The 21st century food manufacturer tries to manage a continuous struggle between yesterday and tomorrow. Ongoing are the battles for balance: continuity vs. innovation; institutional memory vs. the need to shed overhead or bring in new blood; maximum utilization of existing assets vs. investment in new technology and facilities; increasing productivity while lowering cost; maximizing profits on established brands while opening growth avenues with new and innovative products.
Such are the poles today’s food processor operates between as manufacturing and operations heads attempt to resolve challenges that test wit and wile even more than industrial muscle. Successful companies are able to drive innovation from a base of healthy established brands.
Hog Butcher to the Hormel World
Few companies illustrate this truth better than Hormel Foods, the quiet giant that seems to move with ease through today’s manufacturing and economic challenges.
Walk the headquarters halls and it becomes clear how this food industry mainstay has kept pace with every challenge it has faced through what has been, arguably, the most turbulent period in the history of food manufacturing in at least two decades.
History is on its side.
More than 15 percent of the Hormel workforce has logged 20 years or more. The company is built on manufacturing principles that appear to be as relevant today as they were in 1937 when three of its cornerstone products/brands had been introduced.
Take the principle of “sustainability,” a trend driven by environmental conscience today but with a familiar ring in the hallowed halls of Austin, Minn.’s largest employer. In fact, when Wal-Mart asked its customers to respond to its “Sustainability Scorecard,” Hormel was the first major food processor to respond.
“We have a long history of ‘sustainability,’ ” says Phil Minerich, vice president of research and development. “George Hormel called it ‘waste.’ Here sustainability shares sisterhood with cost savings.”
Depression-era products Spam, Dinty Moore stew and Hormel Chili still generate enormous profit – enough to drive ambitious new product ventures, often anchored in new or emerging technologies.
“We’re not a fad company,” says Minerich. “Spam, Dinty Moore, Cure 81 hams…all our products are valuable, recognized trusted brands that consumers can count on in times like this. We want lines of products with longevity.”
Hormel has demonstrated its technological leadership in recent decades with product and process innovations ranging from pioneering ventures in shelf-stable tray entrees to high-pressure pasteurization (HPP), which drives the popular new Natural Choice line.
That leadership stems from a willingness to bear with products and lines with foreseeable upside even through extended periods of slow to stagnant sales.
Case in point is the company’s shelf-stable microwaveable entrees. The first sealed, retortable tray products were released in 1987 under the name Top Shelf. A concept clearly ahead of its time, the line was hailed for its innovation. And unlike most of the frozen dinners and entrees it competed with, it was produced on efficient, automated production lines.
Sales lagged, however, for reasons ranging from product positioning to quality difficulties with some early flavor varieties. Convenient and cost efficient (Top Shelf did not require refrigeration), the concept had enough internal champions to remain afloat under new identities – Dinty Moore American Classics and Hormel Microwaveable Meals. Still, it could do little more than tread water until its re-release under the name Compleats in 2007.
“Top Shelf was ahead of its time,” observes Mike Devine, vice president of operations for Hormel’s Grocery Products division, noting that the product’s microwavable sealed tray package was hidden by a paperboard box during the product’s initial run and restaging. “We reintroduced the packaging concept to consumers and rebranded the product to bear the Compleats name and saw immediate sales growth.”
Today Hormel manufactures the product on two lines at its plant in Rochelle, Ill., and one line in its Atlanta facility. Another line will come onstream in late 2009 at a plant under construction in Dubuque, Iowa.
Hormel is rare, too, in that it continues to design and fabricate much of its own processing equipment from Austin. “Research engineering is one of our hidden gems at Hormel,” says Devine.
“We have developed a lot of very successful proprietary equipment,” adds Bruce Schweitzer, vice president of operations for refrigerated foods, noting the application of HPP to ready-to-eat meats. “We have a unique group of engineers who have been able to look at traditional processes non-traditionally.”
Case in point: Hormel eliminated more than 30 “ergonomically terrible manual jobs” when the group automated a packaging step in its pre-cooked bacon operations.
The Austin plant
The food industry heralded Hormel’s flagship plant in Austin, Minn., even before its opening as a state-of-the-art meat processing facility in 1982. The plant continues to live up to its advance billing. Still reputed to be the largest food processing plant in the world under one roof, live hogs are delivered daily to one part of the plant.
The plant generates more than one dozen products, including: Always Tender marinated meats, Austin Blues pulled pork & chicken, Cure 81 ham, Di Lusso Genoa, Hormel chunk ham, Homeland hard salami, Hormel Natural Choice sliced Canadian bacon, Hormel pepperoni, Hormel turkey pepperoni, Hormel precooked bacon, Old Smokehouse bacon and the SPAM family of products.
