Oregon food processing sector booming
By Eric Mortenson
SALEM — If the prospects for Oregon’s food processing sector needs an icon, it’s rising adjacent to one of Norpac Foods’ repackaging plants: The steel skeleton of a 260,000 square foot frozen food storage and distribution facility under construction by Henningsen Cold Storage Co.
It’s a collaboration by two of Oregon’s oldest companies. Norpac, the cooperative of 240 farmers, dates to 1924 and Henningsen started a year earlier. More to the point, it’s an investment that speaks volumes about the industry’s current stability and promising future.
By having dedicated storage space right next door, Norpac will save “well into six figures annually” in trucking and handling costs as it supplies frozen vegetables and fruit to restaurants, institutional food service departments and grocery chains, said Chuck Palmquist, Norpac’s vice president for sales. For Henningsen, it means throwing in big-time with a single customer.
“It says we’re both optimistic about where we’re headed,” Palmquist said. “We both see opportunity.”
The construction comes amid increased recognition of agriculture’s economic impact. A November report by the land use group 1000 Friends of Oregon titled, “Great & Growing: People and Jobs in Oregon’s Agri Cluster,” makes the case that ag’s economic influence is felt in every corner of the state.
Links to agriculture hum through the state’s processing plants, shipping and distribution networks and related businesses ranging from equipment dealers and supply stores to restaurants. According to the report, $5.8 billion worth of farm and ranch products spins into $22 billion in goods and services annually.
More statistical evidence of the ag sector’s strength came in the December labor trends report issued by the state Employment Department. From 2007 to 2012, the depth of the recession, Oregon’s manufacturing sector lost 15.8 percent of its jobs. But food manufacturing jobs increased 7.8 percent during that same period.
People may hold off buying a house or appliances during tough times, Employment Department economist Pat O’Connor concluded in the report, “But people have to eat, even when the economy is not doing well.”
The numbers are significant, said Dave Zepponi, president of the Northwest Food Processors Association. Food processing is the third largest manufacturing sector in the Pacific Northwest, after aerospace and high tech industries.
“We need to start swaggering a little bit,” Zepponi said. “We may not be as sexy, but we’re very stable.”
The association represents about 150 processors in Oregon, Washington and Idaho. Zepponi said the industry is looking at “steady growth” as northwest processors benefit from region that has good soil, a temperate climate, low-cost power and a reputation for agricultural innovation and food safety.
Zepponi, who recently returned from a marketing trip to China, said those qualities are good selling points in Asia. Processors are working to tap the Asian export markets, where an emerging middle class has more disposable money with which to buy food.
Norpac has annual sales of $300 million to $500 million, but only about 3 percent comes from exports. The company sees good opportunities in the export markets, but expects only incremental increases for now, said Palmquist, the sales vice president.
Norpac has five plants in the Salem area, one in Hermiston, Ore., and one in Quincy, Wash. The company employs about 1,300 people full-time, with many more seasonal workers coming on the job during harvests.
Palmquist said much of the industry’s recent growth has come from smaller, niche processors – “The Dave’s Killer Breads of the world,” he calls them – that have sprung up in response to the demand for local, high-quality products. Zepponi said his association is making a special effort to recruit smaller firms into the group.
Palmquist doesn’t mind the competition. “It lifts all of us, I think,” he said.
“People are interested in where their food comes from,” he said. “Anyone who establishes a foothold of a locally produced product has a real willing audience to market to.”