FOOD PROCESSING INDUSTRY REPORT
Finding the Sweet Spot
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he company's rallying cry may not exactly be "Eastward, Ho," but California-based Ruiz Food Products Inc. surprised many experts recently when it selected a site in North Texas for its second major U.S. food processing plant.
Nearly everyone who follows the food-processing industry expected the world's largest manufacturer of hand-held, frozen Mexican foods to expand at or near its headquarters plant in Dinuba, Calif., in the central San Joaquin Valley about 30 miles (48 km.) north of Bakersfield.
In fact, the company initially announced that it would double the size of its flagship factory in Dinuba.
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| John Patelski, right, president of A. Epstein and Sons International, and Scott Kupperman, the head of Epstein's site selection practice, convinced Calif.-based Ruiz Foods executives to take a look at Texas. | |
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"Our initial announcement was to double the size of our plant in California. We actually broke ground on that," says Bryce Ruiz, executive vice president of Ruiz Foods and the elder son of Fred Ruiz, chairman, CEO and co-founder of the company. "Looking at our business and our future, it was obvious that we had to get closer to our customers and deliver a greater level of service long-term."
The result? Ruiz Foods announced May 12 that it would expand production of its El Monterey frozen foods by opening a plant in the North Texas city of Denison. The privately held, family-run company acquired a 262,000-sq.-ft. (24,340-sq.-m.) manufacturing and distribution facility from General Mills.
The former Pillsbury plant, built in 1962, is expected to open as a Ruiz Foods plant in November 2005 with 100 employees. By the time the factory on four-lane Highway 75 reaches full production next summer, about 450 people will work at the site.
The capital investment by Ruiz Foods includes $4 million for the purchase and an estimated $10 million for renovations. The 49-acre (19.8-hectare) site includes plenty of room for future expansions.
"The consensus of our team was that if we didn't take this opportunity to step out of the state of California, we might not ever get this opportunity again," Bryce Ruiz says. "We also felt that if we could find a suitable facility, we could renovate it faster than we could build."
That job fell to the project site consultant, A. Epstein and Sons International. Led by company president John Patelski and Scott Kupperman, head of Epstein's site selection practice, the search focused on giving Ruiz Foods the best opportunity to reach the most customers in North America.
Patelski says that the most important site criteria for Ruiz were distribution patterns; facility costs; operational costs; labor availability, quality and costs; transportation access and costs; and utility costs.
"Our research clearly showed that the growth in the handheld ethnic food business is now and in the coming years in the East and Southeast," says Kupperman. "Also, in order to take advantage of a decrease in transportation costs, Ruiz needed a second processing facility."
Kupperman admitted that "the first hurdle to clear was convincing Ruiz that the best place to build was not in Dinuba. We had to demonstrate that the transportation cost savings would offset that."
With so many raw ingredients going into the taquitos and burritos made by Ruiz, it was imperative that Epstein find a location where the costs for shipping both incoming product and outgoing product are competitive.
"We found that the sweet spot was a very narrow oval from Indianapolis spreading south into Texas and the Gulf Coast," says Kupperman. "We knew that this facility would need to be located somewhere between the Ohio Valley and the Gulf Coast."
Another critical ingredient for the expanding food processor? Proximity to a major airport, so that Ruiz executives could access the second plant quickly from the California headquarters.
