2012 Capital Spending Report: Greek Yogurt Plants are Stacking Up

After two years of 20 percent increases, capital spending looks to be up only 4.1 percent this year.

By David Phillips, Plant Operations Editor

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Batavia, N.Y., appears to be the epicenter for Greek yogurt. Agro-Farma Inc., headquartered in Batavia, just changed its name to Chobani Inc. to coincide with its category-leading brand. While it's sitting pat in Batavia, the company is expanding its facility in nearby New Berlin, N.Y., which is dedicated to Greek yogurt. Plus it plans a new plant in Twin Falls, Idaho, that will be 900,000 sq. ft., will cost $250 million and should open later this year. Company officials hinted the Twin Falls plant is not entirely dedicated to Greek yogurt: "It will house additional product lines and innovations," a spokesperson said.

Dannon Co., a U.S. subsidiary of France's Group Danone, operates three production facilities in the U.S. It is currently at work on a 400,000-sq.-ft. expansion of its Minster, Ohio, plant at a cost of around $88 million.

General Mills announced last July it will spend $36 million for a new distribution center in Fort Wayne, Ind. The new DC will measure 1.5 million sq. ft.

Speaking of consolidation, JR Simplot announced in November it will build a new potato processing plant in Caldwell, Idaho, with site preparation anticipated to begin next month and start-up expected by spring of 2014. The new plant will replace the company's existing potato processing plant in Caldwell, with additional closures of facilities in Aberdeen and Nampa, Idaho, in the next two to three years. Those will result in the loss of just under 800 jobs.

The 380,000-sq.-ft. plant, which will be built on the site of the company's original processing plant in Caldwell, will help Simplot remain competitive while providing significant environmental benefits, says president and CEO Bill Whitacre.

"Competition in the food industry has become challenging, with profit margins shrinking and costs continuing to rise," he said. "These factors and other considerations have made it important to the future well-being of our food business that we build this new plant."

Simplot won't give the cost of the new facility, but Whitacre said it will be the largest single investment the company has made in Idaho. The new plant will employ about 250 people.

Although it is not giving cost or square footage figures, Tyson announced in March it will expand its Dakota City, Neb., plant as part of a consolidation effort. Sara Lee completed a 200,000-sq.-ft. Kansas City facility in December that is now producing Hillshire Farm and Sara Lee Deli sliced meats.

Just last month, Abbott Nutrition, Abbott Park, Ill., announced it would build a new $270 million plant in Tipp City, Ohio. The facility will produce Ensure and Glucema brands of adult nutritional supplement beverages. It will employ 240.

Mars Chocolate North America announced in June it will seek gold level LEED certification for a new $250 million plant it will build south of Topeka, Kan. The plant is slated to open next year, producing M&Ms and Snickers bars. The local economic development agencies helped Mars select a 91 acre site on which it plans to build a 350,000-sq.-ft. first phase.

Mike Wittman, vice president of supply at Mars Chocolate North America, said the Topeka plant would be the company's first new manufacturing facility built in the U.S. in more than 35 years. Interestingly, Mars hoped to build a 300-ft.-tall wind turbine for the plant, but the Federal Aviation Administration disallowed it because of a nearby airfield, according to TV station KAKE. Mars reportedly is seeking permission to build a solar field at the plant.

There is a big project underway in Canada, too. Toronto-based Maple Leaf Foods recently announced plans to build a $395 million processed meat plant near Hamilton, Ontario. Plans call for a 402,000 sq. ft., plant that will employ 670.

There is definitely an ongoing trend, driven by consumer confidence, toward more spending in food manufacturing.

– Brian Kappele, Stellar AEC Firm

"The final phase of this plan will establish Maple Leaf Foods as a more streamlined and profitable company, well positioned to deliver significant and sustainable value to its shareholders," said Michael McCain, president and CEO. "We are creating, through one of the largest single investments in the Canadian food industry, a highly efficient, world-class prepared meats production and distribution network that will markedly increase our competitiveness and close the cost gap with our U.S. peers."

The plant will produce deli meats, processed meat and wieners. No slaughtering or rendering will be performed at the plant, so the facility is expected to produce minimal odors. The new location will "make the majority, not 100 percent, but the majority of wieners for the entire country," said McCain.

Plans for the new project were announced in October as part of a $560 million infrastructure and technology upgrade. That news came just a month after the company launched what it calls Canada's largest bakery, also in Hamilton. The 385,000-sq.-ft. "Trillium" bakery benefits from efficient design flow and best-in-class technologies, the company says.

Kellogg has begun an expansion of a plant in Belleville, Ontario, spending $43 million to add a Mini Wheats line.

Back in the states, Minneapolis-based Malt-O-Meal Co. (recently renamed MOM Brands) expects to wrap up a $136 million expansion of its Asheboro, N.C., production facility this year. Plans include the addition of more than 200,000 sq. ft. of production space, two additional lines and the construction of an 80,000-sq.-ft. warehouse.

In September, Campbell broke ground on a 34,000-sq.-ft. innovation center to be located at Pepperidge Farm's headquarters in Norwalk, Conn. The $30 million investment reflects the company's efforts to accelerate innovation across its Baking and Snacking portfolio, the company's second-largest reporting segment, which includes both its Pepperidge Farm unit and its Arnott's biscuits unit in Australia and Asia Pacific.

On the smaller end of the scale, Pierre's Ice Cream of Cleveland celebrated the start-up of its new plant last summer, while a southern Ohio neighbor opened its new plant in the fall. Pierre's new 35,000-sq.-ft. production facility began filling carton's with French-style ice cream last June. Sustainability features include high-performance insulation, hot and cold recapture and windows and skylights to provide natural light.

Graeter's Ice Cream in Cincinnati opened a 24,000-sq.-ft. plant last September to expand its fairly local distribution. The company says it will continue to make flavors like its famous Black Raspberry Chip with a French pot system that produces just 2.5 gallons per batch.

Consumption of craft beer in the U.S. keeps growing (dollar sales were up 15 percent for the first half of 2011 according to the Brewers Assn.). While the brewing giants InBev and Miller-Coors continue to acquire and partner with craft breweries, some of the top independents are also scaling up and going bi-coastal.

Craft beer pioneer Sierra Nevada Brewing Co., Chico, Calif., is ready to break ground on a new brewery in Mills River, N.C. The project will cost close to $100 million, and produce 95 full-time jobs. Meanwhile, at last report, New Belgium Beer Co., Fort Collins, Colo., was looking at either the Philadelphia area or western North Carolina to site a new canning facility.

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