Growing food processors in Ohio

LIMA — At a plant south of Columbus, General Mills employees make 17 million Totino's Pizza Rolls a day.

At the Northwest Ohio Cooperative Kitchen in Bowling Green, Dennis Dickey and a handful of part-time employees make 5,000 containers of Willy's Famous Salsa one day a week.

They are at opposite ends of Ohio's food and beverage processing industry that ships $24 billion worth of products annually. The industry is growing with staples, specialty and gourmet foods and high-quality convenience grocery options. Ohio and the region are poised to take advantage of the growth and add to their economies.

We make things

Ohio already has a large share of the food-processing industry. It ranks fifth among states overall and second in the nation in fruit and vegetable processing and the production of speciality foods, according to JobsOhio, the state's economic development agency. Food processing is one of the target industries for the newly formed JobsOhio.

Ohio is home to some of the largest food production facilities in the world. That General Mills plant? The world's largest pizza plant, making 1 million pizzas a day. The Campbell's soup plant in Napoleon is also the world's largest, as is Dannon's yogurt facility in Minster. The Heinz plant in Fremont makes more ketchup than any other single place on the planet.

Some of the most well-known names in the food industry — Smucker's, Bob Evans, PepsiCo — have Ohio headquarters or operations. Dannon, Rudolph Foods, Cooper Farms, Hirzel Canning Co., Nickles Bakery and Kettle Creations are just a few of the large food processing companies operating in the region.

West Central Ohio has a long history of manufacturing, making things. Food processing is a new generation of that, Lima Mayor David Berger said, and matches up well with the economic-development vision of the region.

“We've understood from national trends that food manufacturing is on the upswing,” Berger said. “It fits with our overall focus on manufacturing, the dimension of our economy that's wide and deep. It's a diversification of our historic involvement with making things.”

Hirzel makes the Dei Fratelli brand canned tomatoes and tomato products. The fourth-generation, family-owned and -operated company was founded in 1923 and has extensive greenhouse and farming operations and three canning plants, including one in Ottawa. The Ottawa plant packs tomatoes into 300-gallon barrels destined as ingredients in someone else's food products.

In Hirzel's case, nearly all of what it uses comes from the region, said Karl Hirzel, operations director for the company. The company works with 33 growers in Ohio and southeast Michigan and has a hand in every tomato used, from engineering of the variety and growing the crop to its harvest and processing. The company employs 125 year-round and triples that at harvest, from August to October.

“Dei Fratelli” is an Italian phrase meaning “of the brothers,” in honor of the four brothers, one of whom was Ken Hirzel's father, who helped make the company flourish. A woman in the company's packaging department came up with the brand name in the 1970s to seize on ethnic food trends. The company is a regional supplier, shipping primarily to Midwestern grocery stores.

“We've developed recipes in the company and promote high-quality products that are all run from fresh tomatoes with the brand,” Hirzel said. “We maintain the highest standards we can.”

Seizing opportunity

Kettle Creations began production in a 100,000-square-foot building in 2009 in the Gateway Commerce Park. Allen Economic Development Group and other officials hope the mashed potato and macaroni and cheese maker becomes a flagship company at Gateway, which development officials are trying to get named a certified shovel-ready food-production park.

AEDG, the city and county are partnering with the Toledo-based Center for Innovative Food Technology to fund — a total of $20,000, — the certification. The result will be a certification from Ady International and The Austin Group, which also certify Ohio's job-ready sites as shovel-ready.

The process is similar to going through a company's site selection process, said AEDG President Marcel Wagner, with evaluations of infrastructure, transportation access, utilities and other needs. Ady and Austin work with large, quality companies that need expansion sites but don't want to do the legwork themselves, Wagner said. In large part, the certification is the price of admission, access to consideration.

“When these companies see an opportunity to grow their business, they're generally on a very short time frame to assemble a project,” Berger said. “They rely on these folks who do that and their expertise, so they can come in and assess a site very quickly.”

Gateway has about 100 acres left for development and could double that, Wagner said. The county-owned park has roads and utilities in place and is located next to Interstate 75 on state Route 65, with a central location to get a product to much of the Midwest and East Coast within a day. It also has a key something: abundant quality water.

Especially for certain kinds of food production, such as potato or bakery production, water is where a company starts when evaluating a site. If it's not there, the site isn't even considered.

“Water is a huge resource for us. It's a huge selling point to attract that sort of investment,” Berger said. “We've been able to demonstrate that it's working well with Kettle Creations. They have a wonderful set of products in their lineup, and being able to highlight the new facility and their success is timely for us.”

The company is featured prominently in the new five-minute marketing video AEDG produced targeting food processing companies. AEDG officials will take the video with them to three meetings this year in which they'll be granted one-on-one access to 25 national companies and firms doing site selection specifically for food processing, Wagner said.

