Taking Recession Strategies Personally

I won’t pretend that I know very much about financial strategy, but just like everyone else out there, I’m a struggling consumer just trying to stay afloat amidst current economic hardships, so that at least grants me the right to an opinion on the topic.

While trying to make sense of “recession strategies” on a large scale industrial level, I found that it made sense to start with something more tangible for me – such as my own personal recession strategy – and then apply this strategy to the manufacturing industry.

For example, one thing that we all try to do during tight economic times is cut back on unnecessary spending. At the same time that I’m deciding to buy the whole stalks of celery instead of the pre-cut, pre-portioned, perfectly packaged celery, the manufacturer of this celery might also be deciding that maybe all the extra packaging and prepping isn’t paying off. Reducing the amount of packaging, packaging in bulk or changing packaging materials has the potential to save companies millions. Take the Poland Spring Eco-Shaped bottles for example. Not only are they saving on raw materials - using 30% less plastic per bottle and 30% smaller labels - the bottles are lighter and thus cheaper to ship. In addition to their cost savings, they can also position themselves as a sustainable company that is making an effort to reduce their environmental footprint, thus increasing their sales.

Secondly, another smart strategy is to avoid putting yourself in (or further into) debt. If I’m uncertain about my economic future, I’m not about to enter any agreements that involve long-term financial commitments. Making capital investments in a recession is a big deal and should not be taken lightly. This is mainly because once capital is invested, it is not easily recovered for reinvestment into anything else.

And finally, I pay close attention to where and how I spend my money. Indirect spend is just as applicable in our personal lives as it is in business – and represents a huge opportunity to save money. I recently discovered, for example, that some states allow you to choose your electricity supplier – which means you can evaluate deals and offers from numerous suppliers and pick the one that saves you the most money. Doing some research and making an informed decision seems a lot smarter than blindly paying an electric bill each month. We recently ran an article for Food Manufacturing on this topic. In it, the author discussed how many companies overlook vast savings opportunities associated with their indirect spend. By pursuing “smarter sourcing” of indirect goods and services, companies will not only realize significant one-time savings, they will enjoy them year after year. When you consider that for most manufacturing companies, indirect materials represent about half of the company's total spend, this could potentially add up to big savings.

Fortunately for us consumers and industry in general, economic cycles mean that if we can at least stay afloat during tough times, better times should be around the corner. Staying smart with our money when times are tough might just be the “edge” we need to survive.
Click here to read IMPO editor Anna Wells' take on recession strategies

Learn the ABCs of ERP

Food manufacturers need to focus on manufacturing food, not sorting through software solutions. They need to produce quality products, in the right quantities, at the right price. By implementing one system - Enterprise Resource Planning - you can organize all aspects of your business activities, from supply chain to human resources. Our one-hour webcast, hosted by Anna Wells, Editor of IMPO magazine, will:

-Outline technology options
-Lend expert advice on choosing the right solution for your company
-Offer real-world experiences of other manufactures who implemented ERP systems
-Offer a live Q&A session with industry experts

Click here to register for the event which will take place August 6, 2:00 EST

Green Pockets

We are a society plagued with guilt. I tossed a plastic six pack ring (uncut) into the trash the other day and instantly had a flash of a baby seal tangled in my thoughtless discard, with an R.E.M. song playing in the background.

Thankfully for me, the manufacturing world is making up for my carelessness by collectively “going green.” New equipment promises greater energy efficiency, less emissions and less waste. Industrial facilities can go green by becoming LEED certified; or, if they are looking for simpler solution (and less paperwork) they can make smaller changes such as adding thermally insulated windows, installing skylights, switching to florescent lighting, or using reusable pallets.

There are a multitude of reasons for manufacturing to go green, including everything from better environmental stewardship to healthier employees. I’m certainly not arguing against sustainability practices. However, at the end of a day, a company is not successful unless its products are selling. Sustainability sells. Customers want to buy from companies that operate in an environmentally friendly matter and produce environmentally friendly products because it helps alleviate the guilt imposed on us from every possible angle as green marketing campaigns tell us how we are single handedly destroying the planet.

My question is, if going green wasn’t producing a profit, would manufacturing continue its sustainability push?

