Many different factors drive new construction in the meat and poultry industries. Whether companies add on to existing facilities, remodel or build new and complete processing plants, over the last decade the processing industry has seen a noticeable increase in construction.

Driving forces

Derek Bickerton, vice president of business development and market analyst with Zak Netting of Jacksonville, Fla.-based Stellar, a design, engineer, construction and mechanical services firm, have seen a need for new construction primarily driven by demand among processors to increase production capacity. Recent changes in the market have pushed processors to build with the objective of developing new products, as well as upgrading efficiency and increasing the capacity of their facilities.

“Additionally, some market sectors are dealing with aging infrastructure, and many are starting to realize that installing new products and OEM (original equipment manufacturer) equipment could better serve their fast capacity needs and improve their efficiency,” Bickerton said.

Justin Hamilton, market leader for Kansas City, Mo.-based McCownGordon Construction, added that food safety requirements and new best practices call for upgrades at many existing facilities. Renovations might be needed to meet US Department of Agriculture regulations, or to mitigate potential product quality issues, or in some cases to improve sanitation, product segregation and product traceability.

Consumers today have raised their standards of nutrition, and animal handling practices have also changed for the better. Animal size has also steadily grown. A growing number of older facilities must be modified to adjust to these factors. But McCownGordon has seen its processor clients shift their attention to building based on the well-being of employees.

“Our processing clients are focusing on employee welfare and retention,” Hamilton said. “A single shift of production, where most employees work the day shift, helps with employee job satisfaction and retention. However, this means the production capacity of the plant may need to increase if demand was previously met with multiple shifts of production.”

Headquartered in Ogden, Utah, with offices all over the United States, Big-D construction brings another perspective to the processor contemplating modifications and upgrades through construction. For some processors, upgrades and modifications might not serve them in terms of what they need to do to continue to grow, or even remain solvent in their business.

“As for plants, sometimes a little makeup will help them a little, you know, a remodel and innovation expansion and sometimes they’ve just outgrown the bones of that structure and it’s time to move on,” said Forrest McNabb, president of Big-D Construction.

As communities grow, processing facilities originally built on the outskirts of a town or city see themselves now within that town or city.

“They’ve been consumed by population growth,” McNabb said.

People in these communities do not welcome an expansion or remodel and would even prefer the existing plant to go away altogether.

“They were welcomed, but now they’re not because they have an ammonia refrigeration system or the smell of what they’re producing or the truck traffic,” McNabb added. “It’s not received by the neighborhood like it was once as an outskirt area. The communities are less open to having your add-on or remodel. They [processing facilities] can’t scale anymore, so they’ve chosen to move on.”

Oftentimes an addition for more storage can provide the solution to a processor's challenge. (Source: Big-D Construction)

Trend tracking

With consolidation among some larger beef slaughter plants, and some larger and smaller beef plants under construction now, and new pork slaughter plants opened a few years ago, both the beef and pork sectors could satisfy capacity, said Darrin McCormies, senior vice president and director of Industrial Services at Chicago-based Epstein. Seaboard Triumph Foods, Clemens and the Prestage Foods pork plant in Iowa, all came online at roughly the same time a few years ago, and they have appeared to satisfy the pork capacity.

As far as the beef slaughter, McCormies said, “We’ll see what happens when those two big ones come online and what happens with the total shackle space.”

Epstein is in the early design stages of a new smaller beef plant in Texas in the near future, so there is still activity in some new beef slaughter construction, but McCormies noted a decline in the number of inquiries he’s getting for startups.

“I think we’ll continue being driven by value-added products at the retail side, additions, consolidations, then some new construction,” McCormies said. “But I think that’s where more capital will be spent in, in my opinion.”

Chad Ware, director of the Process Group at Epstein agreed.

“I think where you do see growth is people trying to capture more of the end value of the products that they’re producing,” Ware said. “So, if it’s a rancher trying to stand up a small slaughterhouse, it’s because he sees that’s where the money is being made. And the same with the traditional slaughterhouses moving more into prepared foods and further processing. They’re just trying to capture more of the consumer value for themselves and that seems to be driving the trends where there is expansion.”

