food Process-

ing readers who identify themselves as being involved

in manufacturing. Excluding undeliverables, 18,009

surveys were delivered. There were 395 respondents,

representing a 2.19% return. The respondents were

divided among the following food categories:

n Bakery (11 percent)n Breakfast Cereals/Grain Products/Pasta

(3 percent)n Beverages – non-dairy, including carbonated

drinks, juice, alcohol, water, etc. (7 percent)n Condiments/Jams/Jellies (2 percent)n Confectionery (5 percent)n Dairy – milk, cheese, ice cream, etc. (6 percent)n Fruits And Vegetables (4 percent)n Frozen Dinners (2 percent)n Further-Processed Foods and Specialties

(10 percent)n Herbs/Spices/Dry Flavorings (4 percent)n Meats/Poultry, fresh or frozen (18 percent)n Packaging (5 percent)n Seafood, fresh or frozen (1 percent)n Snack Foods/Chips (4 percent)n Other (17 percent)

Table of Contents

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Late-2007 optimism for 2008

Food safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2007: One food scare after another

Sanitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Get clean, stay clean

Physical security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Post-9/11 actions still holding up

Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 A little less concern over worker loss, immigration crackdowns

Automation & production . . . . . . . . . . . . . . . . . . . . 10 I, Robot

Environment & energy . . . . . . . . . . . . . . . . . . . . . . . 11 The green machine

Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 About Grant Thornton

FOOD PROCESSING is the only magazine for the entire food manufacturing industry, serving all categories (dairy, snack foods, meat & poultry, frozen dinners, etc.) and all job titles (research & development, plant operations, marketing, management). FOOD PROCESSING helps its readers improve bottom-line business results by exploring the latest trends in new product devel-opment, marketing, process optimization, packaging and workforce management. To subscribe, go to www.FoodProcessing.com and click on “subscribe.”

3 Sponsored by

Food and Beverage processors exited 2007 with confidence in 2008. Just like the rest of the world, they had no clue about the economic downturn that would greet them in January of 2008.

conducted during november and december of 2007, our seventh annual Manufacturing trends survey shows nearly 77 percent of food and beverage processors antici-pate production increases of at least 5 percent this year. and although safety concerns remain the biggest focus for processors, many will be both spending and saving green by “going green.”

there was a record 395 respondents, 160 more than last year’s survey. For the second year, we used an enhanced statistical analysis to generate a clearer picture of processor concerns. Based on a ranking scale assigning weighted rel-evance to each of nine categories (see graph below), each concern was assigned aggregate points to determine level of importance.

other concerns cited include: “reducing conversion costs, inventory reduction, reducing turnovers;” “replace-

ment equipment and (resources) to accommodate expan-sion or replacement;” and “regulatory issues.”

some of the highlights, all of which will be dealt with in sections of this report, are:

Food safetythe optimism for 2008 must be tempered by the concern for food safety, once again the no. 1 concern among our processors (it has been in all seven years of this survey). and for good reason: Last year was plagued by food prod-uct recalls. it was a year in which consumers – and the food processing industry – were overwhelmed by food scares.

SanitationLeaky roofs at conagra plants and e. coli in ground beef reminded the food processing industry of the importance of sanitation. one answer was increased training in sani-tation. nearly 90 percent of respondents said employee training was their top practice for improving sanitation. specifically targeting the bugs, 59 percent said they would

Late-2007 optimism for 2008

Executive Summary

WHAT MANUFACTURING ISSUE IS MOST IMPORTANT TO YOUR PLANT FOR 2008?

The number shown is a weighted point score. First-place votes were assigned a multiplier of 9, second-place votes 8, etc. down to a multiplier of 1 for 9th place.

