2009 The State of Food Manufacturing

1. 2009 The State of Food Manufacturing 2009 FISA Annual Conference September 19-22, 2009 The Resort at Squaw Creek Lake Tahoe, California Patrick Young, Publisher Food Engineering Network

2. BNP Media Based in Troy, Michigan Privately held family owned publishing company - over 80 years old 65 titles in 8 major markets Architecture, Construction, Food, Beverage and Packaging, Manufacturing, Plumbing, Flooring and Maintenance, Gaming, Safety and Security and HVAC Custom Publishing, Conferences, Trade Shows and Seminars � Food Safety Summit Custom Research - Clear Seas Research

4. Serving the North American Food and Beverage Manufacturing Market 16,000 manufacturing plants Wholesale value of shipments $590 billion

5. The industry�s only pre-filed hard bound catalog listing suppliers to the food and beverage industry.

7. Food Engineering Events Food Automation and Manufacturing Conference and Expo, April 25th-28th Sheraton Sand Key Clearwater Beach, FL. ProcessTechnologyXchange-September 12th-15th, 2010 The Lodges at Deer Valley, Park City, UT

10. Market Factors in Early 2008 Exponential increase in commodity and energy prices Increasing biofuel production Depreciation of the US dollar Increasing demand from emerging markets Squeezed margins Inflated valuations of acquisition targets

11. Market Factors in Late 2008 Exponential decreases in commodity and energy prices Easing of margin pressures A more realistic valuation of take-over targets Continued depreciation of the US dollar Restricted R&D and marketing investments

12. 2009 Market Factors Continued, but lower, price inflation rates for energy and other commodities Decreased dependence on biofuels Increased aggressive food pricing strategies to gain market share Continuation of interest in health and wellness Increased focus on cost-saving strategies among businesses and consumers

13. Top Line Initiatives of Food & Beverage Manufacturers Margin Improvement Sustainability Food Safety

14. Traditional Approaches to Margin Improvement Implementation of automation Control the process Reduce labor costs Reduce inventories Improve yield

15. Modern Approaches to Margin Improvement Lean Manufacturing Six Sigma Total Quality Management Total Production Maintenance

16. Overall Equipment Efficiency OEE measures the actual output of the line against the purely theoretical output on a 24 hours a day 365 days a year basis with no exceptions for downtime.

17. Productivity Improvement Asset utilization

18. Productivity Improvement Asset utilization Process automation

19. Productivity Improvement Asset utilization Process automation Improving yield

20. Productivity Improvement Asset utilization Process automation Improving yield Recovering process byproducts

21. Productivity Improvement Asset utilization Process automation Improving yield Recovering process byproducts Added capacity

24. Automation Shopping List 2009 Ranking Intend to Buy PLCs 65% Motion/motor controllers 48% Digital sensors/transmitters 33% Lab analysis equipment 33% Sanitation/CIP systems 30% HMI screens 26% Automation of product tracking and tracing 24% Energy management software 24% Other controllers or advanced controls 23% Other integration software 18% Preventative/predictive maintenance software 18% SPC software 17% Supply chain mgt. software 17% Wireless networks 15% Source: Food Engineering�s 2009 State of Food Manufacturing Survey.

25. Top Ten Trends Impacting Food Manufacturing Energy and water conservation Raw material costs Automation of repetitive tasks Supply chain cost reductions Consumption demands and market conditions Productivity improvements Labor costs and availability Rising material costs Lean manufacturing and other similar initiatives Flexibility Source: Food Engineering�s 2009 State of Food Manufacturing Survey.

26. Production, Packaging and Process Control Equipment Budgets Slip Slightly Average Budget Increase 2004 6.2% 2005 3.8% 2006 4.8% 2007 7.5% 2008 5.4% 2009 0.98% Source: Food Engineering�s 2009 State of Food Manufacturing Survey.

28. Help Wanted Need for external expertise

29. Help Wanted Need for external expertise The expanded use of information or data in all aspects of the business

30. Conclusion Better macroeconomic conditions Margin and plant productivity improvements Food safety � increase quality of end product Sustainability � energy and water conservation

31. The End Thank you for your time Enjoy the rest of the conference!