IPM, Rockford, Mich., designs, engineers, automates and installs full line food and beverage complete packaging systems. As such, the firm is involved in expansions, renovations and greenfield plant projects. The company comes in later during a project, after market demand, after product assessment and SKUs have been established and design, engineer and install a modern, integrated, OEM neutral packaging system that ensures optimization of customer aspirations.

The trend IPM has seen in its area of new construction is the proliferation of SKUs. A greater variety of protein types such as pork, lamb, beef, duck, etc., in different formats, such as chubs and patties, as well new flavors and serving sizes has resulted in more intricacies involved in the packaging process.

“The impact of more and smaller SKUs has added complexity to some packaging processes,” said Tom Wiersma, business development manager at IPM. “And the complexity has often required more automaton in packaging systems.”

New construction demands attention to the newest automation and artificial intelligence (AI). When expanding or building greenfield, there must be an adequate labor pool for staffing the additional capacity. Labor markets have dwindled significantly in recent years and show no signs of increasing.

“When considering expansion, processors need to assess labor availability,” Hamilton said. “Increased production will require staffing. With a nationwide labor shortage, critical to ensure the local labor pool is adequate.”

Automation might not solve the current labor shortage problem completely, but it can certainly cut down on the number of staff necessary for operations.

AI has emerged as a topic being discussed in every industry, and meat and poultry processing is no different. Processors have begun to anticipate the effects of AI on their facilities not just presently but over the next 10 years and beyond.

Processors must consider how AI will work within a new construction project and how any new equipment and automation will require compatibility.

“Many food processors are aware of these upcoming changes and are working diligently to implement them in their operations,” Bickerton said. “However, failing to do so could result in falling behind.”

When a processor lacks the capacity for demand, a greenfield processing plant provides the needed space and technology. (Source: Stellar)

Beginning to build

Once a processor decides to build, expand or remodel and allocates the capital, a new process begins. Processors must find the right builder with the right plan and trust the process of new construction. Challenges will arise and oftentime a pivot will be necessary. Builders will make sure that projects fit into their processes and procedures as well. It’s a symbiotic relationship.

Processors need the same traits in a builder that all industries ready to invest in new construction need, a reliable firm able to adapt to any obstacles that might come up, yet able to provide high-quality work and meet timelines. In today’s construction environment transparency and trust should rank at the top of the list when processors choose a company.

“Stellar is uniquely equipped to meet these needs with in-house design and process capabilities — including thermal, mechanical, electrical and refrigeration — all under one roof,” Bickerton said. “This facilitates collaboration, gives us greater control over the outcome, and enables us to better understand our client’s needs.”

Builders also want to partner with processor clients that fit in with the construction firm’s culture. Trust between the processor and the builder is imperative to ensure the project proceeds as smoothly as possible.

“The mutual trust between an owner and a builder has to exist,” McNabb said. “Or it has to be one that you believe can be developed in a mutual rewarding project.”

Builders and processors must incorporate flexibility into any project no matter how large or small, but also the ability to make a decision and move forward with it. Projects in the meat and poultry industry come in all sizes and degrees of complexity with many options to consider along the way to completion.

“But there’s never a moratorium on a better idea,” McCormies said. “So, whether it’s two weeks into a project, two months, 20 months, you know a better idea will sometimes push you to kind of alter course.”

He added that deeper into the project schedules and finances become more impactful to the project when trying to pivot and might not be the best decision. However, it doesn’t mean it couldn’t be implemented later on if circumstances permit.

Building, renovating and expanding a meat or poultry processing plant in today’s environment means understanding the differences in the factors affecting construction that didn’t exist 10-20 years ago, or are at least magnified compared to the present. Long lead times for materials and equipment are very common, sometimes up to two years out.

“We need to make early design decisions and issue purchase orders well before design is complete and construction is started in order to meet the overall project schedule,” Hamilton said.

Knowing this and being open to honest communication is a must for firms and processors to complete projects.