Production sections

Packaging sections

Entire production line

Logistics/warehousing

Waste operations

Maintenance,repair, ops

Entire plant

Other

None

53%55%

51%53%

24%21%

Improved washdown/clean-in-place

Detection/testing

Dedicated lines

Improved labeling

Reformulation

Other

Does not apply

0

1,000

2,000

3,000

Food

saf

ety

Ener

gy is

sues

(sou

rcin

g, c

ost)

Labo

r

Sour

cing

and

mat

eria

ls

Envi

ronm

enta

lco

ncer

ns

Aut

omat

ion

Logi

stic

s

Cons

olid

atio

n/ex

pans

ion

chal

leng

es

Plan

t sec

urit

y

2,56

7

2,21

8

2,131

2,00

3

1,924

1,834

1,758

1,738

1,662

WHAT EFFORTS ARE YOU MAKING OR PLANNING TO MAKETO CONTROL FOR E. COLI AND OTHER PATHOGENS?

0 20 40 60

59%

45%

19%

14%

6%

5%

25%

WHAT PORTION OF YOUR PLANTHAS BEEN AUTOMATED?

No ..................................... 39%

Yes .................................... 38%

Don’t know/Does not apply .................. 23%

Increased........................... 44%Reduced .............................. 2%Kept the samemeasures in place............. 46%Don’t know/Does not apply ....................8%

Did you increase or reduce security measures

in 2007?

Will you increase security in 2008?

Increase less than 5%.......... 8%Increase 5-10% ................. 20%Increase more than 10% ... 16%Stay about the same.......... 24%Decrease less than 5% ........ 2%Decrease 5-10%................. 3%Decrease more than 10%.... 4%Don’t know....................... 23%

Consolidate production/number of plants............... 10%

Expand production/number of plants............... 28%

Stay the same.................... 48%

Don’t know/Does not apply ...................14%

For 2008 are you planning to…

Compared to 2007, will your capital spending budget…

0 20 40 60

18%13%

12%

This year Last year

7%

11%6%

4%2%

18%17%

5%7%



Production sections

Packaging sections



Waste operations


Entire plant

Other

None

53%55%

51%53%

24%21%


Detection/testing

Dedicated lines

Improved labeling

Reformulation

Other

Does not apply

0

1,000

2,000

3,000

Food

saf

ety

Ener

gy is

sues

(sou

rcin

g, c

ost)

Labo

r

Sour

cing

and

mat

eria

ls

Envi

ronm

enta

lco

ncer

ns

Aut

omat

ion

Logi

stic

s

Cons

olid

atio

n/ex

pans

ion

chal

leng

es

Plan

t sec

urit

y

2,56

7

2,21

8

2,131

2,00

3

1,924

1,834

1,758

1,738

1,662


0 20 40 60

59%

45%

19%

14%

6%

5%

25%


No ..................................... 39%

Yes .................................... 38%




in 2007?





Stay the same.................... 48%




0 20 40 60

18%13%

12%

This year Last year

7%

11%6%

4%2%

18%17%

5%7%

4 Sponsored by

Executive Summary, continued...

improve washdowns and clean-in-place systems in the coming year.

Physical securityphysical plant security, which caused a blip a few years ago, has returned to the bottom of the worry list for food processors. part of the reason for the low concern has been a total lack of terrorist-like incidents, and part is the iron-clad measures that were put in place post-9/11. they seem to be working just fine.

Labor Labor was a higher-ranking concern the previous two years, when production was ratcheting up, hiring was ris-ing and experienced talent was fleeing to other companies or other industries. simultaneously, immigration crack-downs threatened to dent the lower-paying segment of the food industry’s labor force. as the no. 3 issue, it’s still a concern, but it’s lost a few points from the past two years.

Automation & productiona big caveat: this survey was taken in november 2007, before the stock market began 2008 with a series of tum-bles. so there was a fair amount of optimism for produc-tion increases, and automation was one way of coming up with increased throughput. While the consumption of food is recession-proof, capital spending and the ability to borrow money is not, so there are post-survey concerns not covered here.

