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Friday, 28 September 2018 20:03

Growing Up: Food processors play ‘significant role’ in West Michigan economy

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The strong dairy production in West Michigan has encouraged a number of milk processing companies to locate in the region. They include Continental Diary, Fairlife, Foremost Farms USA, and Glanbia. The strong dairy production in West Michigan has encouraged a number of milk processing companies to locate in the region. They include Continental Diary, Fairlife, Foremost Farms USA, and Glanbia. COURTESY PHOTO

West Michigan’s growing food processing industry continues to develop, spurred on by the region’s strong agricultural supply chain, access to water and sufficient infrastructure capacity.

With some 207 establishments situated across a 13-county region, the industry has taken an incremental growth trajectory, one that builds off its legacy in manufacturing and seeks to keep more economic activity in West Michigan, rather than ship it out to other areas.

Jeff Tucker, general manager of Oceana Foods LLC, views the food processing industry as playing a “significant role” in the West Michigan economy.

The company, which started in 1994, processes dried blueberries, cherries, cranberries, strawberries and apples, and has been in a constant state of expansion, Tucker said.

“There’s been expansions by not just us, but with a number of processors in the region,” Tucker said. “Everyone is kind of in growth mode right now or has been in the last few years.”

Oceana Foods has opted to grow in the region because of the strong fruit-growing industry and its accessibility to reliable sources of water.

“We’re here because that’s where our raw material is,” Tucker said.

As the food processing industry grows in West Michigan, its contribution to the region’s economy becomes increasingly important, sources say.

According to Paul Isely, the associate dean and a professor of economics at the Grand Valley State University Seidman College of Business, every job in the food processing sector leads to the creation of more than two jobs in the broader local economy. By comparison, a job in the automotive supply chain results in the creation of another 2.5 jobs in the economy, while a job in furniture manufacturing adds an additional 1.5 jobs, Isely said,

Isely cited economic data showing manufacturing in food, beverage, and tobacco products has increased by about 10 percent in Michigan between 2010 and 2016. The sector now contributes more than $6 billion worth of economic activity in the state.

“We’re not as strong as the other states,” Isely said. “Other states are doing more food processing, but it is a growing area for us. It has been growing pretty strongly.”

Supporting the region’s food processing industry forms a pillar in Grand Rapids-based The Right Place Inc.’s economic development strategy. The sector employs 17,300 people, having added jobs at a rate of 13.3 percent from 2013 to 2017, according to data from the organization.

Tim Mroz, vice president of marketing and communications at The Right Place, said the group touts the region’s many benefits when seeking out food processing industry projects.

“We market in terms of why West Michigan is good for food processing,” Mroz said. “It comes down to access to water, wastewater capacity (and) treatment; our ag supply chain is robust for food processing; and we have a strong understanding of the manufacturing processes.

“You have a workforce that understands the fundamentals of food processing and safety.”

Similarly, Zeeland-based economic development organization Lakeshore Advantage said raw materials — such as crops and animals — are abundant in Allegan and Ottawa counties, which serves as a point of attraction for possible food processors.

“We have seen tremendous growth in the industry,” Emily Staley, vice president of marketing and communication for Lakeshore Advantage Corp., wrote in an email to MiBiz. “We have an expansive dairy shed nearby for milk production, and crops as well. They are grown here and it makes processing more cost effective to be in close proximity to your raw materials.

“In addition, the more food processors we have, the more employees we have who are being trained for these jobs that require certain skills and competencies needed in a regulated food processing environment.”

Cliff Meeuwsen, president of Zeeland Farm Services Inc., cites the region’s favorable business climate as contributing to the soybean processing company’s ongoing expansion in Ottawa County. ZFS employs about 250 people in West Michigan.

The company also can access key national and international markets from its home base in Zeeland, Meeuwsen said, noting that export demand has increased by roughly 15 percent over last year. At the same time, domestic demand also has grown by about 11 percent, he added.

“The business climate is good here,” Meeuwsen told MiBiz. “Dealing with townships and county governments (in West Michigan), they seem reasonable to work with. West Michigan is just a decent business and people climate. Our agriculture is pretty strong in West Michigan. We have a very diversified ingredient supply. We’ve got fruits, we’ve got vegetables, we’ve got grains, we’ve got livestock.

“We’ve got it all within a 100 miles from my location.”