Take Wal-Mart, for example. Wal-Mart’s newest green initiative aims to reduce packaging 5% by 2013, which they are estimating could save 667,000 metric tons of carbon dioxide from entering the atmosphere. Oh and by the way, this noble initiative will also save Wal-Mart $3.4 billion and helps the company to market itself as an innovative leader in sustainability practices.

I came across a tee shirt the other day made of recycled cotton and plastic soda bottles. Across the front, it said “I’m going green.” This epitomized my questioning behind the growing green wave. Would a person buy this shirt because it is good for the environment, or simply, do they want everyone to clearly see how much they care about saving the planet?

I suppose you could say that as long as companies are “doing the right thing” when it comes to the environment, their reasoning behind it is irrelevant. But personally, before I become financially loyal to a particular product or company, I’d like some assurance that said company stands behind its green principles profits aside, and that I am not just buying into another transient marketing trend.

(Click here to read IMPO Editor Anna Wells’ counterpoint take on going green)

In the Eyes (and Ears) of the Beholder

I recently learned of an art project on display at an art exhibition in Holland. The exhibit, titled “Our Daily Dread,” features moving urethane pig ears suspended from the ceiling, as well as a huge video of a dog chewing on a pig ear, and animal noises coupled with background sounds that can only be described as the “slaughterhouse soundtrack” (click here to view the video).

Perhaps my art appreciation prowess isn’t exactly up to speed, but I was left a little confused by this exhibit.

I understand that this was meant to be a spin off of Nikolaus Geyrhalter’s documentary film “Our Daily Bread.” Geyrhalter’s documentary shows scene after scene of the industrial production of food, with no narration. Many reviews seem to have mistakenly interpreted the film as Geyrhalter lashing out against the evils of mechanization in the food industry.

To quote Geyrhalter about the documentary, “There is nothing wrong with saying, ‘Buy organic products! Eat less meat!’ But at the same time it’s kind of an excuse, because we all enjoy the fruits of automation and industrialization and globalization every day, which affect much more than just food.”

It seems to me that Geyrhalter is blaming society and its consumers rather than coming down on the very food industry that we all faithfully support with our dollars.

I can partially agree with this. While it is true that today’s modern food production is a reflection of consumer demands, consumers are asking for cheaper, more widely available food products in great varieties, and the industry is responding. Our food industry, like many other industries, has evolved to meet the demands of present day society.

However, I do not feel one single ounce of guilt about this. In fact, I think the advancements in automation are impressive and a testament to the amazing progress in the food processing industry. I’d venture to say that most people involved in the industry would see the documentary as something beautiful and artistic.

Which brings me back to the “Our Daily Dread” exhibit. I believe that in art’s noble attempt to deliver a social message, it often falls short. In a desperate scramble to make viewers “feel” something, the artist settles on making people feel incredibly guilty. This to me is the equivalent of a movie that attempts to be scary by having characters jump out unexpectedly. There is a difference between a startle and a scare. Just like there is a different between delivering a social message and just trying to make people feel bad.

Sorry to say, Ken Rinaldo (the artist) but your guilt trip did not work on me! Am I supposed to be repulsed by the sight of a dog eating a pig’s ear? Let’s keep in mind that in some countries, pig ears are considered a delicacy, and eaten by humans. Am I supposed to feel bad for the pig? Pig ears are a byproduct of the pork industry – no one killed (or tortured) an entire pig just to obtain that ear.

Additionally, should I be saddened by the mechanical sounds of slaughter? If you recall, the traditional method of slaughtering a pig had something to do with grandma dragging Wilbur out to the barn, wrestling him down to the ground and using a handheld knife to cut this throat. If you ask me, our newer, more automated methods are a lot less horrible – for the human and the pig.

And finally, are dozens of floating urethane pig ears supposed make me feel bad about eating meat? Last time I checked, my bacon didn’t have ears and there was absolutely no dread involved on my end when it came to eating it. At the very least, its going to require some actual pig body parts (extra points if they are bloody) if you are even attempting to rattle me – go big or go home, Rinaldo.

The Power of Misperception

The Power of Misperception

While having dinner in a restaurant the other night, I overheard a woman at the table behind me verbally scanning the menu and discussing what she no longer feels is safe and to eat. On her list was beef (“contaminated with mad cow”), spinach (“contaminated with E. coli”), chicken (“possible salmonella poisoning”) and all seafood (“filled with carcinogenic toxins”).