Environment & energysimultaneously, 2007 saw the highest energy prices and the most interest in environmental responsibility. Many processors found the same solution worked for both con-cerns. energy conservation was at the top of the list of solutions (practiced by nearly 70 percent of respondents), and environmental issues were deemed extremely or very important by 71 percent, the highest mark the green sub-ject has scored in the survey’s seven years.

5 Sponsored by

The inundation of Chinese ingredient scandals was only half of last year’s food safety debacle . The domestic fiascos came hot and heavy . One meat processor, Topps Meat Co ., folded rather than face the music for the second largest beef recall in U .S . history . Hamburgers tainted with E . coli O157:H7 sickened dozens – but killed no one . Augusta, Ga .-based Castleberry Foods Inc . was almost taken down by a recall of nearly 100 of its meat-based products for botulism .

It wasn’t just meat and meat-based pet food that put the fear into processors last year . Bagged spinach and salad recalls nearly devastated those markets . ConAgra took a $66 million hit early in the year for contaminated peanut butter . Near the end of the year, the company recalled Ban-quet pot pies .

Cheese, tortillas, smoked salmon dip, puffed veggie snacks … a veritable supermarket of recalled consumer food products proved processors had considerable trouble keeping bugs out of the food .

This epidemic of food-safety failures pushed the issue to one of its highest showings as a top processor concern – more than 52 percent compared to 47 percent last year and 30 percent the year before .

Safety measures

the Usda is responsible for inspections of meat products and eggs while the Fda is re-sponsible for most other food products. Unfortunately, the Fda’s budget has been slashed in recent years resulting in a re-duced number of inspections at

a time when we probably need them the most. With elections coming in 2008, many fear food safety will take a back seat. on the bright side, the agree-ment with china is a first step toward improving the quality and safety of imported food and drug products. Under the terms of the agreement, the U.s. will have inspection access to certain chinese manufacturing facilities for a limited number of products specified in the accord. the results of the survey echo most if not all of the findings in the grant thornton “2007 survey of U.s. Food and Beverage companies” sponsored by Food pro-cessing. the survey noted that many companies have augmented their internal food safety programs with outsourced providers of food safety audits.

—by dexter Manning, grant thornton LLp

2007: One food scare after another

Food Safety

6 Sponsored by

“To keep the U .S . food supply safe, all individuals in the food chain, from the farmer to the consumer, must properly handle and process food,” states John Surak of the Milwau-kee-based American Society for Quality (www .asq .org) . His colleague, Janet Raddatz, tenders a note of optimism: “Our food supply is as safe as it has ever been . Emerging pathogens, mass transportation and a global supply chain will continue to challenge us, yet the food industry remains vigilant in providing consumers with a wide variety of safe, high-quality food products .”

So, have our respondents made progress in this regard? Numbers are up only a couple percentage points above 2007’s already high numbers implementing employee train-ing programs (89 percent for 2008; 87 percent in 2007) and HACCP plans (57 percent vs . 55 percent) . Improved pest control, more/improved sanitary equipment and rapid microbial detection all stayed within the same percentages in 2008 as 2007 .

More than three-fourths (76 percent) of processors say they implemented additional food safety measures in 2007 and about the same (74 percent) say they will this year, too . This is also close to the number (73 .5 percent) who have an ingredient/food tracking and tracing program in place – 2 .5 percent above last year’s responses .

E-Coli We specifically asked about E . coli concerns, although certainly other bugs wreaked havoc last year . Four in 10 answer they are “extremely concerned .” Add in another fourth who are “very concerned” and nearly a fifth “somewhat concerned” and you’ll see this tiny bug is making enough commotion to keep more than 80 percent of processors up at night .



