July marks an exciting milestone for Stellar: our 30th anniversary. While we’ve celebrated plenty of remarkable moments over the past three decades, we know we’re not the only ones. Food processing has experienced several turning points of its own, signifying key changes that have molded food manufacturing as we know it today.
Game-changing mergers and acquisitions
Whether it’s plant closures, job creation, facility renovations or “synergy savings” (the savings in operating costs after two complementary companies come together), mergers and acquisitions can impact the food industry in a variety of ways. Here are some of the most noteworthy deals.
2015: Kraft Heinz Company merger creates one of world’s largest food companies
This year, two household names merged to become one of the food industry’s most influential powerhouses. The Kraft Foods Group and H.J. Heinz Co. joined forces to form The Kraft Heinz Company, establishing the third-largest food company in the U.S. and the fifth-largest in the world.
The Kraft Heinz Company began trading on the Nasdaq July 6th under KHC.
2014: Tyson Foods and Hillshire Brands join forces to create prepared foods powerhouse
In August 2014, Tyson Foods Inc. completed its merger with The Hillshire Brands Company, positioning Tyson as the leader in the prepared foods industry. The move is expected to generate more than $500 million in synergy savings by 2017.
When the merger was announced, Tyson CEO Donnie Smith said:
“Part of our strategic growth plan has been to shift toward higher-margin prepared and branded foods. This transaction gives us a portfolio of complementary, proven brands as a new springboard and accomplishes in a short time what would have taken us years to build on our own.”
2013: Chinese take over Smithfield Foods to form global pork enterprise
In 2013, Shuanghi International Holding acquired Smithfield foods for approximately $7 billion, marking the biggest Chinese takeover of a U.S. company to-date. The acquisition of U.S. pork company Smithfield Foods gave the Chinese company a premium U.S. food brand during a time when food scares plagued Chinese consumers’ views of domestic products.
While Shuanghi’s chief executive said the transaction would create a “leading global animal enterprise,” giving access to new pork production technologies, U.S. pork producers were excited to to benefit in terms of increased exports of U.S. pork products.
Now, in 2015, many multinational food and beverage companies are viewing China as a potential growth vehicle thanks to the emergence of the Chinese middle class and the country’s food safety concerns.
1989: $25 billion Nabisco buyout makes history
In 1989, the largest buyout in U.S. history belonged to the food processing industry with Kohlberg Kravis Roberts & Co.’s acquisition RJR Nabisco for $25 billion.
According to a Chicago Tribune article, the sheer magnitude of the deal sent a message to many of America’s largest corporations, signifying “no firm is safe from acquisition.”
Legislation, regulations impact food processing industry
1990: Americans with Disabilities Act shakes up building design
Over Stellar’s 30 years of life, the Americans with Disabilities Act (ADA) still represents one of the biggest elements we saw impacting building design as a whole. The act completely transformed how facilities were designed and built, ensuring the disabled could access all areas of plants effectively. New building and design standards included the general design requirements for building and site elements, such as:
- Accessible routes
1990: Process Safety Management (PSM) of Highly Hazardous Chemicals supports safer workplace, world
It was also in 1990 that the Occupational Safety and Health Administration (OSHA) published the proposed standard, “Process Safety Management of Highly Hazardous Chemicals,” to promote worker and workplace safety. The standard established a management program and requirements for the management of hazards associated with processes involving highly hazardous chemicals, putting the microscope on refrigeration facilities.
Food safety benchmarks change
1997: USDA Blue Book moves out, HACCP moves in to establish new sanitary guidelines
Until 1997, the U.S. Department of Agriculture’s (USDA) Blue Book served as sanitary design guidelines for the design of food processing facilities. However, when the USDA decided it no longer wanted to take responsibility for the reviews and approvals of design drawings, companies had to self regulate and create their own control plans.
It was then the U.S. Food and Drug Administration (FDA) published the Hazard Analysis & Critical Control Points (HACCP) principles and application guidelines to assure food safety from harvest to consumption:
- Conduct a hazard analysis
- Determine critical control points
- Establish critical limits
- Establish monitoring procedures
- Establish corrective actions
- Establish record-keeping and documentation procedures
- Establish verification procedures
The American Meat Institute’s Food Safety Program
The American Meat Institute, now called the North American Meat Institute, formed an equipment design task force to establish food safety principles specifically for meat and poultry plants. I was a member of the team that created the facility principles in 2004, while AMI updated process equipment principles originally formed in 2002 just last year, specifically addressing listeria concerns.
- Distinct hygienic zones established in the facility
- Personnel and material flows controlled to reduce hazards
- Water accumulation controlled inside the facility
- Room temperature and humidity controlled
- Room airflow and room air quality controlled
- Site elements facilitate sanitary conditions
- Building envelope facilitates sanitary conditions
- Interior spatial design promotes sanitation
- Building components and construction facilitate sanitary conditions
- Utility systems designed to prevent contamination
- Sanitation integrated into facility design
2014: 10 Principles of Sanitary Design (Process Equipment)
- Cleanable to a microbiological level
- Made of compatible materials
- Accessible for inspection, maintenance, cleaning and sanitation
- No product or liquid collection
- Hollow area should be hermetically sealed
- No niches
- Sanitary operational performance
- Hygienic design of maintenance enclosures
- Hygienic compatibility with other plant systems
- Validated cleaning and sanitizing protocols
Finally, food processors have realized that food safety is NOT a competitive advantage—it’s imperative. All food manufacturing companies have to work together to protect consumers against food-related hazards—whether they’re biological, physical or chemical.
While much has happened the shape the food processing industry over the past three decades, we’re eager to witness its continued evolution. What do you think is in store for the next 30 years?
Stellar is a fully integrated firm focused on planning, design, pre-construction, construction, refrigeration, mechanical & utility, building envelope, and total operations & maintenance services worldwide. Visit the company's blog at www.stellarfoodforthought.net