On the surface, 2016 looks like a positive period for food and beverage production in North America, based on responses to Food Processing’s 15th annual Manufacturing Outlook Survey.
Download the Survey Results
To see the data behind the reporting, download a PDF of the survey results.
Three-quarters of the 251 participating food professionals anticipate increased production at their facilities, marginally higher than last year’s feedback, with the greatest increase occurring at plants with predicted throughput hikes of 20 percent or higher. Expansion of the workforce is expected at almost half of all plants, the highest ratio in recent years.
Nonetheless, an undercurrent of unease is evident, with two-thirds expressing optimism about the year ahead, down from three-quarters last year. And while the era of across-the-board pay cuts continues to recede, respondents are less likely to anticipate salary increases in 2016 than they were last year.
Americans may be tightening their belts and watching their waistlines, but food and beverage remains a manufacturing growth sector. That puts the industry in select company: Most manufacturing sectors are shrinking, according to the Institute of Supply Management, victims of a strong dollar and weak foreign demand. As long as locally produced has any meaning, food & beverage is insulated from those factors.
The pessimism needle barely budged for 2016, with one in 10 survey respondents indicating they are somewhat or very pessimistic heading into the New Year, the same ratio as last year. The biggest changes are slippage in those somewhat optimistic and an increase in those ambivalent about 2016’s prospects. The latter group almost doubled to one in four.
Product safety is Job No. 1 in food and beverage manufacturing, as attested to by the one-fourth of production professionals who rank it as the top priority in 2016. January marks the fifth anniversary of passage of the Food Safety Modernization Act (FSMA), and with enforcement of FSMA regulations beginning to phase in later this year, manufacturers are paying closer attention to it.
FSMA references hazard analysis and risk-based preventive controls, FDA’s version of the HACCP plans required by USDA for 20 years. Whether it’s called HARPC or HACCP, almost half of survey participants indicate their firms are re-evaluating those practices as part of an effort to improve sanitation and food safety. An even higher proportion—two thirds—are focusing on more rigorous employee training in these areas. Two in five are arming sanitation workers with upgraded equipment.
The need for better food safety practices goes beyond regulatory requirements. As a processor of case-ready meat notes, “Regaining the trust of the consumers due to the increase in food recalls” is a top priority at his firm.
Microbial testing of products and the environment is standard procedure for meat, poultry and fresh produce, and the practice is spreading to other sectors. Only one in eight respondents are from the meat and poultry sector, yet 22 percent of respondents say rapid microbial detection systems are used in their plants.
Who Answered the Survey?
More than 250 Food Processing readers provided feedback in this year’s Manufacturing Outlook survey. On-line responses were completed Oct. 15-Nov. 19. More than half (55 percent) of respondents are employed at companies with 100 or fewer employees. Of the remainder, 40 percent are with firms with 101 to 1,000 employees, and 5 percent work at companies with more than 1,000 employees.
They represent a broad spectrum of the industry. Professionals involved in meat and poultry processing constituted the largest segment, followed by further processed foods, grain-based products, non-dairy beverages, baked goods, confections and dairy products.
Several professionals volunteer comments on the increased use of environmental monitoring at their facilities, and others say quality assurance programs are targets for capital spending this year. In-line monitoring via sensors and laboratory automation systems were singled out, although one respondent questions the ROI on food safety. “Value added to the product is not there,” a produce professional lamented, “and the retail outlets are not willing to pay for the increased cost.”
Third-party audits can be a burden, but a plurality of professionals welcome outside scrutiny and certification programs to help improve food safety. Many retailers, foodservice suppliers and food companies regard standards certified by the Global Food Safety Initiative (GFSI) as the gold standard, and almost half of respondents say their plant has been GFSI certified. Less than a third are not considering certification audits.
Half of the plants have been certified under SQF level 2 or 3, the same ratio as last year. BRC Global grew to one-third of certified facilities, followed by FSSC 22000 and IFS. Among those considering certification, SQF 2, BRC and IFS were the most frequently cited schemes.