I started thinking about consumer misconceptions, which was timely, considering that the very next day I received an email from a member of the poultry industry pointing out that I too had made an incorrect assumption in my last column. I had mistakenly mentioned that one possible rationale for vegetarianism was the desire to avoid hormones injected into poultry and cattle. While federal regulations allow the use of certain hormones on growing cattle and sheep, hormones are illegal in poultry production.

Consumer perceptions – whether true or false – are powerful in the food industry. The 2006 Monterey County spinach recall, prompted by E. coli contamination, lead to estimated losses as high as $100 million. While a portion of the economic loss can be attributed to product loss in terms of recalled products, the ripple effects of the spinach scare facilitated a costly decline in sales for both the spinach and leafy greens industry in general.

A recent survey of consumers (commissioned by Deloitte Consulting) reported that 57 percent of Americans say they have stopped eating a particular food, temporarily or permanently, as a result of a recent recall.

While the food industry seems to be doing its best to battle misconceptions and set the record straight for consumers, it seems that a significant portion of their marketing efforts are centered around defending, rather than promoting, their products. How do you have time to prove that your chicken tastes better than your competitor’s when so much of your time is devoted to merely proving that your chicken won’t give consumers salmonella, bird flu, or an increased resistance to antibiotics?

Some suggest that there needs to be better clarification at the federal level regarding specific affected products during a recall, as well as a more concise follow-through on the progress of the recall. Others claim it is just a question of putting more information and educational materials into the hands of consumers – and one way to accomplish this would be to make sure media outlets are passing on accurate information.

I’m interested in hearing what your companies are doing to assuage consumer fears and alleviate misconceptions. Please email me with your thoughts/ideas.

And by the way, the woman in the restaurant eventually settled on pasta in a “fresh, chunky marinara sauce” – it took everything in my power to resist telling her about the tomato recall.

Test Tube Nuggets

Karen Langhauser, Editor-in-Chief

I'm clearly not a PETA supporter despite the fact that I feel that chickens serve a very divine purpose on this planet, especially when covered in honey mustard and put on my sandwich. Therefore, I typically dismiss all PETA news events as blatant publicity stunts and inadequate attempts to destroy much of the industry that keeps my publication alive. But I have to hand it to them this time, because they have my attention.

PETA recently announced a one million dollar prize for the first individual or group to develop and sell in vitro chicken meat on a commercial level. In vitro meat is essentially meat grown in a laboratory without the physical body or organs of the actual animal. Starter animal muscle cells, suspended in a growth medium (as a food source for the cells), enable meat to be grown on sheets in a lab. Sounds delicious, right?

It might not sound aesthetically appealing at first, but I think one of the most interesting things about in vitro meat is the conundrum it could bring for vegetarians. I never turn down the opportunity to sit down with a vegetarian and really delve into the reasoning behind his/her diet choices. I've come across two common types of vegetarians. First, there is the "I don't eat anything with a face" and "killing animals is cruel" vegetarian. Second, there is the more socially responsible vegetarian who has concerns about everything from the impact of livestock on our land, air and water to the effects that hormones injected into poultry and cattle can have on our health. I'm not saying either view is incorrect. What is intriguing though is that in vitro meat would strip these vegetarians of all their rationale.

In recent years, research organizations devoted to developing meat substitutes, including in vitro, have emerged. These organizations claim that because meat substitutes are produced under controlled conditions (versus a farm for example) the substitutes are safer for consumption, have less of an environmental impact and are more humane than traditional meat.I'll buy that argument. But despite even a one million dollar incentive, it remains to be seen whether or not in vitro meat could ever be economically competitive with traditional meat, or more importantly, whether any consumer, vegetarians and meat eaters alike, would want to eat lab-grown meat.


What this does show us is that as our breath of scientific knowledge proliferates, the face of the food industry could see some changes. While it is unrealistic to expect a total overhaul of traditional food production methods (ala the Jetsons or Star Trek), the possibility of innovation such as cloned meat, in vitro meat or nanofood is now more than just science fiction. The food industry will have to share some portion of its market with products that no one formerly thought could even exist.

One more thing - and this is just me being somewhat antagonistic - but if you truly follow all the rules of the PETA contest and manage to be the first in the country to successfully create and then sell in vitro chicken in at least ten U.S. states - wouldn't a million dollar prize just be pocket change?

Food Manufacturing, Advantage Business Media