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2017 Manufacturing Survey: More Questions than Answers for Food Manufacturing Challenges

Jan. 17, 2017
Despite uncertainty, companies are forging game plans for FSMA compliance, skilled worker recruitment and other needs, according to our 16th annual Manufacturing Outlook Survey.

Call it cracked crystal ball syndrome, but if one word could sum up the outlook for food manufacturing in 2017, it would be uncertainty.

Whether the topic is salaries, staffing or capital spending, food production professionals who responded to Food Processing's 16th annual Manufacturing Outlook Survey were less certain about what the new year would mean than their peers who provided feedback in recent years. The ambivalence extended to their expectations for production in their own facilities, though twice as many anticipate an expansion in the number of lines or plants operated by their companies than a contraction or consolidation.

One development they are sure about is enforcement of the Food Safety Modernization Act (FSMA), with compliance required by all but the smallest processors by September. FSMA readiness ranked as the third most important issue in 2017, just below cost control and two notches behind food safety, the perennial top issue in food & beverage manufacturing.

General staff training nudged up in the top-issues rankings, although very few (one in 27) rated it as a top concern. FSMA requires food-safety training of every production worker, with documentation of the dates and successful completion of that training. Asked what steps they were taking to upgrade sanitation and food safety practices, three-quarters of survey respondents cited employee training, up sharply from recent years. Validation of the effectiveness of cleaning and sanitation procedures “in accordance with FSMA” will be vital, a beverage manufacturer volunteered.

Participation in independent food-safety audits of their facilities also is on the rise. Major retailers and foodservice operators are pressuring their suppliers to seek certification under one of the food safety standards endorsed by the Global Food Safety Initiative, and most respondents indicated their companies have done so. One in five is audited under proprietary standards created by firms such as Silliker and AIB International. Only 15 percent say certification under any standard is not being considered.

To increase the odds that their facilities will pass those audits, half of the survey participants say their companies are upgrading sanitation equipment, up from a third three years ago. Rapid microbial testing to validate the effectiveness of cleaning programs is used by three out of 10, 50 percent higher than in 2014. Beefed up HACCP plans, pest control and the use of expert consultants also are becoming more common.

Talent wanted

Food industry employment mirrors the U.S. manufacturing sector, where the number of jobs is down 37 percent since its 1979 peak while output has more than doubled. Automation is the single biggest factor, and food companies face the same challenges as other manufacturers in recruiting and retaining qualified individuals to keep lines running.

“Limited workforce available for employment in production,” complained a produce processor, ranking the problem as a critical issue her company will face in 2017. “People availability in our region,” a poultry processor chimed in.

More than half of participating professionals indicated their companies were expanding in-house technical training to address the skills need. Recruitment of maintenance technicians was the next most common tactic, with two in five pursuing those in-demand workers. “Hiring individuals with automation background, computer skills, CAD/CAM, etc.,” a dairy processor wrote.

Similar strategies were evident in a question about optimization of assets: Almost half cited on-the-job training programs, and three in 10 said they were hiring more maintenance personnel. Even more are taking the work-team approach, shifting routine maintenance responsibilities to operators in order to free up time for preventive and complex repair tasks by maintenance technicians.

“Higher automation training needs to be made a priority for all electricians,” a beverage manufacturer suggested, touching on the electromechanical skills needed to maintain machinery with digital controls. One in six individuals surveyed indicated their companies were working with schools to help develop electromechanical courses.

One-quarter already are actively recruiting electromechanical technicians as they brace for the exodus of baby boomers. “The graying of the workforce, the need to hold on to skills that are not available in the marketplace” was of particular concern to one baker.

Given the challenge in attracting skilled technicians, one in four companies is seeking outside providers of maintenance services, an approach being applied in other service areas, as well. Despite the criticality of the issue, almost as many are not addressing it.

Assuming qualified individuals are added to the staff, the next mission is keeping them in the fold. “Retaining qualified employees is a challenge,” a snack food manufacturer allowed. Showing a little love with a robust worker safety program can help. Two-thirds indicate reductions in workplace injuries is a top priority of senior management at their companies, with machine-guarding initiatives underway at a similar ratio of firms — the highest proportion ever recorded in the manufacturing trends survey. Safety committees are actively engaged in identifying and correcting safety hazards at three in five plants.

Free-from fallout

Growing demand for free-from and clean-label products is stressing out food formulators, but it also impacts production: 60 percent indicate processes are being adjusted to accommodate the war on preservatives and enzymes with difficult-to-pronounce names.

Competition from clean-label products is negatively impacting many food manufacturers: one in five says sales demand for their products is declining because of free-from foods, though slightly more say throughput is holding steady or increasing, despite the existence of clean-label alternatives. Three in 10 indicate they are adding new technologies and equipment to enable their plants to manufacture products without shelf-life extenders.

“The demand by the younger generation for natural and organic food products” was flagged by one processor as a nettlesome concern in the coming year.

Energy use is a controllable cost. Many manufacturers want to reduce waste in this area, with half of respondents saying their companies have a continuous improvement program to identify inefficient practices that can be easily altered. Half of those firms also are monitoring energy use to quantify demand and identify consumption anomalies.

One in 10 manufacturers are using regenerative drives to reduce electric consumption, with slightly more capturing and reusing waste heat from processes. Compressed natural gas and other alternatives to diesel fuel are used at 10 percent of motor vehicle fleets, with slightly fewer firms purchasing credits from renewable sources such as wind and solar.

Outsourcing remains an attractive option for specialized services. Outside management of pest control programs topped last year’s outsourcing results, and it grew to 68 percent in this year’s survey, up from 61 percent. More than a third outsource some or all engineering services, and 24 percent outsource logistics management. Only one in six has moved sanitation services out of house.

Food processors will confront many new and continuing challenges in the coming months. That creates a level of trepidation. “Until there is more certainty from both U.S. and Canadian governments,” a small processor wrote, “it makes it difficult to plan.”

Despite the uncertainty, the optimism index offers some encouragement: 65 percent said they are somewhat or very optimistic about what 2017 will bring. Regardless of how chaotic the world becomes, the demand for food and drink will continue.

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