Wagner sought the food certification and went to the Center for Innovative Food Technology to get funding help and technical assistance. He also sees huge growth potential for the industry.

“We don't offshore a lot of food production,” Wagner said. “We make our food here. It's not going to decline. These are things people buy every day.”

Growing food processors

Dickey, CEO of Willy's Salsa, wowed friends and family with a recipe he received from a Mexican friend. The former Las Vegas blackjack dealer and pool salesman quit “a good-paying job” to own his own business and make salsa.

“I'm 64 years old. This is the hardest thing I've ever done in my life,” Dickey said. “I wouldn't be here without CIFT.”

CIFT operates the Northwest Ohio Cooperative Kitchen, a nonprofit commercial, licensed kitchen that entrepreneurial food processors can rent. CIFT and the kitchen also help small companies with things such as food safety, finance, marketing and distribution.

Dickey started making smaller batches of salsa that he sold in stores in his neighborhood. Willy's Salsa is now in 400 grocery stores in seven states. He has worked his way to grocer's shelves with distributors and brokers and experimentation in the kitchen. He uses the kitchen one day a week, but Dickey's long-term plan is to outgrow the kitchen.

That's exactly the kitchen's purpose, said CIFT CEO Dave Beck. The kitchen has good food “roots;” Heinz used to own the building and greenhouses, and experimented with new tomato varieties. Today, the kitchen has a couple dozen clients, caterers and producers of specialty foods, gourmet sauces, mustards and spice rubs, chocolates, cookies and peanuts.

While the kitchen is small scale, the center works with large companies using new technology and industry best practices to improve their products and position in the marketplace. For example, CIFT worked with Orval Kent, which owns the former I&K facility in Delphos, on research to improve the quality, safety and shelf life of its refrigerated salads.

The Hirzel company, which helped found CIFT and continues to have company officials sit on its board, uses the company's expertise often.

“It allows us to leverage the expertise they and other members have,” Hirzel said. “We're always looking for ways to improve our process. Quality is key with food products. There are no compromises. Some times, it's the only advantage you have over competitors.”

CIFT helped Hirzel develop a machine that picks out soft tomatoes. CIFT also helped Hirzel at the crop level, studying the effects of irrigation and developing ways for certain crops to mature and ripen at the same time (which creates a consistent product), and with energy savings.

“Our job is technology-based economic development,” Beck said. “If we can demonstrate to people the potential of products or technologies, it gets people to the next step.”

Beck said he welcome's the new focus of JobsOhio.

“We have 1,100 food-processing companies in the state now. Take them and all the things they buy, the impact is immense. We can grow that. If a company is buying products from somewhere else and we can make it here, that grows the economy,” Beck said. “Food processing has traditionally not been looked at as real manufacturing or an industry, just cooking. It's not. It's high-tech.”

What's ahead

Food processors face a number of opportunities and challenges; sometimes, as with the still-fragile economy, an issue is both.

Food companies see a financially healthy and improving 2012, according to Food Processing magazine's manufacturing trends survey, but are concerned with continuing overall economic uncertainty, rising costs of raw products and changing safety standards.

Food safety tops the list of concerns for processors. Hirzel underwent a massive audit and achieved what is known as Level 2 SQF (Safe Quality Food) program certification. While that language means little to consumers, it's instantly recognized in the industry as assurance of quality and safety, Hirzel said.

“We're proud we achieved it in our first go-round,” Hirzel said.

The economic downturn is creating a new consumer, one who eats out less, clips coupons and uses the Internet to find deals, according to a study by Chicago-based Symphony IRI and reported by Food Processing magazine. Consumers are eating out less frequently and bringing lunches and snacks to work. Shoppers are more measured these days, with lists and budgets, combined coupons and circulars and fewer “non-essential” purchases. Successful retailers and food manufacturers will find ways to demonstrate to consumers the value of their products, not just with price and convenience, but also with relevance to their lives, the report said.

In other words, families are not getting less busy and the days of a stay-at-home mom peeling potatoes all afternoon are long gone. Those families are stretching their dollars with fewer restaurant visits. Some of our mothers and grandmothers may not like to hear it, but those mashed potatoes from Yoder's and Bob Evans are a pretty good substitute for their work. Other mothers and grandmothers have given up the fight, and stopped at the grocery for the packaged variety, on their way home from work, the book club or exercise class.

“Shoppers and families are finding value in high-quality, wholesome food products,” Wagner said.

Food Processing's manufacturing trends survey did find some positives:

• 72 percent of respondents said their plants will increase production in 2012.

• 28 percent will increase the size of their workforce.

• 32 percent said they deferred capital projects in 2011, a decline from the previous year when 45 percent said they did so.

For companies dusting off expansion plans they set aside a few years ago, Wagner wants them to know Allen County has shovel-ready land, quality, abundant water, a talented workforce and a strategic location to get a product into the hands of half the country.