Production sections

Packaging sections



Waste operations


Entire plant

Other

None

53%55%

51%53%

24%21%


Detection/testing

Dedicated lines

Improved labeling

Reformulation

Other

Does not apply

0

1,000

2,000

3,000

Food

saf

ety

Ener

gy is

sues

(sou

rcin

g, c

ost)

Labo

r

Sour

cing

and

mat

eria

ls

Envi

ronm

enta

lco

ncer

ns

Aut

omat

ion

Logi

stic

s

Cons

olid

atio

n/ex

pans

ion

chal

leng

es

Plan

t sec

urit

y

2,56

7

2,21

8

2,131

2,00

3

1,924

1,834

1,758

1,738

1,662


0 20 40 60

59%

45%

19%

14%

6%

5%

25%


No ..................................... 39%

Yes .................................... 38%




in 2007?





Stay the same.................... 48%




0 20 40 60

18%13%

12%

This year Last year

7%

11%6%

4%2%

18%17%

5%7%

Get clean, stay clean

Sanitation

7 Sponsored by

Post-9/11 actions still holding up

Physical Security

From wherever contamination comes, china or our own fumbling of the food safety ball, processors are reasonably confident it won’t come from terrorist sabotage: security hov-ered at the bottom for the third year in a row, with only 10 percent choosing it as their primary concern.

that doesn’t mean to say security doesn’t matter. When asked about their concern about terrorism/bioterrorism, 31 percent say they are “very” or “extremely” concerned. that

number is only a couple percentage points lower than last year. When the 44 percent who are “somewhat” concerned about terrorism are add-ed in, though, the total of those so worried dipped to 75 percent from last year’s 84 percent.

Fewer respondents than last year – 44 vs. 54 percent – increased secu-rity measures, and only 38 percent will be imple-menting new security measures in the new year compared to 46 percent who promised to last year. a number of respondents note the reason new security measures were not on the table for 2008 was because their facilities have nu-merous security measures already in place.

the steps processors are taking to make their plants more secure are pretty much the same as last year: two-thirds will secure/restrict external access, half will do the same for inter-nal access. Just over half will focus efforts on employee i.d.; the same number will implement surveillance methods.

nearly 16 percent will go high-tech via security application software, compared to just under 13 percent last year. other measures included “any of the other technologies suggested under the dHs [dept. of Homeland security] or by vari-ous asis [formerly american society for industrial security] groups, (such as) rFid of transports, bio-scanner/sampler hardware and software,” from a processor of specialty foods in prairie village, Kan.

similarly, from a cleveland-based consultant to a national bakery: “scan contents of (all) product entering and leaving; scanning and other inspection of carrying truck to ensure a match and no erroneous additional or missing items.”



Production sections

Packaging sections



Waste operations


Entire plant

Other

None

53%55%

51%53%

24%21%


Detection/testing

Dedicated lines

Improved labeling

Reformulation

Other

Does not apply

0

1,000

2,000

3,000

Food

saf

ety

Ener

gy is

sues

(sou

rcin

g, c

ost)

Labo

r

Sour

cing

and

mat

eria

ls

Envi

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enta

lco

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ns

Aut

omat

ion

Logi

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s

Cons

olid

atio

n/ex

pans

ion

chal

leng

es

Plan

t sec

urit

y

2,56

7

2,21

8

2,131

2,00

3

1,924

1,834

1,758

1,738

1,662


0 20 40 60

59%

45%

19%

14%

6%

5%

25%


No ..................................... 39%

Yes .................................... 38%




in 2007?





Stay the same.................... 48%




0 20 40 60

18%13%

12%

This year Last year

7%

11%6%

4%2%

18%17%

5%7%

8 Sponsored by

A little less concern over worker loss, immigration crackdowns

Labor

coincidental to the security responses was one of the big-gest labor issues in the past few years: immigration. several respondents note how concerns about illegal immigration mesh with security. that said, the only change from last year in how stricter immigration laws would affect busi-ness was an increase in the number of those for whom the problem of illegal immigration doesn’t even apply. at 16 percent, it was almost double last year’s figure of 9 percent. as with last year, about one-eighth would be affected by such laws “a great deal” and one-fifth somewhat affected. Half wouldn’t be impacted at all.

