Insider Media Limited

It goes without saying that construction industry has struggled over the past two years, with even industry giants like Rok and Connaught collapsing in recent months. But there is an area of construction which is coping better than most – and that’s in the design and build of food facilities.

Over the past few months, Clegg Food Projects has won and completed several large scale food projects around the UK.

Earlier this year, we won a multi-million pound contract from the bakery giant and longstanding Clegg Food Projects client Greggs to design and construct a cutting edge factory in Longbenton, Newscastle-upon-Tyne.

The north east factory was the latest in a long line of large-scale projects that Clegg has carried out for Greggs. The new Gosforth factory, close to the first ever Greggs shop in Gosforth High Street, supports the company’s rapid growth as it plans to expand its chain of 1,400 shops around the UK by a further 600 sites over the next few years.

This factory will be the 11th project we have carried out for Greggs in less than ten years.

Another regular client of ours is Northern Foods. We are working with the company at its pizza base factory in Finch Close, Nottingham, and another factory extension in Worksop. In Staffordshire, we have commenced work on a new factory for Adams Food Ingredients, part of the same group as Kerrygold for whom we completed the construction of a new factory for the production of cheese at the company’s site in Leek.

These projects are just part of an impressive list of work for food companies which are continuing to thrive during the downturn. So why is it that when construction firms are struggling in various sectors, that the food sector seems to be thriving?

The answer is, of course, that the food industry is reasonably recession-proof. It’s true that even in a recession, people still have to eat. So, as a specialist of design and construction in the food and drink manufacturing and storage sector, Clegg Food Projects has continued to win projects.

As a specialist in designing and building food factories, we know what has driven the activity - that there has been a change in eating habits. In the last recession, consumers cooked more – and home-baking became popular again.

But this recession has been different. Consumers are buying more convenience food, but not just because it is cost effective.

People may be re-evaluating their spending, but those who have jobs are still just as busy and are buying prepared foods which need less time to put together. Perhaps what we are seeing is the ‘stay at home’ culture. Rather than going out to a restaurant, consumers are staying in and buying a bit of indulgence.

Not surprisingly, people are wanting to eat comfort food in the downturn – which may also be something to do with the colder weather last winter and this. They are buying cheaper cuts of meat and seasonal produce.

During 2009 and early 2010, the change in eating habits was further affected by the reduced purchase of high value ready meals and greater focus on lower cost ‘discounter’ frozen food retailers. This created an even greater demand for ‘value’ from the retailers, placing pressure on manufacturers to cut costs and leading to a more ruthless approach to supplier relationships with retailers shopping around for the best deals.

This led to uncertainty for manufacturers which then caused a reduction in willingness to invest in capital on building fabric as they were unsure whether their customer would continue to buy from them.

An outcome of the recession was for rationalisation of food and drink manufacturing facilities with some capacity going out of the market as manufacturers tried to reduce their total costs.

Typical investment switched from large ‘new build’ projects to smaller extension, alterations and refurbishments – this still generated work opportunities but at a reduced investment value with projects in the £1m to £5m rather than £5m to £15m of recent years.

Since the beginning of 2010 this has changed slightly as confidence has grown slowly and the justifications for investment – such as improved efficiency, quality and food safety – remain relevant so manufacturers have been more seriously looking at making changes.

This has resulted in an upturn since mid-2010 with more capital projects starting than for the previous 18 months. Whilst the recovery looks to be continuing into early 2011, it is fragile and conditions are likely to continue to be challenging throughout 2011.

What is interesting about eating habits in a recession is that the consumer is creating the demand all along the supply chain. Retailers and manufacturers are listening to consumers.”

John Moxon, business development director of Clegg Food Projects