Hormel’s flagship plant in Austin, Minn.
The Austin plant remains an industry benchmark, thanks largely to its ongoing continuous improvement program. “The two areas of paramount importance in our plants are the safety of our employees and the safety of our products,” notes Schweitzer. Hormel’s safety emphasis is manifested in plant design and practice.
“Hallways separate all sections of the plant. Effectively, we have six plants under one roof,” says Austin plant manager Mark Coffey. “That [along with footbaths at entrance and egress areas] is key to controlling cross-contamination from division to division.”
Plant management orients Austin facility employees to its standards and missions through a continuous improvement playbook organized around “The Five Ps”: Principles, People, Process, Product and Performance. Every 12 months, plant personnel review the plant according to playbook guidelines and determine how and where to focus improvement efforts with respect to company vision, mission and values.
Workforce longevity -- more than a quarter of its workers have spent 25 years or more with the company -- factors largely into the plant’s continuous improvement record. But loyalty has been a two-way street. Hormel has implemented flexible work shift options including a 3-2-2 schedule of three days one week, four the next. Its benefits and profit-sharing plans also have tightened worker bonds to the company.
“We’re proud that the company has voluntarily paid profit sharing to all of our employees since 1938,” says Coffey. “That tells part of the story of why we have so many long-term employees. We take good care of them.”
From Spam to Natural Choice
Showcasing both foundation brands and breakthrough technology, the Austin plant itself is a living testament to Hormel’s success formula of continuous revitalization of products and processes coupled with “outside-the-box” innovation.
Spam, for example, is 70 years old and counting. Like all Hormel production lines, the Spam operations are subjected to continuous improvement efforts, which have elevated production to 1.2 million lbs. per week. That translates into 80 million 12-oz. containers per year.
The Spam operation was central to the Austin plant construction in 1982. In fact, the first thing placed on the site was the existing hydrostatic cooker, installed before there was anything above ground. The plant was literally built around it.
With steam rising up its seven-story height, the cooker remains an awesome throwback to a bygone Hormel era. Product serpentines through the continuous flow cooker, entering on one end as ground raw meat in a seamed can and coming out hours later as cooked finished product, the same today as in yesteryear.
Yet continuous improvement has had an important hand in Spam product and process evolution. The most dramatic improvement in Spam production has been the conversion from three- to two-piece cans and from lithograph pre-printed cans to the application of printed labels to a standardized can – a significant supply chain improvement.
“We can buy generic empty cans and don’t have to run through an inventory of pre-printed cans,” says Coffey. “If we want to change our marketing (or a recipe), we can do it more quickly. We only have to apply a label.”
A plaque-filled wall in the Hormel R&D center in Austin honors the company’s “hall of fame” patents. On it is a special recognition award for high-pressure pasteurization (HPP). While Hormel can’t take credit for the HPP patent, the company looms large in advancing this breakthrough process in the production of ready-to-eat meats, thanks to an engineering group that added proprietary improvements to the equipment.
HPP is the linchpin of the preservative-free process for Natural Choice, the first nationally distributed meat product line processed with HPP. Hormel also exposes its foodservice sliced meats, including its Bread Ready line, to high pressure after final packaging.
“We employed a cross-functional food safety effort to validate the pressure and time required to eliminate listeria with the process,” explains Kevin Myers, group manager for fresh and processed meats. “To introduce the Natural Choice line without preservatives, we needed the HPP process for our products to remain safe.”
Technology in Action in Austin
High-pressure pasteurization kills microorganisms such as salmonella and listeria by collapsing their cell walls under extremely high pressure.
“It’s an extra food safety hurdle for us,” explains Coffey, noting that meat products are exposed to pathogen risk each time they are exposed to an additional piece of equipment or process step. “We have our GMPs [good manufacturing practices] and SSOPs [sanitary standard operating procedures] in place to see that [pathogens] are not getting into the product. But this is a final step while the product is already in its final package.”
To face what Coffey calls “the economic headwinds” represented by the rising costs of commodities, fuel and even feed grains, Hormel has stepped up its efforts to improve manufacturing efficiencies and asset utilization as well as its sustainability efforts.
Among the company’s most significant and publicized sustainability efforts is the Dubuque plant, destined to produce Compleats and canned products. Hormel is employing the U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) guidelines for sustainable, environmentally friendly facilities from before the groundbreaking. (See Hormel Cultivates a Green Plant)
“By putting more product through our facilities, we lower fixed costs,” explains Coffey. “As for our sustainability initiatives, going green is good for the environment, but it is also economically cost beneficial. It’s a matter of asset utilization, better control of the things we can control such as yields, efficient utilization of raw materials…efficient utilization of labor. These are all examples of attempts to offset what we know are increasing input costs.”