But overall, labor worries are limited to the usual con-cerns of: not enough qualified workers, not enough money to keep good workers and the growing salary and benefit squeeze on the middle class. this is reflected in projected hiring practices. there was nearly a 10 percent drop (from 44 percent) in the number of processors expecting to take on new workers. and 7 percent vs. 5 percent last year expect to actively reduce their workforce.

separating salary and benefits, we found 48 percent of food employees expect raises this year, with 55 percent having

received one last year. salaries are expected to stay the same for one-third. two-thirds saw benefits stay the same in 2007, and nearly as many – 61 percent – anticipate no change this year. nearly 11 percent saw a decrease last year and 10 percent expect a decrease this year.

But there’s more to the compensation picture. as a Lin-den, n.J., olive oil processor warned, salary and benefits de-terioration can have an adverse effect on safety: “as inflation increases, it will be harder to maintain compensation levels (and) trained workers]. [effective] food safety training will be very important.”

We compared staff categories regarding growth. in addi-tion to previous years’ categories of engineering, r&d and Management, we added Marketing. in each case, between one-fifth and one-quarter said staff for those groups was larg-er than in 2004; between 43 and 50 percent said levels stayed the same.

staff reductions for the groups show Management will fare the worst – 20 percent expect reductions this year. in the re-maining categories, 11-13 percent predict a weeding out.

9 Sponsored by

Labor, continued...

despite talk of layoffs and outsourcing of entire job functions, it looks like there have been increases in en-gineering, r&d, management and marketing positions … at least in the past three years (see below). note also the lines for “nonexistent” and “don’t know/does not apply.”

those are pretty significant numbers for departments that no longer exist. perhaps those functions were out-sourced more than three years ago. also curious: Man-agement shows both the biggest increase and the biggest decrease. But apparently everybody has at least some management.

again, we remind that this survey was taken in no-vember and december of 2007, before the economy nose- dived in January 2008. at that time, at least, respondents were optimistic that salary and benefits increases were forth-coming this year. very few reported or anticipated salary givebacks; significantly more experienced or expected an erosion in benefits.

While not dealt with in this survey, our mid- 2007 salary survey found the median salaries by ti-tle to be: Management $93,000, Marketing/sales $85,000, r&d/product development $76,000, plant operations/engineering $76,000, purchasing $51,000. to see our full salary survey report, go to www.foodpro-cessing.com/articles/2007/159.html.

10 Sponsored by

some laborers work 24/7 and never complain. automation levels stayed roughly the same as in last year’s survey. any changes were too small to be statistically significant and likely due to the differences in respondents this year over last. But some stand-outs might point to an automation trend, espe-cially considering those categories’ connection to energy and environment issues. Logistics, maintenance and waste op-erations percentages were all much higher than last year (see graphs below).

processors are still automating the same ways. pLc inte-gration was tops at 45 percent, and custom software second place with 39 percent. off-the-shelf software accounts for 22 percent of automation methods and robotics about one-fifth. pc centralization makes up 11 percent and rFid 9 percent.

safety, security and labor issues point, if anything, to a 2008 focused on holding the fort and not making waves, with a few prayers thrown in for avoiding recalls. But there’s still optimism in the air. about 20 percent anticipate produc-tion in ’08 to increase by 20 percent or more – only 3 percent lower than last year; 31 percent (same as 2006) foresee a 5-9 percent increase.

the big jump was in the 10-19 percent increase range: the 26 percent looking at a production increase at that level is 5

points above last year. that brought the total number looking toward a production increase to 77 percent.

note: decreases barely measured but we should keep an eye on the pessimism coming from the 2 percent who fore-see a production drop of 20 percent or more consolidation/expansion numbers are virtually unchanged this year, too: 10 percent foresee a consolidation, 28 percent see expansion and 48 percent hope to stay the same. capital spending, too, mimics last year: a quarter believe it will stay about the same; 44 percent see it increasing and 9 percent foresee it decreasing. (these two charts are on p.3.)

