Cargill announced Tuesday that it is investing $48 million in a new automated order distribution system and building at its giant Dodge City beef-packing plant.
Construction will start in the fourth quarter and be operational by spring 2015. The new system will allow the plant to move from holding 25,000 boxes of beef at the plant to 155,000 boxes.
The system will be housed in a refrigerated 62,000-square-foot building specially built to house it. The computer-controlled system will add efficiency and capacity while cutting mistakes, injuries and operating costs, the company said. Each box of beef can also be traced and kept track of, important in a business with a highly perishable product.
The new system replaces the distribution system used at the plant since the 1980s.
The company has invested more than $760 million in its plants in Schuyler, Neb.; Friona, Texas; and High River, Alberta, Canada, in the past decade.
Cargill’s Dodge City beef-processing facility opened in 1979, is on 1,400 acres, employs nearly 2,700 people and harvests 6,000 head of cattle daily.
New distribution equipment is needed because the complexity of products has grown dramatically in the past few decades, said company spokesman Mike Martin. There are more brands, more products and more cuts processed specifically for particular customers, domestic and foreign.
Even as Cargill is investing heavily in its plants, it closed one in Plainview, Texas, because the U.S. cattle herd is shrinking. The number of domestic cattle is now at a six- or seven-decade low as consumer tastes change, ranchers retire and aren’t replaced and because the recent drought has drastically raised the cost of raising cattle. Some of that decline in cattle numbers is offset by an increase in the size of cattle.
Improving efficiency at a time when the industry is trying to shed capacity isn’t contradictory, said Darrell Peel, a professor at Oklahoma State University.
Shedding unneeded capacity is a cost issue. Delivering exactly the right order at the right time in the right way to customers is more of a service issue as well as a cost issue. Both help the company remain strong in a tough business, he said.
“It’s getting leaner and meaner,” he said. “In one sense, you’re dealing with the excess capacity and the need for the remaining facilities to be state of the art.”