KLS Site Selection in Food Industry

Report
Recent Trends in Food
Related and Light
Manufacturing Location
Decisions;
Why “Flexibility” is Critical
Scott Kupperman
Owner
1
Context & Goals for Discussion;
- Recognize that changes in economic conditions and consumer
tastes have had major impact on food processing and other light
manufacturing based industries
- Share observations on how the concept of “Flexibility” has risen
in importance
- Define what Flexibility means relative to a location solution
- Provide you with a potential way to
differentiate your regions value
proposition
The Food Industry in 2012 and beyond …..
What’s Going On ??????
- Changing Tastes & Expectations !!
- Baby Boomers (ages 48 – 66) want healthy choices and
preventative products to feed expectations of longer
lifespan.
- Millennial’ s (ages 16 – 30) want health & wellness
products, convenience, increasingly use technology to learn
where and how it’s produced, care about environmental
responsibility and are highly brand “dis-loyal”.
The Food Industry in 2012 and beyond …..
What’s Going On ?????? (Pt. 2)
- Highly volatile costs of production ….
- Commodity prices increased 8.5% in 2010 and 16% in 2011
- Worldwide economic instability continues
- Energy prices continue to remain high and un-predictable
The Food Industry in 2012 and beyond …..
What’s Going On ?????? (Pt. 3)
- Food Safety will continue to increase in
importance;
2011 Food Safety Modernization Act (FSMA) shifts focus
from contamination response to contamination
prevention.
- FSMA requires plans to be implemented by mid 2012;
increased FDA inspections already reported and increase
in re-calls expected.
-
The Food Industry in 2012 and beyond …..
What’s Going On ?????? (Pt. 4)
- In spite of all this, growth is forecast for
the industry…
- Recent survey indicated that 90% of F&B manufacturers
expect sales to increase for 2012.
- 75% of respondents expect to increase production or at
least maintain 2011 levels.
- M&A activity in the US increased in 2011 for third
straight year.
How this is changing the Focus
Of Food (& others in light manufacturing)
industry;
- Continual product innovation a necessity !!
- Increased focus on safety, tracking, ingredient sourcing
- Sustainable production practices, focus on energy
management are critical
- Branding which defines a consumer experience and use
of social media to connect directly with consumers are
vital to success, especially in light of increased private
label competition
- Specialty and middle market stores gaining in
popularity; taking market share from supermarkets
How are food processors (and their site consultants)
addressing these changes in their decision making ?
Focusing on comprehensive solutions which offer
maximum flexibility relative to;
- Real Estate
- Labor
- Permitting & Entitlements
- Taxation & Incentives
- Local Resources & Professional Support
- Branding & Cultural image
- How is “Flexibility” being defined in decision making ?
- Which of these does your location have to offer ?
“Flexible” Property Solutions;
-
Include well defined expansion and/or exit strategies
Maintain a significant buffer from residential, retail, office uses
Don’t mix incompatible uses within, or adjacent to facility
Offer clear heights of 25’ +
Have robust & up-gradable utility infrastructure (electric, gas,
water, sewer, waste water capacity)
Include a minimum 150 parking spaces, plus expansion area
- Feature large column grids, minimal existing
partitions
- Offer significant structural capacity of
roof/wall systems, floors
- Are not overly burdened by private use
restrictions (CCR’s)
Key Labor factors which promote Flexibility;
-
-
-
Right to Work states and/or lack of union presence
Vocational training programs in tune with recent trends
in automation, food safety compliance, process
engineering, equipment maintenance, energy efficiency
4 year colleges in region with strong programs in food science,
packaging, product development, marketing (including use of
social media !) or similar programs in regional industry of focus
Nearby military facilities with recurring veteran population
entering workforce
Evidence of similar companies who can voice success in hiring and
maintaining capable workforce
Recent layoffs in similar industries, resulting in under-employment
Entitlements and Permitting;
most overlooked aspect of
Flexibility;
-
-
How reliable and predictable are your processes ?
Are permitting entities contracted out or are they municipal or
state employees ?
Are key permitting individuals aligned with ED goals ? Will they
“show well” in an introductory meeting ?
Do you know of key permits which require long lead times ? Are
you able to offer expertise to help mitigate ?
What would other local firms say about their experience with your
jurisdiction ?
Taxation and Incentives; Flexibility concerns…..
-
-
-
How flexible are incentives; what if we go beyond our original
commitments ?
Is there a means of mitigating property taxes on equipment and
machinery ?
If we cannot use tax credits offered against state corporate taxes
since we don’t generate a significant liability, what other
assistance will you provide ?
What help can you provide for current and
future infrastructure needs and will you be able
to deliver ?
How difficult will compliance process be for HR,
accounting/finance staff ?
Local Resources and Professional Support;
- Do they exist and how “plugged in” are you to the following;
- Design, engineering, construction firms
- Attorneys who specialize in RE transactional work,
entitlements & zoning, incentive documentation,
environmental law, tax and municipal finance
- Specialty consulting firms focusing on air emissions, energy
efficiency/sustainable design, traffic consultants, waste-water
specialists
- Temporary staffing agencies who focus on industrial sector
- Search firms that focus on senior technical specialists and
facility leadership positions within key industries
Knowing there are quality choices in resources above
is critical “Flexibility” differentiator
Branding and Culture; Promotes Innovation
-
-
-
Can you provide examples of other companies within industry
that have been able to grow strong brand identity ?
Will local population embrace product and be proud it’s made
in their community ????
Are there local resources, landmarks, institutions which can be
used by a company to help differentiate products thru
marketing efforts ?
Does local workforce have evident history of loyalty and
buying into team oriented environment and embracing “it’s
not just about me” concept ?
Do you have property solutions for companies that want
location to be a reflection of their brand ?
Closing Thoughts;
* Food processors and many light manufacturing based
companies are facing dramatically shifting conditions, it’s never
been more difficult to build and sustain success than it is today
* In order to be successful, they must be able to react, innovate
and execute on a faster pace than ever before
* Location solutions must recognize and contribute to operating
and financial flexibility
* Consider and be able to effectively convey what your region has
to offer and recognize that for many companies, these factors can
be a major differentiator
Questions……………
Contact Information;
Scott Kupperman - Owner
Kupperman Location Solutions
W (224)-544-5540
C (224)-224-2559
E [email protected]
www.kuppermanls.com
Credits: Grant Thornton Study, FoodProcessing.com

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