Food Processing: Regional Tastes Add Spice to Saturated Market -- Industry Review, Site Selection magazine, September 1999

Food Processing: Regional Tastes Add Spice to Saturated Market(cover)

Meeting Logistical Requirements

Getting Ready
for Prime Time

A Look at State Strategies

Catering to Boutiques

Bottlers Seek
Mega Sites

A S I T E S E L E C T I O N I N D U S T R Y R E V I E W F R O M S E P T E M B E R 1 9 9 9

A Look at State Strategies

Frito Lay Many agricultural states are making the effort to lure more food processing, because it adds value to the crops that are already being produced. Indiana is an agricultural state that is also making food processing a high priority. "Food processing is definitely one of our targeted industries," says Kim Hannel of the Indiana Dept. of Commerce. "The most obvious reason is that the raw materials are grown right here. We're also centrally located to major population centers, and we have excellent transportation connections."

Indiana caters to the food industry with highly tailored incentive programs and support of food science research and development efforts. Purdue University is a center of food products research, and the governor of Indiana is working on pushing through legislation that will increase support of such research.

Above right: Kern County, Calif., is home to several plants operated by Frito Lay

Iowa-based Grain Processing Corp., a corn-based ingredients manufacturer, is opening a new facility in Washington, Ind., after evaluating 60 locations in 10 states. "We chose this location because it's near our customers and because of the availability of corn along with access to transportation," says Art Lundberg, a GPC spokesman. Indiana has also recently attracted new investment from Consolidated Biscuit, which is opening a new US$12 million plant in Michigan City; Harlan Bagel Supply, a maker of frozen bagel dough, which is investing $5 million in its Avon facility; and Red Gold, a tomato processor, which is upgrading and expanding its Elwood plant. Michigan-based Dulk Dairy is currently developing a 9,500-acre (3,800-ha.) dairy farm in Newton County, Ind., to serve the state with the help of a $50,000 training grant from the state's Dept. of Commerce and a $175,000 grant to the county for public infrastructure improvements.

Conte Luna Foods North Dakota is making a very successful pitch to companies making wheat- and potato-based products.

Philadelphia Macaroni, founded in Philadelphia in 1914, now operates its largest pasta plant in Grand Forks, N.D. Opened in 1990, the plant has been expanded four times since, with a total of five lines operating in 100,000 sq. ft. (9,200 sq. m.). The company had previously operated all its plants near Philadelphia, shipping the wheat in, but now it's producing the finished products near the market.

Above: Grand Forks, N.D., is luring food processing facilities from across tha country. (Pictured) is the Conte Luna Foods plant newar Grand Forks,

Moving to where the wheat is grown wasn't a simple economics decision. "Really, it's six of one, half a dozen of another whether we ship the wheat to the plant or ship the pasta from the plant," says Luke Morano, a Philadelphia Macaroni owner. "The real reason we moved there is that the community was so anxious to get us there that they gave us every consideration. They just wanted us to put the plant up, without demanding that we promise a certain level of employment. The governor and the mayor got involved." Morano, whose company is still headquartered in Philadelphia, notes the high cost of running manufacturing operations in the Northeast. "It's not a friendly business environment. No one tried to keep us here," he says. The state also owns and operates a wheat mill, processing durum and semolina.

Simplot Pat Downs, an economic developer for Grand Forks, notes that Philadelphia Macaroni's decision has gotten the ball rolling for other companies. There are three pasta makers in North Dakota now, and similar enthusiasm among potato processors. "It is expensive to ship goods out, but we have no sales tax on buildings or equipment, and we offer property tax abatements," says Downs. "Besides, while we are a remote locale in people's minds, our rail and truck connections are excellent." Simplot, a Boise, Idaho-based frozen french fry producer, now operates its largest plant in the Grand Forks area, and keeps expanding it. Idaho potatoes weren't enough to support Simplot's operations, so the company contracted with North Dakota farmers who, on the strength of the contracts, were able to get bank financing for irrigation systems that helped them produce the type of potatoes Simplot needed. Simplot's investment then helped attract small Master Potatoes, which North Dakota lured from its home in Minnesota. "They had tax and regulatory issues," says Downs.

Above right: Frozen french fry producer Simplot operates its largest plant in
Grand Forks, N.D.

As the food processors are joined by packaging, refrigeration and other related suppliers, critical mass is developing. "The trend is feeding on itself," jokes Downs.

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