Strategic growth: should you retrofit or build a new facility?

While renovating an existing facility may improve production volume and speed, the facility may not meet the company's long-term needs. It's critical to weigh the pros and cons of both retrofitting and building a new facility.

11/24/2014


While renovating an existing facility may improve production volume and speed, the facility may not meet the company's long-term needs. It's critical to weigh the pros and cons of both retrofitting and building a new facility. Courtesy: StellarAs the economy shows signs of recovery, capital spending is up and food processors are tapping into new opportunities and expanding product lines. The question of whether to renovate an existing facility or build a new plant is becoming more complex as processors balance their equipment and production needs with meeting food safety requirements.

Your strategic plan may drive much of this decision to ensure that the facility meets your company's current, and also future, needs. While renovating an existing facility may have your production up and running quicker, the facility may not meet your long-term needs. A strategic plan with clearly defined operational goals and procedures facilitates effective decision-making, especially where plant design and capital expenditures are involved.

Weighing the pros and cons
There are pros and cons to both solutions. Architectural solutions are much easier to engineer for a new plant than with an existing one. For example, if your facility will be processing allergenic ingredients, separate storage and production areas can be designed. Working within the constraints of an existing footprint may prove to be a challenge.

Upgrading an existing facility may be a more budget-friendly solution and reduce upfront equipment costs, but you may have to compromise on utilizing state-of-the-art technology and automation. Here are five key considerations when making the decision to renovate or build new:

  • Automation: Incorporating automation into an existing facility to improve production efficiency can be challenging in two ways. Automated equipment often has large space requirements and will require significant square footage. In addition, if you're utilizing older equipment, it may not lend itself to automation. Be sure to connect with equipment manufacturers to determine the ability to automate existing equipment.

  • Food safety: The ability to meet stringent food safety regulations is one of the most crucial factors in plant design, whether renovating or building new. Ensuring proper air flow throughout the facility is a must. Air flowing into areas where food is being processed must be tightly controlled to maintain room temperatures and eliminate the potential for condensation and contamination. Materials used in construction and equipment design, such as stainless steel, are also key considerations to guarantee the facility will meet food safety requirements.

  • Design issues: Again, it is much easier to design a new plant around desired architectural solutions, which may not be easily modified in an older facility. For example, is the ammonia piping system sufficient for required flow, but more important, does it meet current code requirements to ensure worker safety? Are drainage and wastewater systems sufficient? Can the location support the utility requirements of the plant's operating systems?

  • Access: What modes of transportation will your facility need to access for distribution? Existing facilities may provide more ready access to inland ports and railways, while finding greenfield space near transportation hubs can be difficult. Increasingly, food processors are trying to minimize the distance finished goods must travel to distribution facilities.

  • State/ local regulations: Be sure that you carefully review all local and state regulations and incentives before making the decision. Labor laws can vary greatly between states, as can utility costs and incentives. 

Michael Smith has more than 17 years of experience in industrial construction on domestic and international projects. His responsibilities include project development, executive supervision, planning, estimating, contractual negotiations, cost control, assurance of quality and completion. This article originally appeared on Stellar Food for Thoughts. Stellar is a CFE content partner. Edited by Joy Chang, digital project manager, CFE Media, jchang@cfemedia.com



The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
Doubling down on digital manufacturing; Data driving predictive maintenance; Electric motors and generators; Rewarding operational improvement
2017 Lubrication Guide; Software tools; Microgrids and energy strategies; Use robots effectively
Prescriptive maintenance; Hannover Messe 2017 recap; Reduce welding errors
The cloud, mobility, and remote operations; SCADA and contextual mobility; Custom UPS empowering a secure pipeline
Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Research team developing Tesla coil designs; Implementing wireless process sensing
Commissioning electrical systems; Designing emergency and standby generator systems; Paralleling switchgear generator systems
Natural gas engines; New applications for fuel cells; Large engines become more efficient; Extending boiler life

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
The maintenance journey has been a long, slow trek for most manufacturers and has gone from preventive maintenance to predictive maintenance.
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Maintenance Manager; California Oils Corp.
Associate, Electrical Engineering; Wood Harbinger
Control Systems Engineer; Robert Bosch Corp.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me