Food processing and packing expansions show preference
for locations that provide maximum opportunity to reach high-growth markets.

T

here's more than a sweet tooth behind Krispy Kreme Doughnuts Inc.'s decision to locate a 187,000-sq.-ft. (17,391-sq.-m.) manufacturing and distribution facility in Effingham, Ill.
      Like most food plant site selections in 2001, this deal represents the wave of the future. Corporate real estate executives at major food companies increasingly are choosing Upper Midwest, Rust Belt and Sunbelt locations to meet their processing and packaging needs -- and they are doing it in a more scientific way.
      At Effingham, Krispy Kreme has contracted with The Haskell Co. to provide a turn-key solution. Jacksonville, Fla.-based Haskell is providing supply chain analysis, site incentives negotiation, architectural and engineering services for facility design, construction services and training. Haskell calls this process its "Total Facility Solutions" approach.
      Scheduled for completion in May 2002, the new Krispy Kreme factory represents the state of the art in facility design and project management. But it's far from alone in representing the future of site selection among food companies in the Rust Belt.
      An analysis of Conway Data Inc.'s New Plants Database shows that Great Lakes and Rust Belt states accounted for five of the top 10 states for new and expanded food facilities during the 12-month period ending August 2001. The top three states, in fact, come from this region: No. 1 New York, with 33 new and expanded facilities; No. 2 Michigan, with 16; and No. 3 Pennsylvania, with 14. Illinois, site of the Krispy Kreme plant, finished in sixth place, while Missouri tied for ninth (see accompanying chart).
      In the food processing, packaging and distribution business, two site selection factors proved paramount this year: access to labor, and access to growth markets. The Midwest and Sunbelt provide both.
      In terms of capital investment, the South accounts for 11 of the 20 largest food plants in the United States from January through July of this year. Florida, which tied for fourth in the total number of new and expanded facilities, leads all states with five in the top 20 most expensive food plants.
      Among the companies leading the way in capital investment this year are Sysco Food Services, Nestle USA and the Folger Coffee Co.
      Sysco announced Aug. 24 that it has selected a 48-acre site in the Lewisville section of Austin Ranch in Texas for construction of a 557,000-sq.-ft. (51,801-sq.-m.) food-service distribution center. The new plant replaces the company's current 360,000-sq.-ft. (33,480-sq.-m.) building in Dallas and includes freezer, cooler and dry warehouse storage areas as well as administrative space. Sysco expects to employ more than 650 people at the site.
      "Having a new facility will provide us with an exciting opportunity to expand the breadth and depth of product offerings, gain efficiencies to enhance service to customers and continue to grow our business," says Ivan Moore, president of Sysco Food Services of Dallas L.P.
      The property is on the 1,900-acre (770-hectare) corporate campus of Austin Ranch near the intersection of Plano Highway and Highway 121. Subject to closing on the land purchase, Sysco plans to begin construction this fall and complete the building by December 2002. The company supplies food and related products and services to restaurants, health-care facilities, schools and universities, lodging establishments and other food-service operations throughout the Dallas-Fort Worth Metroplex, northeast Texas and western Louisiana.
      A Fortune 200 company, Sysco selected Lewisville for its central location, low tax rate and the quality of the area's work force, according to company officials.
      Other Sunbelt states experiencing growth in the food-processing sector include Arkansas and Louisiana, sites of major announcements for Nestle and Folger's. On July 27, Nestle USA announced that it will invest US$165 million to design and build a 325,000-sq.-ft. (30,225-sq.-m.) frozen-foods manufacturing facility in Jonesboro, Ark.
      "This is the world's largest food company, and it has decided to make a multi-million-dollar investment in Arkansas," Gov. Mike Huckabee said at the press conference. "This will send a signal to other companies across the nation and around the world that Arkansas is a great place to do business."
      The manufacturing plant will employ nearly 1,000 people initially and has room for expansion. The factory will produce Stouffer's and Lean Cuisine brands of frozen meals for the $47 billion company.
      The project includes an innovative agreement with Millard Refrigerated Services, which will partner with Nestle to provide sophisticated product distribution and logistics services in an adjacent facility. Millard, which will employ about 65 people, will provide more than 200,000 sq. ft. (18,600-sq.-m.) of temperature-controlled storage.
      Jay Weaver, vice president of operations for Nestle USA's Prepared Foods Division, says his company chose Jonesboro for its industrial infrastructure, work force, competitive operating costs, central U.S. location and quality of life.
      Another large food plant broke ground this summer in New Orleans, where Folger Coffee Co. began work on a $100 million expansion of its coffee roasting facility. The project, which consists primarily of upgrades to the company's roasting and packaging operations, will create 80 new jobs upon completion in early 2003.
      The upgrades also will create 300 indirect jobs and generate nearly $1 million a year in state and local taxes, according to MetroVision, a marketing arm of the New Orleans Chamber of Commerce.
      Folger's expansion was made possible by a public-private partnership that supported construction of a new electrical power substation. The power plant allows Folger's and other commercial users in the New Orleans Business & Industrial District to pull power directly from Entergy's high-transmission lines instead of the regular grid supplying most commercial and residential customers.