Choosing the right location is paramount because it can make or break the facility’s output. It’s important to determine each potential site’s opportunities and challenges and consider all aspects that enable or hinder a facility’s success. To meet growing consumer demand, it is crucial to place facilities in locations equipped with strong labor market fundamentals, suitable infrastructure, and the ability to meet speed-to-market requirements.
By developing a solid site-selection strategy and collaborating with local economic development arms in the areas you plan to locate, F&B users can come out on top as the race for space tightens in the industrial sector.
Here are three questions F&B operators should ask when deciding where to place their next facility.
1. What Does the Labor Market Look Like?
Current workforce availability, or lack thereof, represents one of the biggest obstacles to F&B manufacturing in the United States. According to FDI Intelligence, the food and beverage sector has announced 86 manufacturing and/or distribution projects within the first half of 2023. This represents the creation of more than 6,800 jobs. Analyzing and understanding the labor market in a proposed region or location ensures new facilities can be adequately staffed with a workforce that meets the role requirements. Having an up-to-the-minute view of the availability of labor provides an understanding of the education level of available talent to fill these positions, current average wages, and the unemployment rate in the proposed region.
Automation has become increasingly prevalent in the F&B industry, leading to a shift in the skills required for the typical F&B warehouse workforce. Automation has become increasingly prevalent in the F&B industry, leading to a shift in the skills required for the typical F&B warehouse workforce. Facilities must now have a more educated staff with a specialized, tech-oriented skill set. Warehouse work has shifted from manual labor to the operation of complex equipment because of automation.
State and local governments understand the state of their labor markets. Working with regional and local economic development corporations (EDCs) and analyzing labor studies can provide critical knowledge when making these decisions. EDCs track a collection of beneficial information such as:
- Community college graduation rates and types of degrees awarded
- Local wage rates for varying positions
- Unemployment rates and availability of the labor market
- Traffic patterns in the region that determine the reasonable radius from which to recruit staff
2. What Is the Speed to Market You Are Trying to Hit?
For many operators, the quickest way to ramp up operations is to retrofit an existing facility, which can be readily available, depending on the market. However, there can be complications with using that route. For one, the facility will need to be brought up to current USDA standards to ensure food safety policies are being followed. Another challenge is infrastructure requirements. Power and water will likely need to be outsourced to meet operational demands, especially with modern food production facilities.
A greenfield project allows you to build for efficiency rather than modifying previous work. There are some exceptions when it comes to retrofitting. Ryan Companies recently worked with a large e-commerce company planning to expand its F&B network by retrofitting existing buildings in areas where demand for its products is high. This allows the company to experiment with operational processes before investing in greenfield facilities or new build-to-suit development.
Building greenfield facilities can also lead to high costs such as potential rezoning efforts. However, a greenfield project allows you to build for efficiency rather than modifying previous work. Ultimately, the decision comes down to your optimal speed to market and when you would like it all to come back to you. Users are typically better off building from the ground up because the facility is being built to the exact specifications of your operations and guarantees efficiency.
It’s also important to note that, in some cases, there are economic development entities that specifically hold land for manufacturing facilities instead of logistics facilities, which gives more flexibility to vacate spaces. Manufacturing facilities are typically extensively built out to remain on a specific site for decades, making it a better deal for the cities that own the land. These municipalities are more receptive to F&B users with complex build-outs and long-term lease requirements for their production facilities. They can offer assistance for building a ground-up facility. Go where you’re wanted — especially if the need for speed is essential.
3. What Infrastructure Is in Place at Your Proposed Location?
Water, power, and sanitation are the most significant drivers of infrastructure for any facility. Given the substantial power requirements, this only becomes truer for an F&B facility. According to the United Nations Environment Program (UNEP), the F&B sector consumes 30 percent of the world’s total energy. A large source of this power consumption is derived from equipment operations in these facilities. When discussing the F&B industry, 80 percent of the time we are referring to cold storage, which has very important power access requirements.
EDCs can provide information on how recently existing infrastructure was updated to determine if it can power the facility's operational load. To entice industrial users to operate in their local jurisdictions, some EDCs will go the extra mile to include infrastructure incentives in their development agreements such as footing the bill for infrastructure improvements or excess usage. When scouting out new locations, it’s crucial to see which municipalities are more liberal with their incentive packages because it can save you money in the long run. EDCs can also provide information on how recently existing infrastructure was updated to determine if it can power the facility’s operational load.
Currently, Ryan Companies has a project underway in Texas where a new power grid and 20 new generators were brought in to support a new campus throughout the Lone Star State’s sweltering summer months. This project exemplifies the importance of scouting location incentive packages. If this project’s power grid were to fail, the city of San Antonio would finance the use of the generators.
Considering the growth that the F&B industry has experienced in recent years and the projected expansion in the decade ahead, it’s imperative to find locations equipped to handle this swell in demand. Some simply play the game better than others. Diligence in site selection and recognizing the impact a smart site selection strategy can have will ensure your facility remains efficient and resilient through the inevitable ebbs and flows of the marketplace.