A year of expansion

Nov. 13, 2017 - by MEAT+POULTRY Staff
Processors have invested millions in renovations and new plants throughout 2017.

This year has seen several new projects and facility expansions in the meat and poultry processing industry. From adding square footage to existing plants in Wichita, Kansas, to acquiring complete companies in locations as far away as Romania, companies invested millions to increase throughput and maximize efficiency.

Tyson’s targets

Tyson Foods will upgrade and expand multiple facilities throughout the remainder of this year and beyond. Increased poultry demand is pushing an expansion of Tyson’s 20-year-old Obion County chicken plant in Union City, Tennessee. Plans were announced this past August to begin a 25,000-sq.-ft. expansion in the fall. Tyson expects completion of the $84 million project by the middle of 2019.

The Union City plan includes expanding the harvesting area, adding processing lines and expanding the location’s supply chain. Supply chain enhancements will consist of expansions at the feed mill and hatchery, as well as increasing the transportation needed for support. The construction project will create roughly 300 new jobs.

“Customer and consumer demand for chicken is increasing, so we’re investing in projects that build on our strengths, expand our capabilities and increase our capacity,” said Doug Ramsey, group president of poultry at Tyson. “Expansions like this position us to grow and support our customers.

“We’re pleased to be able to invest in such a great community,” Ramsey added. “We’d like to thank the Tennessee Valley Authority, the Tennessee Dept. of Economic and Community Development, and the Northwest Tennessee Economic Development Council for their assistance and support for this project.”

In addition to its facility in Union City, Tyson plans to expand the pork plant in Waterloo, Iowa. The expansion was announced on Sept. 22 and cost was estimated at $28 million. The project includes the addition of over 56,000 sq. ft. to the 540,000-sq.-ft. plant, and renovation of an existing 56,400 sq. ft.

“The expansion of our Waterloo complex is great news for our plant, our community and our customers,” Shane Miller, senior vice president of Tyson Fresh Meats’ pork division told MEAT+POULTRY in an email.

The Iowa Economic Development Authority approved Tyson to receive approximately $2 million in tax credits in addition to $396,000 in sales and tax refunds as part of the project. The tax credits are to be divided between equipment and investments.

Tyson had also planned to build a new poultry complex that included a hatchery, feed mill and processing facility just outside of Tonganoxie, Kansas, in Leavenworth County. However, a grass roots campaign, led by Citizens Against Project Sunset (CAPS), and organized by residents concerned about the negative environmental and economic impact of the facilities on the community started opposing the project. CAPS launched a website (www.nototyson.com), started a social media campaign opposing the project and distributed yard signs that read “No Tyson in Tongie.”

Production capacity at the facility was estimated at 1.25 million chickens per week when the plant became fully operational. But in September, Springdale, Arkansas-based Tyson announced plans to put the project on hold while considering other locations after county commissioners in Leavenworth County voted to rescind a resolution of intent to approve revenue bonds totaling $500 million to support construction of the complex.

According to the open letter released by Tyson on Sept. 19, the company still has interest in Leavenworth County, but will “prioritize the other locations in Kansas and other states that have expressed support.”

Smithfield expansion and acquisition

In August of this year, Smithfield Foods Inc. announced new construction and expansion at its Tar Heel, North Carolina, processing facility. The company will build a new distribution center and expand its blast cell cold storage at an estimated cost of $100 million. To bring the two projects to fruition will require approximately 250 new jobs. Currently the Tar Heel plant, one of the largest pork processing facilities in the world, employs almost 5,000 and processes over 30,000 hogs a day.

“This expansion reflects the promising new era we’re experiencing at Smithfield,” said Kenneth Sullivan, president and CEO at Smithfield. “It supports our continued growth and helps us better serve our customers by providing additional capacity and optimizing our distribution footprint.”

Both projects are now underway and Smithfield estimates completion by fall of 2018 with the new distribution center covering 500,000 sq. ft. and 47,000 pallet positions. The expansion of the blast cell cold storage expansion will increase the company’s capacity by 140 million lbs.

