Issue Spring 13
Global companies are local in nature. An organization with branches in the United States, Europe and China cannot run a one-size-fits-all operation. Government regulations, cultural nuances and talent pool can all affect how a company is run. In the food industry, that list of considerations also includes the consumers’ taste buds.
“We are positioned very well in that we have a global network, literally with people from our organization in offices or plants all over the world,” says David McDonald, president of OSI Group. “We have a global operation which means we have scale in size but we have local management teams that are very sensitive and very understanding of the local cultures and tastes. It’s the power of global scale and efficiency along with local solutions.”
Headquartered in Aurora, Ill., OSI Group is a global leader in supplying value-added protein items, such as sausage links and beef patties. OSI Group also supplies items such as sandwiches and pizza, to leading foodservice and retail brands. The privately held corporation operates more than 50 facilities in 17 countries and it is currently employing its global-efficiency, local-solution strategy to expand its presence in China.
OSI has operated in China for the past 20 years and as the country’s economy has grown, OSI’s presence has grown with it. It operates eight factories and with two new facilities underway OSI will be largest poultry producer in the nation. Last September, the company broke ground on a new mega-plant for further processing in Henan province. That same month, it announced a joint-venture agreement in Zhoukou with DOYOO Group to create DaOSI, OSI’s third fully vertically integrated poultry operation in the country. OSI’s China operations serve clients such as McDonald’s, Yum, Starbucks, Saizeriya, Papa John’s, Burger King and Subway.
“China is a real focus of ours for all the reasons we read about every day,” McDonald says. “It continues to be the largest growing consumer market in the world and so it has the power of population, but that population is growing more affluent, as well. We have some great customers in China who are experiencing tremendous growth and we want to keep up with them.”
Including its recent endeavors in China, last year alone¬ OSI launched, expanded or announced plans for seven new processing and production facilities around the globe. In September, OSI broke ground on a beef-processing facility in Poland that will replace an existing operation and could bolster the plant’s staff by 30 percent. Last January, the company announced the opening of a new modern feed mill in Shandong Province with an annual capacity of 600,000 metric tons, making it one of China’s largest feed mills in operation. A new frozen foods processing plant in Madanapalle, India, which initially will focus on the manufacturing of vegetable products for quick-service restaurants and retail, came online last March.
Last June, OSI announced a new plant in Geneva, Ill., producing branded and private-label frozen entrées. The plant is attached to a facility owned by refrigerated warehouse and distribution services company Millard. Also, OSI Food Solutions Hungary added a high-capacity production line and large cold storage area to its existing building in Bábolna. The $25 million addition more than tripled the production capacity of quality processed chicken products to 22,000 tons annually.
“We have years where we have opened more plants and years where we have opened less, but we certainly have an appetite for growth,” McDonald says. “Our chairman, Sheldon Lavin, has always pushed the organization and therefore there is an energy in the organization to grow and to become more significant and offer more to our customers.”
McDonald explains that offering more to its customers is not limited to production capacity – it includes product development, as well. OSI Group partners with its clients on the products they need to grow their business and in turn partners with its own suppliers to achieve that outcome. As consumers become more demanding and sophisticated in their food choices – natural and organic, premium versus affordable, healthy but tasty – McDonald says the partnering process to give the consumers exactly what they want has become even more necessary.
OSI Group regularly engages equipment manufacturers to develop processes that aid in food safety and quality, such as machines with built-in X-ray equipment that detects foreign particles. It also plays a more active role with its agriculture suppliers, monitoring how products are grown.
“We engage with customers early on and discuss with them the solutions they are trying to provide or the concepts that they want to pursue,” McDonald explains.
“That early engagement is valuable to us and that’s when we become the most valuable to them. We have a great deal of technical resources and a great deal of people who understand how to take those concepts and turn them into actual products.”