Food & Beverage Industry News speaks with Total Construction’s Rob Blythman about the post pandemic landscape around manufacturing construction projects.
Rob Blythman, Total Construction’s general manager, engineering construction group, is seeing first-hand the flow on impact of the COVID-19 pandemic and lockdowns as food and beverage producers look to restart stalled projects.
Blythman compared the current construction landscape in the industry as a ‘gold rush’, but with it have come some other issues.
“When you’ve got a gold rush everything triples in price and that’s what’s going on,” he said.
“What we are seeing in the market is a lot of people asking for cost plans. Their projects are going from conceptual to the next step, across the market. And of course, you have a material and labour cost increase.
“A lot of operators are missing the boat because costs of construction are going up constantly and it’s becoming unattainable for a 2020 business model and companies are having to rethink their projects completely.”
The skyrocketing cost of labour and materials is a major factor in the need to re-evaluate pre-COVID business plans.
“In the past it was considered cheaper, or around the same cost, to build new (greenfield) rather than finding an old or non-complying facility and retrofitting it to be a food facility (brownfield). As retrofitting can result in substantial building upgrade works having to be carried out to bring the building up to code,” said Blythman.
“Now because of the cost of building materials, especially hard-shell materials like concrete and steel, you’ll find that getting an old facility and retrofitting it is more cost effective than building from the ground up. Even with the risk of building upgrade requirements.”
Changing consumer habits have also forced some manufacturers and producers to reassess their approach to production, with the ready meals market being a good example.
“I think the Australian public have changed their food purchasing mentality and they’ve gone from stocking a pantry full of food to buying things just in time prior to a meal,” said Blythman.
“That falls to ready meals, pre-packaged salads, products which are designed to be one meal instead of bulk buying for multiple meals.
“You see it as you walk down the supermarket isle; many products now are individually packaged in single or double serves and buying in bulk seems to be on the back burner in the consumer’s minds.”
Another driver that appears to be behind changing consumer trends, Blythman said, centres around changes to people’s work schedule in the wake of the COVID-19 pandemic.
“People aren’t going to the office five days a week anymore and it’s becoming easier to duck down to the shops to pick up their food for the day, this is one of the reasons you’re seeing smaller corner store type supermarkets popping up,” he said.
“We are doing a project for a client now, that resembles a local corner shop more than a supermarket.”
The evolution of packaging has also played a critical role in growing popularity of ready meals and single portion products.
“Packaging has come a long way which has helped create a stronger ready meals space. You wouldn’t dream of individually packaging a steak 10 years ago, but it has become cost effective,” said Blythman.
The constant changes in consumer trends creates a sort of ‘crystal ball’ effect when it comes to producers anticipating what they will require for the future success of their output, Blythman said.
“What they are very weary of is changes in the market, it’s almost crystal ball stuff for a lot of these companies. They need to make their facilities more flexible, from a fit-out perspective, then they have in the past,” he said.
“The marketplace is moving much quicker than the old staples of food that people used to eat and people aren’t thinking a week ahead when it comes to what they eat, this wasn’t the case in the past.
“What will be hot this month and what is hot next month is hard to forecast.”
Blythman said Total Construction also anticipates stagnation to grow in the food and beverage construction sector over the coming 12 months because of the growing costs and are urging companies to get their projects underway sooner rather than later.
“We anticipate stagnation over the next 13 months on projects due to cost increases, and for those who hesitate to launch their projects now, could be in a lot of trouble down the track,” he said.
“What we are seeing is people getting cost plan after cost plan and every time they ask for a new cost plan the price is going up 20 per cent. It is almost a chasing inflation scenario.”