Wanted: skilled workers
“Availability of qualified workers” and “Lack of key talent availability” are common refrains when professionals cite specific issues facing their organizations. Two in five indicate their companies have expanded in-house technical training programs to address the skills gap.
Other popular strategies include stepped-up recruitment of maintenance workers and technicians (28 percent) and creation or expansion of in-house engineering competency (22 percent). Less common initiatives are increased outsourcing and working with schools to develop electromechanical curricula, each cited by one in 10 respondents.
Almost a third suggest their companies are doing nothing to address the issue. “Tearing out our hair” was one produce professional’s explanation of his firm’s approach. One in five are sidestepping the skills gap by throwing more labor into the production mix.
For some, more automation holds the solution. “Automation will play a role in addressing safety and shortage of workers,” writes one. Presented with seven options of 2016 automation projects, only one in eight indicated nothing was in the works. Automation of some section of the production line is likely at more than two in five plants, closely followed by areas in the packaging department. Ambitions for complete line automation are contemplated by three in five, and almost one-quarter seeks some degree of automation in warehousing and maintenance, repair and operations.
“Finding equipment to solve our automation needs” is a top priority for one small manufacturer. “Most likely it will have to be custom built (costly),” she wrote.
Re-staffing of engineering departments and other skill competencies suggests some organizations are reconsidering the focus on core competencies that began in the 1980s. On the other hand, others have concluded they may have reached the point of no return. About one-quarter of respondents say some or all engineering services are outsourced, and almost as many indicate the same for maintenance services and training.
Pest control was far and away the most common of seven competencies to be outsourced. Three in five turn pest control over to third parties. Microbiological testing is an outsourced service at almost half of respondents’ facilities.
Replacing older workers who will be retiring is shaping up as one of America’s greatest manufacturing challenges. Presented with six possible steps their companies could take to address the issue, two out of five indicate partnerships with community colleges and trade schools are either being discussed or expanded. A majority of those individuals’ firms also have campus recruitment programs and participate in job fairs, and a third of them have mentoring programs for high school and college students.
Overall, a third of respondents said job fairs and campus recruitment were part of their organization’s new-blood strategy. One in seven say their firms have apprenticeship programs for skilled positions. “We are offering scholarships to college students,” volunteered a manager at a grain-based business. “We also offer tuition for employees who want to pursue formal education that will be applied to our food processing demands.”
Food companies are as likely to work with trade unions to hire skilled workers as they are to be involved in junior high school outreach programs that encourage education in science, technology, engineering and math (STEM). Less than 6 percent indicate either option was being pursued. Almost three in 10 say their companies are doing little if anything to address skilled staffing needs. “Staffing, staffing, staffing,” wrote one. “We can’t get enough employees.”
A majority indicates worker safety is a top priority of senior management and part of the company culture, and half say a continuous-improvement approach to machine guarding and other safety modifications is in place. Reportable injuries are declining at a third of the workplaces.
Less than one in 10 say there are no safety initiatives in place at their plant. Half have an active safety committee that recommends changes when problems are identified, and two in five record and review near-miss events for possible remediation. Almost as many have programs in which operators observe their peers and provide feedback when at-risk behavior is identified.
Reducing operating costs by increasing efficiency in energy use is an objective at two-thirds of respondents’ plants. About a third are monitoring energy usage or upgrading lighting systems. “We switched to LED lighting in the plant in 2015,” a further-processor wrote, and on-site generation of renewable energy is being considered. In fact, one in six of all participants say wind, solar, biodigesters and other renewable options are under review. A New Jersey professional says her firm is considering steps beyond solar panels, which already have been installed.
Those are worthwhile projects, as are worker skill development and injury reduction. The primary mission in food manufacturing, however, is not simply increasing throughput but rather the production of safe, nutritious products. The industry should do a better job of communicating its commitment to food safety, one manufacturer advised. A little chest-thumping could go a long way in elevating the industry’s reputation.