“At Smithfield, we’re constantly evaluating strategies to achieve greater operational efficiencies and make our supply chain more sustainable,” said Dennis Organ, senior vice president, supply chain and direct store delivery (DSD) for Smithfield Foods. “This project will help us accomplish both goals while better serving our customers in the southeastern US.”

Smithfield is also expanding its international operations through acquisition. Smithfield’s parent company, WH Group Ltd. announced on Sept. 25 that Smithfield Foods acquired three pork processing plants and five distribution centers in Romania with the acquisition of Elit SRL and Vericom SRL, for an undisclosed amount contingent on anti-monopoly approval from regulators.

In a published statement, WH Group stated the two companies have the capacity to produce up to 45,000 metric tons, although current production is about 25,000 metric tons. That production currently serves over 12,000 customers in the Romanian distribution network.

“The group expects the acquisitions to give Smithfield a leading position in the Romanian packaged meats market with a branded portfolio of products sold in the higher-margin traditional channel,” according to WH Group.

Domestic upgrades

Austin, Minnesota-based Hormel Foods Corp. plans to spend about $50 million to add a new 156,000-sq.-ft. processing facility to its Dold Foods manufacturing plant in Wichita, Kansas. Along with the new construction, Hormel plans to spend $82 million for upgraded machinery and equipment putting total cost for the project at approximately $132 million.

Hormel estimates expansion of the bacon processing facility will bring an additional 384 jobs to the area. Currently, the Dold Foods facility employs 275 and contributes largely to Hormel’s overall bacon production. City government documents state that Hormel qualifies for a 100 percent, five-plus-five-year tax exemption – except for any capital outlay levy assessed by the local school district – based on the company’s capital investment and job creation.

Livingston, California-based Foster Farms plans to preserve existing jobs, as well as create new ones, at its plant in Farmerville, Louisiana. Foster Farms purchased the plant from Pilgrim’s Pride in 2009 and plans to invest roughly $30 million on expansion and equipment upgrades, one of which is reportedly a controlled atmosphere stunning (CAS) system. The expansion is expected to preserve 1,092 jobs in Union Parish and add 92 new direct and indirect jobs.

“Foster Farms is expanding its Farmerville operation for future growth and flexibility of customer mix, as well as greater efficiency in its fresh chicken operations,” said Laura Flanagan, president and CEO at Foster Farms. “Foster Farms has previously worked with the state economic development department when we acquired the facility in 2009. Since then, we have been pleased with the quality of the workforce, the business-friendly climate, and the attitude of state and local officials in helping us to succeed in Louisiana.”

Columbus Craft Meats, Hayward, California, a subsidiary of Hormel Foods Corp., completed its second expansion in two years. In 2015, Columbus increased its production over 50 percent and doubled the size of its Hayward facility. This year saw the salami curing facility add 10,000 sq. ft., increasing production capacity by 30 percent. The $16 million expansion was completed in September and featured the installation of custom, Italian-made equipment.

“We are now the most broadly distributed deli meat brand in the United States and we’re excited to see the tremendous growth in our business,” said Joe Ennen, CEO. “This added capacity will assure that even more consumers coast-to-coast will be able to enjoy our premium salami. Further, our expansion not only allows us to meet demand but also to continue developing innovative new products.”

Privately held, Roanoke, Alabama-based Koch Foods Inc. is planning to invest $40.5 million in a feed mill to produce prepared feeds, feeding ingredients and support the growth of the company’s Pine Mountain, Georgia, poultry processing plant. According to the Randolph County Economic Development Authority’s (RCEDA) projections, the company’s contract growers will build approximately 190 new growing houses. The new growing facilities would cost about $500,000 to construct and would result in $95 million of capital spending along with new jobs, property tax, and sales tax into the local economy, the agency said.

“Our plans to build a state-of-the-art feed mill in Roanoke will allow for a more efficient live operation that is necessary in today’s extremely competitive environment,” said Mark Kaminsky, COO of Koch Foods. “With the right facilities such as this feed mill in place, Koch Foods will not only remain competitive but look to expand in this area. We appreciate all the support this project has received.”

