We take two looks at food plant construction this month. The first is highlighted on the cover: our annual Capital Spending Report.
Judging from responses and public documents of most of the 50 largest food companies, capital expenditures may be up 7.6 percent this year. That's not as optimistic as the 11 percent we forecast last year at this time, but that never came true, even for the companies we survey. Several major food companies encountered difficulties in 2006 years and pulled back spending significantly.
Some of you may not see as readily see the other report relating to capital spending. This also is the month for our annual Architect-Engineering-Construction directory, but that section only goes to those in our circulation who claim to have a hand in deciding how expansion funds are spent.
If you don't see that section stapled into the very middle of this magazine, go to the 2007 AEC Directory online. You can read the report on food industry construction trends, as seen through the eyes of several AEC executives. You can also shop through the list of 63 AEC firms who specialize in the food industry.
Both of those reports focus on the industry's biggest players: for example, the $2.6 billion budgeted by Pepsico, the $1.2 billion being spent by Kraft, the $359 million beverage plant and distribution center planned by Nestle USA. There are, of course, many more food companies expanding than the 26 we survey.
Somewhere amid the financial complexities and the SEC reports is lost the excitement felt by people at a small company who are building their first plant or their first major expansion. But in doing some research for a conference we are staging on just that subject, I talked to several small processors who are filled with both the excitement and the anxiety of taking on a mortgage to fulfill their dreams.
Mr. Mud Bug started out as a catering service in Kenner, La. But its gumbos and alfredo sauces have caught on in such a way that "we did 2 million lbs in manufacturing last year," according to owner Michael Maenza. Having outgrown his 60,000-sq.-ft. production space, he's looking to build a 150,000-sq.-ft. plant in the next two or three years.
"We've been in business 10 years, but everything has been outsourced," says Brian Sanderson, vice president of Sanderson Specialty Foods, Austin, Texas. His company's barbecue sauces and salsas are seeing ever-widening retail distribution, and he thinks it's time the company had its own plant. "It's scary. We have no idea of the cost," he offers, but he's also excited at the prospect.
And there probably are hundreds of similar stories out there, entrepreneurs whose dream products have caught on sufficiently to warrant a manufacturing site of their own. I'm sure North Carolina pharmacist Caleb Bradham had no idea that 1890s cola syrup creation of his would be the foundation of a $32 billion worldwide company: Pepsico. And J.L. Kraft wasn't even making the cheese he sold out of his horse-drawn wagon in 1903.
Everyone starts out small. While this month we focus on some of the food industry's biggest spenders, I want to pay at least a small homage to the food industry's future generation of leaders.