Food processors nibble at locations in Carson, Reno
Northern Nevada Business Weekly
Food manufacturers and processors who operate on tight margins increasingly look to low-cost Northern Nevada as the site for new operations.
The sector already is a growing part of the manufacturing landscape in Northern Nevada, and food company executives and business development officials say the region is poised for a boom in food-related companies which bring manufacturing operations to the region.
Steve Sposari, president and chief executive officer of SK Foods, which opened an 85,000-square-foot facility in Reno in 2007 and expanded to 150,000 square feet in early 2010, says he’s been contacted many times by companies seeking his opinion on the benefits of operating in Northern Nevada. SK Foods, headquartered in Seattle, employs about 275 at its sandwich assembly facility.
“I have a very favorable opinion of the area and the possibility for additional food manufacturing growth,” Sposari says.
And Stan Thomas, vice president of business development for Economic Development Authority of Western Nevada, says that although food manufacturing isn’t exactly a target sector for EDAWN, the financial woes and crushing tax burdens in neighboring California could lead to an exodus of food-related companies leaving that state for Nevada’s business-friendly environment.
“We are working with a few, and if we start seeing more and more we will take a good hard look at it,” Thomas says. “California has its challenges, and quite a few of these food manufacturing and processing companies are looking to get out of California. We are going to get some of those folks looking this way.”
Ray Bacon, executive director of the Nevada Manufacturers Association, agrees that Nevada could see a flock of California food-manufacturing companies headed this way.
“Food generally has a fairly low operating margin, and with the changes California is making I suspect that there is a probability we will see an increased number of people in the food sector in this state,” Bacon says.
EDAWN’s pitch to lure companies to Nevada includes the state’s lower operating costs, proximity to Western-region customers and favorable tax structure, Thomas says. But food manufacturing companies interested in setting up operations in the Truckee Meadows face a few hurdles.
Thomas says several food companies that looked this way ultimately passed on the region because they require extremely large amounts of water to run their operations. And because the region doesn’t have a historically large presence in food manufacturing or packaging, it doesn’t have a ready pool of trained labor. However, the Train Employees Now program offered by the Nevada Commission on Economic Development provides funds for skill-based training to help new employers ramp up quickly, Thomas notes.
Carson City is in a slightly more favorable position, though, says David Mearson, owner of Nature’s Bakery. Mearson began food manufacturing operations in Carson City in 1992 with New Life Bakery, and at one time he employed more than 300 production workers. His current venture, Nature’s Bakery, employs 22 people in its 30,000-square-foot bakery, and many employees have been with Mearson for almost two decades.
He’s got a long list of former employees he can call upon if needed, he says.
“There is actually a large pool of qualified food processing people in the Minden/Carson area,” Mearson says. “From food technicians to research and development and line help, there is a decent amount of people to draw from right now.”
Labor posed a slight challenge to SK Foods when it set up shop in south Reno in 2007, Sposari says. The company found plenty of able workers, but not many were versed in the requirements of handling food, which includes careful attention to personal hygiene, proper attire, processes for entering and exiting production floor, and sanitation requirements for food handling.
SK Foods had managers relocate from its Seattle corporate offices and also hired some managers from other parts of the U.S. to train its new workforce.
“It was a challenge to find skilled labor for food manufacturing in the greater Reno area,” Sposari says. “There is a lot of manufacturing, but not in food. It took a little bit longer to get everybody familiar with our processes; there was not the experience level there.
“We just don’t hire people off the street and allow them to go into production area,” he adds. “There is a lot of training involved.”
The company’s 2010 expansion proved much easier, Sposari notes, because the company already had a core of well-trained employees and strong management in place.
Greg Leach, president of Leach Logistics in Sparks, employs just over 60 manufacturing workers engaged in bulk packaging of vegetables, herbs and spices. Leach says employee training includes knowledge of about 300 best practices and standard operating procedures.
Bringing new workers up to speed can be costly, Leach says, especially if new employees decide that working in the food manufacturing industry isn’t what they want to do.
“The problem with Reno primarily being a service industry is that there is no real trained personnel in the food industry,” he says. “It is difficult: You either have to go outside of the state to hire, or have to spend extra money training them. If they get halfway through and it is something they do not like, you lose that value.”
Leach says one way he’s avoided turnover is paying wages slightly above scale to encourage workers to stay.