The food manufacturing industry is expected to grow at 4.2% annually, reaching $31.5 billion in value by 2020, according to BCC Research. And as the industry grows, food manufacturers are faced with a variety of challenges.
Today’s consumers want products that address a wide range of health and dietary needs. Meanwhile, consumers are also placing an increased importance on waste reduction, labeling and sourcing transparency, food safety, and delivery.
With these increased consumer demands in mind, site selection has become more important than ever. Manufacturers need a site that will help their business thrive, allowing them to more easily adapt to the ever-changing needs of customers and improve margins. In fact, a recent Area Development article cited “exceedingly thin” margins, profit pressure, and a need for cost-cutting as some of the main factors driving site selection choices for food manufacturers.
So, how do food manufacturers determine the best markets for cost-cutting as well as meeting consumer demand?
Top Site-Selection Factors for Food Manufacturers
At a glance, there are several dynamics influencing both growth and performance of the industry. These include the following as reported by Trade & Industry Development:
When choosing the ideal site for a food plant, a manufacturer should address several details throughout their search. Consider the following factors for site selection:
Room for Innovation and Adaptability
Food manufacturers are experiencing an increased pressure to innovate with the rise of robotic and automation equipment. This is why it is important for a site to offer solutions that support a manufacturer’s need to innovate, from modified processing lines to new ingredients or packaging.
Proximity to Major City Centers
A huge perk to a food manufacturer’s location is being within close proximity to major city centers. Not only does this mean the facility will have easier access to local resources and workforce availability, but it also reduces transportation costs of raw goods and supplies. This is considerably important for products with a short shelf life.
Highway accessibility is generally at the top of the list when it comes to site selection criteria. Food manufacturers primarily target locations that offer easy access both on and off of major interstates and highways. Access to key infrastructure is often vital when it comes to executing business strategies. This creates an attractive environment for customers and employees and can even save the manufacturer time and money.
In fact, for food manufacturers, one of the biggest costs to doing business is transportation. According to the CBRE Food Facilities Group, these costs include:
- Proximity to growers and raw goods
- Inbound and outbound trucking costs
- Time sensitivity of the transportation of perishables
- Interstate access and efficiency of routes
- Weather and topography constraints
Existing Buildings vs. Vacant Sites
In some cases, food manufacturers prefer sites that offer existing infrastructure that can meet their requirements. However, this is not always a dealbreaker.
Because food manufacturers are experiencing pressure to innovate, existing facilities may not support their needs to be able to modify processing lines as new products are introduced. To that end, vacant sites for new facilities that can be customized to meet these requirements are preferable to certain food manufacturers.
Regardless of the industry, employees are the heart of any company. This is why food manufacturers must consider the region’s available workforce when selecting a site for their facility. Food manufacturers desire a region that offers a deep labor pool of diversity and skill sets. Additionally, as technology continues to evolve and skilled workers become more scarce, it is crucial to choose a location that offers premier access to markets with a wide-ranging skilled workforce or training opportunities.
Access to Local Resources
Is there enough? How much does it cost? How long will it take to get service? What is the reliability history of this particular location? These are just a few of the many questions an expanding or relocating manufacturer must ask about utilities during the site-selection process.
Having local resources to support energy efficiency, sanitation, automation, regulatory, and other requirements helps drive food manufacturer success and profit. Consider whether the location offers access to clean and consistent water and if the site’s energy capacity will meet the facility’s growing needs.