SUPPLY MATTERS

In part, the wealth of West Michigan’s agricultural supply base has helped attract food processing companies to the region, experts say.

One such operation is Foremost Farms USA, a Wisconsin-based milk processor that announced last November that it plans to invest $1.15 million to create a 96-acre plant in Greenville.

“It’s as simple as we are following the milk,” Laura Mihm, corporate communications manager of Foremost Farms, told MiBiz at the time the company announced the plant. “Milk production is very strong in Michigan, and Greenville is about (30 miles) to the west of our epicenter of milk. That’s the reason we chose it.”

Foremost’s facility will receive about 6 million pounds of raw milk per day, Mihm said.

Other major food processing expansion projects in the area include the Glanbia plc’s planned $510 million facility in St. John’s, Clemens Food Group’s $255 million pork processing facility in Coldwater and Continental Dairy Facilities LLC’s $173 million collaborative expansion in Coopersville with Fairlife LLC.

Fairlife, a Chicago-based milk manufacturer, operates a plant in Coopersville that employs 250 people, double its headcount from a couple of years ago, said Brian Krosschell, the company’s general manager of supply chain.

“We’re on a very fast growth rate, growing in the double-digit percentages as we speak,” Krosschell told MiBiz. “Keeping up with that demand is a daily discussion for us.”

Fairlife has added two production lines since 2015, allowing the facility to pump out 45 million to 50 million cases of product annually.

Between Fairlife and the adjacent Continental Dairy facility, the companies receive and process 6 million to 7 million pounds of milk per day.

“If you go through the decision criteria, right at the top of that list is milk supply, and not only milk supply, but a quality of that milk supply,” said Krosschell, who’s been with Fairlife for about three and a half years. “For us, and our partnership and relationship with Select Milk Producers, they deliver that to us … in West Michigan. From a dairy farmer perspective, we have everything we need with Select Milk Producers right here in West Michigan.”

Anders Porter, vice president of communications for Fairlife, said proximity to farmers and the raw milk is what differentiates West Michigan from other regions.

“The collaborative efforts … of dairy farmers are able to provide that high-quality fresh milk quickly, so we’re not having to move it in to get it there,” Porter said. “That’s just a big part of what ends up on the shelf for the consumer. The sooner you are able to get that product from the cow to the plants to the consumer, the better the process in general, and the easier it is for us to sort of stick to and adhere to our values, and our guiding principles.”

Krosschell echoed those sentiments, saying that when a milk processor has ample dairy supply and is close to a processing plant, it provides the “foundation for what started the growth here.”

As in other types of manufacturing, food processing thrives best when it’s close to its source of raw materials, according to Isely of GVSU.

“When we look at food processing, it’s a chicken-and-egg issue. You need X amount of ag to be coming into it, so you have to have the ag resources close by,” Isely said. “The effect of processing milk, whether it’s dry, fluid or cheese, contributes three times as much to the Michigan economy than cereal production. We have a substantial dairy component to what’s going on here.”

GAPS PERSIST

Another contributor to the success of the sector locally is its availability of high-quality freshwater. That’s because food processors use a lot of water, “which is great (because) Michigan’s got a lot of that,” Isely said.  

Additionally, food processors also need infrastructure to handle the amount of wastewater they produce.

“If you look … in the Grand Rapids area where we have added in so much beer production that we’re now having to get creative with biodigesters and things like that, all of those things impact our wastewater treatment,” he said.

Despite the growth of food processing in the area, Isely said gaps still exist. In part, the industry’s agricultural supply chain will continue to face challenges related to the region’s growth as developers eye farmland for new housing and commercial projects.

“One of the things we have to worry about … if we’re starting to look back toward Kent County, is that the population pressures are (high) enough that it’s putting pressure on the ability to do agriculture,” he said. “You need a certain base of agriculture in order to convince the processing plants to be here.”

While Isely thinks West Michigan’s food processing industry is headed in the right direction, Krosschell said local and state officials still need to take action concerning capacity constraints.

“When you grow this fast, you run into challenges no different than in any other business,” Krosschell said. “I think the fact that we are part of the discussion in a dialogue now is great … but I think (there are still issues) like …  infrastructure (and) wastewater.”

Krosschell added that ongoing discussions between dairy farmers and processors “could continue to ensure that we have everything we need to keep growing our businesses (and) our dairy farms here in Michigan.”

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