- McCain Foods is pausing its plans to expand a facility in the U.S. as foodservice demand has declined during the pandemic, Just-Food reported.
- The Canadian frozen potato giant announced last year it would spend $300 million expanding its Othello, Washington processing plant. The expansion was expected to add 170,000 square feet to the facility and create 180 new jobs.
- Dale McCarthy, vice president for integrated supply chain at McCain's North America operations, told Just-Food the project will be stopped because all non-essential work is paused. He said once social distancing measures are lifted and its foodservice business recovers, the company will "review restarting the expansion plan."
As coronavirus spreads across the U.S., retail sales have jumped while foodservice demand has dropped, forcing many food companies to change their expectations and plans for 2020. For McCain Foods, the pandemic has cut into french fry demand, prompting farmers to dump potato crops because of a surplus. Now, the spud producer is halting expansion efforts as it takes a financial hit.
The 170,000-square-foot planned expansion in Washington was going to add another advanced French fry processing line to its production capabilities in the U.S. The company said in a release announcing its growth plans last year that it also would bring environmental efficiencies, reducing the facility’s carbon footprint while doubling its production. As consumers look for sustainability, even during the pandemic, a facility that cuts its carbon footprint could have been beneficial for McCain Foods.
The Othello plant, which currently employs more than 450 workers and produce more than 400,000 million pounds of frozen products, celebrated the groundbreaking of the expansion in October of last year. Construction began in May 2019 and the project was expected to be completed in early 2021. The company did not provide an updated timeline and only said it would review restarting construction once safety measures are lifted and business is back to normal.
This move was expected to follow a similar expansion to its plant in Burley, Idaho. Last year, the company completed a $200 million expansion project, growing its annual French fry capacity by more than 400 million pounds and creating more than 180 new jobs.
But this isn't the first time McCain Foods has put its U.S. expansion plans on hold. Back in 2014, the company halted a $100 million expansion of its potato processing plant in Burley, Indiana while reevaluating market conditions. It ended up moving forward with $40 million improvements to its existing production lines.
The company has been expanding its operations globally in the last year. McCain Foods announced it would invest $80 million toward the creation of a new production line at its existing Grand Falls, New Brunswick, facility in Canada. The company also announced its investment in its first French fry factory in Brazil last year. The pandemic will likely slow its plans for growth significantly until demand from foodservice improves.
Food processing plants across the U.S. have closed and reopened during the outbreak as the coronavirus has spread among workers. McCain Foods' facilities have not been immune to the pandemic. A worker in its Nebraska plant tested positive last month.
McCain Foods also has been expanding its product reach lately. The company led a $7 million investment in Nuggs, a new pea protein chicken nugget company. Nuggs planned to announce its retail launch and debut at Expo West, but that was canceled because of the pandemic.
McCain Foods isn't the only company changing its plans because of the pandemic. Coronavirus is creating trouble for companies looking to do product development, launches and marketing for various brands, especially with the cancellation of trade shows. This month, Kellogg announced this month it was delaying the first wave of the launch of its new plant-based Incogmeato brand to keep up with the demand for its core products.
As the pandemic continues to shift future plans, companies like McCain Foods will need to find ways to cost cut while times are rough and get these projects back on track as soon as the pandemic subsides.