2008 Annual Manufacturing Survey: Safety Main Priority, But Green Catching Up

Food safety is still the chief concern of processors, but the ‘green’ trend shot up the charts too; 77 percent see growth this year.

By David Feder, Managing Editor

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Food and beverage processors exited 2007 with confidence in 2008. Our seventh annual manufacturer’s survey shows nearly 77 percent of food and beverage processors anticipate 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 relevance to each of nine categories (see chart), each concern was assigned aggregate points to determine level of importance.

2008 Manufacturing Survey Results

Other concerns cited include: “reducing conversion costs, inventory reduction, reducing turnovers;” “replacement equipment and (resources) to accommodate expansion or replacement;” and “regulatory issues.”

Safety first

The optimism for 2008 must be tempered by the concern for food safety, once again the No. 1 concern among our processors. And for good reason: Last year was one of the worst for food recalls. It was a year in which the industry was overwhelmed by food scares and in which “Let’s go for some Chinese” went from a common lunch suggestion to a guaranteed laugh in a Letterman monologue.

"There’s a change of consumer perception regarding the environmental impact of consumer products. Consumers will start to challenge the logistics of certain products and their distribution based on the environment," said Hubertus Schubert, engineering consultant/process engineering for Coca-Cola Co., Atlanta.

But 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 of the second largest beef recall in U.S. history. E. coli O157:H7 in its hamburgers sickened dozens – but killed no one. And Augusta, Ga.-based Castleberry Foods Inc. was almost taken down by a recall of nearly 100 of its meat-based products for botulism.

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.

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 early in the year took a $66 million hit for contaminated peanut butter, then near the end of the year recalled Banquet pot pies. Cheese, tortillas, smoked salmon dip, puffed veggie snacks … a veritable supermarket of recalled consumer food products proved processors are having considerable trouble keeping the 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. "Food safety has captured the attention of both the American public and lawmakers," says Dexter Manning, national food and beverage industry leader for Grant Thornton LLP. “Unfortunately, the FDA’s budget has been slashed in recent years resulting in a reduced number of inspections at a time when we probably need them the most.

“With elections coming this year, many fear food safety will take a back seat,” Manning adds. “On the bright side, the agreement 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.”

Get clean, stay clean

For the experts, how to ensure safer food still boils down to the no-brainer of clean hands and a clean workplace. “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 Milwaukee-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 the already high numbers implementing employee training programs (89 percent for 2007; 87 percent in 2006) and HACCP plans (57 percent and 55 percent). Improved pest control, more/improved sanitary equipment and rapid microbial detection all stayed within the same percentages in 2007 as 2006.

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. That’s 2.5 percentage points above last year’s responses.

2008 Manufacturing Survey Results

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 hovered 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 added in, though, the total of those so worried dipped from last year’s 84 percent.

Fewer respondents than last year – 44 percent vs. 54 percent – increased security measures, and only 38 percent will be implementing new security measures in the new year compared to 46 percent who promised to last year. A number of respondents noted the reason new security measures were not on the table for 2008 was because their facilities had numerous 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 internal access. Just over half will focus efforts on employee I.D.; the same number will implement surveillance methods.

2008 Manufacturing Survey Results

Nearly 16 percent will go high-tech via security application software, compared to just under 13 percent last year. Other post-9/11 security measures discussed included “any of the other technologies suggested under the DHS [Dept. of Homeland Security] or by various 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. A similar direction was pointed out by a Cleveland-based consultant to a national baked goods maker: “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.”

Labor pains

Coincidental to the security responses was one of the biggest 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 business was a decrease 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 or so somewhat affected. Half wouldn’t be affected by stricter immigration laws at all.

But overall, labor worries are limited to the usual concerns 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 for 2007’s survey, we found 48 percent of processors expect salary increases this year, with 55 percent having received one last year. Salaries are expected to stay the same for one-third – possibly the same third not anticipating a raise this year either.

Two-thirds saw benefits stay the same in 2007, and nearly as many – 61 percent – anticipate no change this year. Nearly 11 percent saw benefits decrease last year and 10 percent expect a decrease this year. But there’s more to the compensation picture. As a Linden, N.J., olive oil processor warned, the issues of salary and benefits can have an adverse effect on safety: “As inflation increases, it will be harder to maintain compensation levels (and) train[ed workers]. [Effective] food safety training will be very important.”

For the second year, we compared categories of staff regarding growth and status quo. However, in addition 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 larger than in 2004. Between 43 and 50 percent said levels stayed the same.

Staff reductions for the three groups showed Management will fare worse than the others – a hair over 20 percent expect a reduction in that department this year. The other categories were in the 11-13 percent range for weeding out.

I, Robot

Some laborers work 24/7 and never complain. Automation levels stayed roughly the same as in last year’s surveys. Any changes were too small to be statistically significant and likely due to the differences in respondents this year over last. There were some stand-outs, however, which might point to an automation trend, especially considering those categories’ connection to energy and environment issues. Logistics, maintenance and waste operations percentages were all much higher than last year. (See chart.)

