Business

Companies flocking to Idaho make food processing a growth industry

Perhaps it shouldn’t surprise that the smell of apples permeates the new GoGo squeeZ plant at 8385 Birch Lane.

But given the sheer size of the place — three-quarters of an acre — and given the sterile white walls and stainless-steel piping coursing through equipment like a puree metro system, the aroma proves this plant doesn’t produce gears or nails.

Those are real apples in stacked wooden crates in the receiving bay and bobbing in the rinsing flute. That’s real fruit being injected into green, 3.2-ounce pouches that robot arms pack into boxes to be shipped to stores across the West. Those are real workers under the white coats, hairnets and shoe booties.

The building, which was owned by Micron Technology Inc., had been vacant since its former tenant, MPC Computers, closed in 2008. Materne, GoGo squeeZ’s French parent company, paid an undisclosed sum for the property and invested $85 million to make it capable of mashing 60,000 tons of applesauce and other fruit mixes per year. Since opening in December, Materne has hired 122 workers and plans to ramp up to 284 by the time the plant reaches full capacity in late 2017.

GoGo squeeZ is one of the latest additions to a growing list of food manufacturers choosing either to relocate to Idaho or to expand operations already here. The roster of companies includes some of the largest job creators in recent years, many of whom complement Idaho’s bulwark industry, agriculture.

From 2004 to 2013, the number of Idaho food manufacturers rose 29 percent, to 302. The industry was Idaho’s 11th largest employer in 2014, according to the Idaho Department of Commerce, and it accounted for 18 percent of all foreign exports.

Commerce Director Jeff Sayer, who in addition to GoGo squeeZ has recruited food manufacturers such as Amy’s Kitchen (Pocatello), and Chobani and Glanbia (Twin Falls area), said Idaho is building its reputation as a destination for food manufacturing. His evidence: Idaho’s concentration of such businesses is twice the national average.

“Facts are facts,” Sayer said. “Idaho is a food state.”

GEOGRAPHIC ADVANTAGE

GoGo squeeZ has been a hit since Materne opened its first U.S. plant in Traverse City, Mich., in 2008. Its 22 flavors include fruit mixes as well as fruit and vegetable blends and an organic fruit line. They are marketed to parents for health and ease: The pouches contain zero additives and, with a built-in straw and resealable top, make for handy, on-the-go snacks. The company reported U.S. sales of about $200 million in 2014.

As U.S. sales took off, Materne looked for a state to supply stores in the West. The company first looked to apple-rich Oregon and Washington to limit shipping costs, said Boris Salome, who moved from France to manage the Nampa plant. Materne became interested in Nampa after learning it could buy the Micron building not far from the Oregon state line.

“It was proximity to the apples,” he said.

The additional outlet for Northwest apples could come in handy for growers. Washington, the nation’s biggest apple-producing state, is suffering an oversupply of some varieties brought on by a record crop and the recently ended West Coast port slowdown, which hurt apple exports. Idaho’s apple output is just 1 percent of Washington’s, but most of it is near Nampa.

Many of Idaho’s largest food manufacturers similarly spent millions building factories here to be close to the supply chain, said Ethan Mansfield, economist for the Idaho Department of Labor. Glanbia, Chobani and other recent Idaho additions (see the box on D1) made new homes in the state’s dairy center, the Magic Valley. The J.R. Simplot Co. and its Texas-based partner, Caviness Beef Packers, await permit approval for a $100 million meatpacking plant near Kuna that will employ up to 600 workers processing up to 1,700 head of cattle delivered from around the region.

Food processors buying from Idaho’s livestock and dairy industries might as well set up shop in Idaho, Mansfield said.

“(Shipping) gets expensive, especially for a heavy raw product like milk or cows,” he said. “Additionally, the cost of land is relatively cheap here, especially compared with California or New York, two other dairy hot spots.”

A 2013 study compiled by University of Idaho economists found a reinforcing relationship between Idaho’s ag and food manufacturing sectors. In addition to directly employing 9,400 Idahoans in 2011 and totaling $8.5 billion in sales, farmers and processors of barley, wheat, sugar beets, dairy and potatoes supported an additional $4.7 billion in payments to employees and suppliers or from payments received from businesses supporting the sectors. From an employment standpoint, the study found the sectors’ ripple effects supported an additional 31,600 Idaho jobs.

WAGE GAINS

The average Idaho food manufacturing job paid about $40,000 per year in 2014, compared with an average of about $38,000 for all industries, according to the state. Several companies secured the state’s new Tax Reimbursement Incentive by promising to pay higher average wages than the average in the counties where they built or expanded plants.

Amy’s Kitchen qualified for the tax break — which repays up to 30 percent of a company’s sales, income and payroll taxes for up to 15 years — by promising to create 1,000 jobs in Pocatello paying an average of $33,000. Glanbia agreed to create 43 jobs paying an average of $42,000 at its Gooding cheese plant.

Salome did not disclose its average wage, saying only that GoGo squeeZ wages are competitive and that the company offers benefits and training. Before building the plant, the company said it would pay an average wage of $16 an hour.

Workers have benefited from increased demand for their services, Mansfield said.

“Many of these employers are struggling to find qualified workers, and generally a good solution to that problem is to raise wages,” Mansfield said. “I believe that will continue to happen in this industry.”

MAGIC VALLEY BOON

Nearly 6,000 food manufacturing workers in the Treasure Valley earned an average of about $42,200 per year in 2014, or about $1,100 more than the Valley’s average.

Food manufacturing is an anchor industry in the Magic Valley, Mansfield said. There, more than 6,000 workers earned an average of nearly $46,000 last year, 38 percent higher than the regional average of $33,150.

“Wage-wise, food processing jobs aren’t as beneficial to the southwestern region as they are to the south-central, where the economy is less diversified and more heavily dependent on food processing as an economic base,” Mansfield said. “But the Treasure Valley jobs aren’t bad jobs. They are just average jobs.”

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