Downsizing Leaves Holes in Innovation and Engineering Talent

A decade of downsizing has sent former food industry innovators to engineering firms -- where anybody can hire them.

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When was the last time your company produced breakthrough processing technology? Is the engineer responsible for that last success still with you, or did he leave the company with a pink slip or, if he was lucky, an early retirement package?

More than a decade of downsizing has left many processors with gaping holes in technological know-how and a faint spark for innovation. The pattern has been remarkably similar at many prominent companies. First, they contracted the manufacturing organizations and cut the engineering team in half. Then they merged the company with another nearly as large, closed plants and contracted the operations and engineering again.

Many believe that food industry innovation is at an all-time low. And the thought of venturing into high-risk new technologies today probably is out of the question in companies still staggering from the debt loads of big mergers. Adding to the pressures are mass merchandisers such as Wal-Mart, whose demands to lower costs have rippled through nearly every consumer products segment in American industry.

Downsizing doesn’t just dampen the creative urge. It is invariably a piece of a larger contraction strategy that leaves few resources free to develop technology or innovative new products.

Pore through the lists of recent new products. You’ll see few signs of daring. As one equipment maker put it, “We’re in a period now where you sprinkle lemon juice into a box of Cheerios and call it Lemon Cheerios. That’s what passes as innovation.”

So where are the breakthroughs coming from today? Who will come to the plate to deliver the next home run, the next fruit roll-up or aseptic pouch beverage system? For that matter, who can you count on to develop that minor piece of equipment that would simply relieve the problems on your line and reduce manufacturing costs? Who’s delivering the specialized equipment and technology that can solve problems or give you a competitive edge?

Get your vendors to develop it

Food companies are outsourcing more now than ever, according to several people we spoke to.

“The trend is to get suppliers to do [the research and development] for free,” says Ed Goldman, senior vice president for Foster-Miller, Waltham, Mass., a manufacturer of custom equipment for food and other industries. “Processors go to the equipment supplier or the ingredient supplier and say, ‘If you’ll do the research and design for free, I’ll probably buy it from you.’ ”

That proposition entails higher risk than equipment companies like to assume in the current manufacturing environment, although some do.

Foster-Miller has notched notable food industry achievements. It developed the process for General Mills’ Fruit Gushers, to which General Mills now holds the patent. (For the record, General Mills is one of the few processing companies that still maintains in-house equipment-making capability.) Foster-Miller also developed water-jet cutting for Nabisco’s Fig Newtons and a new fabricated potato chip process for a snack maker. Still, few food companies today are eager to invest in products requiring new, difficult or untested technologies even when such technology might pose a formidable hurdle to market entry from competitors.

Glenn Anderson and Steve Howard had long careers with Ore-Ida – Anderson’s was 28 years – before the two left to form Atec LLC in Pocatello, Idaho. “They were doing electronic sorting in the early 1980s, before Key Technology had even gotten into the game,” says Mike Keough, director of engineering-industrial packaging of Power Engineers Inc., Hailey, Idaho, which will acquire Atec this month. Keough himself spent 21 years with Ore-Ida.

The Ore-Ida experience brought expertise in specialty meat slicing, too. Gagliardi Bros., another Ore-Ida/Heinz division, had invented a “superslicing” technology to make the unique finely sliced Steak-umms frozen meat product. “You can still see Glenn’s designs in today’s slicers,” adds Keough, “with their servo-driven components and other features that may appear common today but were uncommon and very innovative in the ’80s.”

Prior to the purge of the 1990s, having in-house personnel to design processing equipment was common – even expected -- in the industry. Many processors had their own fabrication plants to build specialty equipment on premises. Nearly every food giant sported dozens, if not hundreds, of engineers and other technical talent that contributed to processing improvements.

Many spent decades with the same company, absorbing then adding to the institutional memory, learning from the old timers, and mentoring the next generation of experts within the same manufacturing organization. Careers spanning 20, 30, even 40 years with the same company were not unusual. Processing technology was considered critical to maintaining a competitive edge. Processors prided themselves on homegrown technology and protected the family secrets jealously.

In a downsized world, the thinking is reversed. Why pay the high cost of keeping a stable of technological talent when you can buy technology more cheaply?

Indeed, companies providing engineering and equipment services today use that argument in their own sales and marketing pitches.

“We have two advantages,” says Goldman of Foster-Miller. “First, we’re aware of technology in a number of industries and food segments. We also hire heavily experienced people and have little turnover.” He adds that the company is multi-disciplinary, enabling it to take on complex projects and to look at all aspects of those projects.

Foster-Miller, recently purchased by Qinetiq, the $1.5 billion British engineering firm, is hardly small anymore. The company’s staff includes 260 degreed engineers. Unlike some of the technology boutiques built from the bones of castoff engineers, Foster-Miller has developed much of its own expertise internally. It has also acquired key personnel from other equipment manufacturers. Still, says Goldman, “Sometimes you come across processing personnel so good that you have to hire them,” recalling several hires of former Kellogg personnel during past periods of cutbacks.

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