2008 Manufacturing Survey - Automation

Processors are still automating in the same manner. PLC integration 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.

So far, the 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 production in ’08 to increase by 20 percent or more – only 3 percent lower than last year; 31percent (identical to last year’s survey) 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 a full 5 percentage points over last year. That brought the total number looking toward a production increase to 77 percent

Decreases barely measured but we should keep an eye on the pessimism coming from the 2 percent who foresee a production drop of 20 percent or more.

The numbers for plant consolidation and expansion remain virtually unchanged for this year over last: 10 percent see a consolidation, 28 expansion and 48 percent hope to stay the same. The capital spending budgets, too, compare close to last year’s figures. About a quarter see that budget staying the same; 44 see it increasing and 9 percent see it decreasing.

2008 Manufacturing Survey - Plans

The green machine

Last year saw enough green flag-waving to make one think St. Patrick’s Day had become a year-round affair. Environmental concerns are on everyone’s radar screen. The number of processors finding themselves “very” or “extremely” concerned about the environment went up more than 5 percent, to 70 percent. In fact, numbers for concern over environmental issues and sourcing and materials issues were higher than they’ve ever been.

Not surprisingly, nearly every processor sounds worried about energy bills: 50 percent are “very worried” and 47 percent are “somewhat worried.” Last year, “only” 90 percent were as worried about energy 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 about 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 last year’s 10 percent.

The steps processors are taking to manage energy haven’t changed and include:

  • Conservation (two-thirds)
  • Audits (one-third)
  • Recycling (three in 10)
  • Renegotiation (one-fourth)
  • Alternate sources (one-fifth)
  • Consultants (one in nine)
  • Co-generation (one-tenth).

Those not looking at any form of energy management for the year dropped from almost 10 percent to under 9 percent compared to last year.

For this year’s survey, we asked about alternate energy sources, such as solar, wind and biodiesel. We discovered almost 20 percent are considering such power. Other alternative energy plans to be implemented include: heating with hot waste water or steam; methane capture; and converting factory waste into biogas for fuel.

But one of the best ways to reduce energy and save money is by implementing a number of 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've also installed sensored lights in low-traffic areas. Other efforts include upgraded efficiency on the ammonia compressors in our refrigeration units, we changed our defrost process to conserve energy, updated steam traps and enhanced leak detection and maintenance. To conserve water, we’ve shifted to low-flow plumbing systems.”

What goes around

The rise in energy worries was a wake-up call that what goes out the pipe goes out the pocket. Overall, environmental issues rank as “extremely” or “very” important among 71 percent (last year 67 percent). And 56 percent of processors surveyed say they’re recycling more than they did last year. In fact, 90 percent are engaged in some form of recycling/re-use program. Fewer than 3 percent are not recycling and have no plans to.

Barriers to recycling included: Too many products not accepted for recycling, not enough room to store recyclables and cost of implementation outweighing the benefits. Some processors also found themselves stymied by regulatory issues and lack of alternative products for those components of their process that cannot be recycled.

However, with most processors riding the “save some green by going green” bandwagon, clever steps are being employed. Examples include computerized “fine-tuning” control of machinery, lighting and thermostats; getting maximum usage out of natural lighting and heat; retrofitting machinery; and controlling leaks on machinery.

Our seventh manufacturing trends survey gave us better-than-ever insight into the issues moving the half-trillion dollar food industry. For instance, one trend that “blipped” on the radar and bears watching is the impact of adding and maintaining certifications for foods and beverages, specifically kosher, organic and halal. These were merely mentioned by several processors as general concerns, but they are certainly strong trends. We’ll keep you up to date on how your fellow processors are coping with those and other such emerging trends in the future.

The editors of Food Processing wish to thank all who took the time to take the survey (nearly twice as many as last year) and who contributed comments. If you have any questions or feedback, or ideas on how to improve this annual survey, please contact us.

How we did it


Our seventh annual Manufacturing Trends Survey was an e-mail survey taken during November. There were 395 respondents, divided among the following food categories:

  • Bakery (11 percent)
  • Breakfast Cereals/Grain Products/Pasta (3 percent)
  • Beverages – non-dairy, including carbonated drinks, juice, alcohol, water, etc. (7 percent)
  • Condiments/Jams/Jellies (2 percent)
  • Confectionery (5 percent)
  • Dairy – milk, cheese, ice cream, etc. (6 percent)
  • Fruits And Vegetables (4 percent)
  • Frozen Dinners (2 percent)
  • Further-Processed Foods and Specialties (10 percent)
  • Herbs/Spices/Dry Flavorings (4 percent)
  • Meats/Poultry, fresh or frozen (18 percent)
  • Packaging (5 percent)
  • Seafood, fresh or frozen (1 percent)
  • Snack Foods/Chips (4 percent)
  • Other (17 percent)
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