2006 Manufacturing Survey

Once again, food safety is manufacturers’ No. 1 concern - but Osama, Katrina and Reddy Kilowatt are out there, too.

By David Feder, Managing Editor

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Security continues to be an important factor in plant ops. Measures processors intend to implement include enhanced employee identification, increased surveillance, security application software and "big scary dogs and guys with guns."
Last year was a tough year for everyone. To say things "got Biblical" would hardly be an exaggeration. We have a largely religious war in the Middle East, poverty and pestilence in Africa, floods and hurricanes at home and earthquakes in the Himalayas.

Although there's no doubt a food manufacturer might have difficulty covering an increase in the price of plastic packaging or finding a trained line worker who'll stay on the job for more than a few months, we did feel the effects of the year's extraordinary global tribulations.

Business advisory firm Grant Thornton LLP (www.grantthornton.com), Chicago, found in a mid-year survey the industry was anticipating good growth. But later in the year, hurricanes Katrina and Rita and unpredictable energy costs disrupted many facets of U.S. business. According to the firm's research, two-thirds of large-company executives expected negative effects from the storms for three to 12 months.

"The food and beverage industry is highly reliant upon transportation to move goods to markets, and is especially sensitive to fuel and energy pricing from an operations component and due to the fallout that fuel pricing has on consumer spending," noted Jim Maurer, managing partner for Grant Thornton's Consumer & Industrial Products practice.

The human cost of the tragedies of Katrina and Rita here or Pakistan and Iraq "over there" can't be underestimated. Yet they do have a trickle-down effect that can't be ignored. For example, fuel shortages lead to more than higher shipping costs. They also put strain on the ingredient supply chain, moving perishables expediently and the costs of goods and packaging along the entire chain from processor to consumer.

These are just some of the concerns echoed by food processors in this, our fifth annual manufacturers' survey. The shift in concerns is evident in the No. 1 issue, food safety. Yes, it still came in on top, but this year just under 30 percent of respondents put it in that prime position, compared to nearly twice that percentage last year. (Editor's Note: To access the numerous graphics that accompany this article, click the Download Now button at the end of this article.)

A virtual three-way tie for second place was led by energy sourcing and costs (18 percent), automation (15 percent) and labor issues (14 percent). Other manufacturer priorities for 2006 included consolidation challenges (7 percent) and logistics (5 percent). One respondent mentioned packaging design as a top priority.

Surprisingly, physical plant security came in at a meager 2 percent, considerably lower than last year, although in a subsequent question bioterrorism and other terrorism issues have more than 85 percent of respondents worried. Between Osama bin Laden and sneaky competitors, security continues to be an important factor in plant ops. About two-thirds of processors polled implemented additional security measures last year, and more than half will this year.

Old fashioned lock-and-key mentality is the way most processors - 76 percent - intend to beef up security. And eyes-open techniques also come into play, with 65 percent bettering employee identification and 54 percent relying on increased surveillance. Big Brother will not only be watching you, but will be watching out for you.

Add in security application software and, a category favorite, "big scary dogs and guys with guns" and hopefully our food plants will be fairly well protected in '06.

Safety first

Of the 30 percent of respondents placing safety as their main manufacturing concern for 2006, nearly eight in 10 claimed to have implemented additional food safety measures in 2005. Almost as many - 69 percent -reported they will implement additional measures this year. Most of these measures (more than 88 percent) will take the form of employee training.

Also in the works are plans to improve hazards analysis and critical control points (HACCP) programs (59 percent), better pest control (44 percent), equipment sanitation (39 percent) and rapid microbial detection systems (23 percent). Track and trace systems, third-party audits and increased worker accountability also were mentioned.

"Our facility team leaders place safety and regulatory affairs at a high priority level," says John Loftis, regulatory affairs and food safety coordinator for commissary and related markets for Whole Foods Market stores in Georgia and the Carolinas. Loftis, whose division manufactures, produces, packages and ships prepared and ready-to-eat foods, came to Whole Foods following more than 32 years at the USDA in food safety. "I've probably seen or heard of anything anyone could have done or imagined in regard to food safety," he says.

Recognizing how integral people are to the safety and security equation, Loftis continues, "Food manufacturing owners and operators should include, and seek advice and recommendations from, production, sanitation and quality control personnel before making major changes. Sanitation, production and quality-control education need to be raised to a higher level. All food manufacturing owners and operators also need to establish more uniform guidelines on bonuses and pay raises, with salaries increased according to training and experience levels."


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