I, Robot

Automation and ProductionWHAT MANUFACTURING ISSUE IS MOST IMPORTANT TO YOUR PLANT FOR 2008?


Production sections

Packaging sections



Waste operations


Entire plant

Other

None

53%55%

51%53%

24%21%


Detection/testing

Dedicated lines

Improved labeling

Reformulation

Other

Does not apply

0

1,000

2,000

3,000

Food

saf

ety

Ener

gy is

sues

(sou

rcin

g, c

ost)

Labo

r

Sour

cing

and

mat

eria

ls

Envi

ronm

enta

lco

ncer

ns

Aut

omat

ion

Logi

stic

s

Cons

olid

atio

n/ex

pans

ion

chal

leng

es

Plan

t sec

urit

y

2,56

7

2,21

8

2,131

2,00

3

1,924

1,834

1,758

1,738

1,662


0 20 40 60

59%

45%

19%

14%

6%

5%

25%


No ..................................... 39%

Yes .................................... 38%




in 2007?





Stay the same.................... 48%




0 20 40 60

18%13%

12%

This year Last year

7%

11%6%

4%2%

18%17%

5%7%

11 Sponsored by

Last year saw enough green flag-waving to make one think that st. patrick’s day became a year-round affair. the envi-ronment is on everyone’s radar screen, and the number of pro-cessors “very” or “extremely” concerned about it rose more than 5 percentage points, to 70 percent. in fact, concern over environmental, sourcing and materials issues was higher than it’s ever been.

not surprisingly, nearly every processor is worried about energy bills: 97 percent are either “very” or “somewhat” wor-ried. Last year, “only” 90 percent were as worried about en-ergy costs.

nearly twice as many 2007 respondents as those for 2006 (16 vs. 9 percent) also claim to be “severely impacted” by energy costs. those “moderately” impacted accounted for three-fourths, just as in last year’s survey. costs increased “much more than expected” for 13 percent in 2007, a 25 percent increase over 2006’s 10 percent.

those not looking at any form of energy management dipped from almost 10 percent last year to under 9 percent now.

The green machine

Environment and Energy

12 Sponsored by

Environment and Energy, continued...

For this year’s survey, we asked about alternate energy sources, such as solar, wind and biodiesel. We discovered al-most 20 percent are considering such power sources. other plans to be implemented include: heating with hot waste wa-ter or steam; methane capture; and converting waste into bio-gas for fuel.

one of the best ways to reduce energy and save money is by implementing many small, easy changes. “our big push to save energy has included upgrading lighting to fluorescent,

and to t8 electronic ballast fluorescent tubes from t12,” says Matt Merkle, technical manager for Kellogg co.’s (www.kelloggs.com) Memphis, tenn., plant. “We also in-stalled sensored lights in low-traffic areas.

“other efforts include more efficiency on the ammonia compressors in our refrigeration units, changing our defrost process to conserve energy, updating steam traps and enhanc-ing leak detection and maintenance,” Merkle adds. “to con-serve water, we’ve shifted to low-flow plumbing systems.”

13 Sponsored by

About Grant Thornton LLP

Sponsor

grant thornton’s consumer & industrial products practice serves the accounting, audit and tax needs of manufacturers, distributors and retailers around the world. services offered include:

· assurance· tax consulting· recovery and reorganization· sarbanes-oxley compliance· transaction support grant thornton also assists its clients with defining and executing strategies for business, tax and operational structures

in asia, including china and india. grant thornton international is the world’s leading accounting, tax and business advisory organization dedicated to its

clients and their global operations. through its network of more than 520 offices in more than 110 countries, including Hong Kong, Beijing and shanghai, and 50 offices in the United states, the member firms of grant thornton interna-tional provide personal attention and seamless service delivery to public and private clients around the globe.

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2008 annual manufacturing trends survey - food processing€¦ · it wasn’t just meat and...

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