Study outlines comparative cost of food processing

Boyd study comparative costs — Shown in the following table are the 30 comparative cities included in the study along with partial rosters of food and beverage companies operating in these markets.

Boyd study summary — Annual operating costs were projected solely for comparative purposes, with only major geographically-variable factors being considered. Those costs not varying significantly with geography, including relocation and start-up expenses, were not considered. The analysis also focuses on those key cost elements most pivotal within the food processing industry site selection process, such as labor, real estate, power, taxes and others.

Boyd study geographical — Presented in this chart is a cost ranking of the 30 food processing markets. Total annual operating costs in the analysis are scaled to a hypothetical 125,000-square-foot processing plant employing 300 hourly workers.

The Boyd Co., Inc., Princeton, N.J., completed a site selection study that compares the cost of operating a food processing plant in a series of 30 markets in the United States.

The report focused on cities housing major concentrations of food and beverage processing operations. Annual operating costs were projected solely for comparative purposes, with only major geographically-variable factors being considered. Those costs not varying significantly with geography, including relocation and start-up expenses, were not considered. The analysis also focuses on those key cost elements most pivotal within the food processing industry site selection process, such as labor, real estate, power, taxes and others.

Site selection trends
In today’s global economy, comparative operating costs are ruling the corporate site selection process. Comparative costs are of special concern to the hyper cost-sensitive food and beverage processing industry, a sector now faced with added compliance costs associated with the new Food Safety and Modernization Act (FSMA).

FSMA is a food safety game-changer, shifting the paradigm of the food industry from reaction to food safety events to one of preventing them. It is yet another mandated expense for processors, placing an even greater emphasis on bottom line operating costs in investment decisions on new plant and equipment. For many food processors, improving the bottom line on the cost side of the ledger is far easier than on the revenue side.

An epic drought and new government restrictions on ground water access is already causing a sea-change of food sector investment in the West. In California, the nation’s leading food processing state, water availability and its cost, along with rising taxes are precipitating an out-migration of food and beverage plants. Sacramento, for example, lost an iconic Campbell Soup tomato processing plant. A regional hot spot is Eastern Washington State, blessed with ample water, hydro-driven green power and a favorable climate for growing many of the crops currently grown in California’s drought-plagued Central Valley. Othello, Wash., is the nation’s leading potato processing city.

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