Prestage Foods of Iowa LLC continues to move forward on its new pork plant project in Wright County, Iowa. The facility is scheduled to open in late 2018. Chicago-based Epstein is acting as general contractor leading the $285 million project.

“Our earthwork is largely complete at this point. We are working on utilities and will begin steel erection later this month,” Prestage COO Jere Null wrote in an email to MEAT+POULTRY in early July of this year.

Null also affirmed that the new plant will cover 675,000 sq. ft. and process 10,000 head per shift for the initial single-shift operation. The new facility will utilize CAS with the pits dug at the job site. Once operations begin, the plant will employ 1,050 workers.

This year has also seen the beginning of operations at the new Seaboard Triumph Foods pork plant in Sioux City, Iowa. Starting with a single shift, once the Epstein-designed and built facility hits full production it will employ around 1,100 and process about 10,000 market hogs per day. Seaboard Foods and Triumph Foods formed the joint venture to construct the new facility. Seaboard Foods is a subsidiary of Seaboard Corp. with a pork processing plant in Guymon, Oklahoma. Triumph Foods is owned by pork producers with a processing plant in St. Joseph, Missouri.

“I couldn’t be more proud of the new plant, our team, and all the local and state partners that have helped bring this project to completion over the past two years,” said Seaboard Triumph COO Mark Porter. “We are excited to begin commercial operations and supply the most sought-after pork products to our diverse global consumers.”

The plant will produce fresh pork for retail, foodservice and further processing under Seaboard’s PrairieFresh Premium Pork and Seaboard Farms brands, and provide raw materials to Daily’s Premium Meats for raw and precooked bacon products. The Sioux City plant will source approximately 30 percent of the market hogs from regional farmers who operate in alignment with Seaboard Foods’ and Triumph Foods’ animal care and environmental stewardship practices. The remaining hogs will be supplied by Triumph Foods producer-owners and Seaboard Foods’ farms.

Clemens Food Group is another fresh pork producer with a new plant starting operations this year. The company’s new facility in Cold Water, Michigan, has partnered with many experienced, family-owned pork producers. In addition, the plant employs roughly 800 people and covers 650,000 sq. ft.

Designed and built by Gray Engineering Architecture and Construction, the facility’s production is expected to be at full force in late 2017 and process approximately 11,000 hogs per shift.

International improvements

On the international front, the Olymel La Fernandière plant in Trois-Rivières, Quebec, will double in size from 24,000 sq. ft. to more than 45,000 sq. ft. following a C$8.1 million ($6.5 million) investment by the company. With completion expected in December, the plant will use the extra space for both production and warehouse storage.

The plant, which Olymel purchased in June 2016, produces La Fernandière brand sausages, fresh and breakfast sausages for the Olymel and Lafleur brands, as well as for private label. The plant will also return to making meatloaf – a product that was previously discontinued. Following the completion of this project, the plant’s annual production capacity will increase from 14 million kg. (30.8 million lbs.) to 20 million kg. (44.1 million lbs.)

“By making this major investment, La Fernandière is giving itself the means to better meet the ever-increasing demand of the sausage market segment. This investment is necessary for us to increase our competitive position and better serve the needs of our clients all across Canada,” Olymel’s CEO Réjean Nadeau said in a statement.

The recent announcement of Miratorg Agro-Industrial Holding’s investment of over 200 billion rubles ($3.40 billion) in the construction of meat production facilities to process poultry, pork and beef using a vertically integrated business strategy means Russia will end its reliance on those imports.

The company refers to the pork production piece of the project as “pig production doubling.” The Oktyabrsky district of the Kursk region is slated to double the company’s pork production to 1 million metric tons (live weight) per year. The slaughter and processing facility, with an annual capacity of 4.5 million head, will create more than 5,000 jobs, the company said.

“This project is a constituent part of solving by Holding of the strategic task on doubling the pig breeding division capacity up to 7.7 million head per year,” said Viktor Linnik, Miratorg, president, during the groundbreaking in September. “Besides the meat packing plant, the grain company will be established, the production of compound feeds will be launched and new pig breeding complexes will be built in Kursk region,” he said.

Further processing operations are scheduled to begin by 2020, with slaughtering and deboning scheduled to begin in 2021.