"At the very beginning of my relationship with Michigan Turkey Producers, they asked me what my vision would be for this company, and I spoke immediately about value-added products, and how I felt that our company needed to get there as quickly as we could,” said Dan Lennon, president and CEO, Michigan Turkey Producers (MTP), LLC.
“My background at Sara Lee (in sales and marketing) was heavily into value-added products, and I felt like the margins and the point of differentiation were in the value-added items,” Lennon told WATT PoultryUSA. Earlier this year MTP took a big step towards fulfilling Lennon’s vision of the company as a value-added supplier when the company began processing at its new cooked products plant in Wyoming, Mich. WATT PoultryUSA recently visited MTP to tour the company’s new facility.
MTP has traveled on a long and sometimes bumpy road on its way to getting into the cooked products business. When Sara Lee’s Bil Mar turkey operation announced that it was going to stop slaughtering turkeys at its Zeeland, Mich., plant in December of 1998, this left the contract and independent growers who supplied the plant without shackle time. These growers banded together and formed Michigan Turkey Producers Cooperative, but the co-op couldn’t raise enough money on its own to open a processing plant. So, with the help of outside investors, Michigan Turkey Producers, LLC, was formed.
MTP began processing and deboning heavy toms in March of 2000, and the company is projected to slaughter 171 million live pounds this year. “We feel we are one of the best commodity producers in the nation, but you are susceptible to the ups and downs of the markets,” Lennon said. “Unfortunately, the markets of 2003 are the best example of that, but having been through that, we knew that we had to get into cooking as quickly as we could. I think that all of us would have said that probably 2007 or 2008 was about the earliest that we could get there.” Lennon explained that the poor market conditions of 2003 changed in 2004, and MTP’s profitability changed with the markets. “Our profit performance in 2004 and 2005, and now into 2006, was such that we were rapidly retiring our debt and this gave us a great balance sheet.” The strong returns of these years meant that MTP was financially able to build a cooking plant. “We had a lot of banks lining up wanting to work with us,” he said.
Lennon says another factor in the timing of the decision to build the cooked products plant has been the value-added business that MTP had developed through co-packing arrangements. “The state of Michigan had issued a bid for cooked meats, and even though we didn’t have a cooked plant, we decided to try and get that business using a co-packing arrangement. We started out with several industry partners, who initially used their own meat and eventually moved to using our Michigan raised turkeys and our Michigan produced raw meats,” Lennon said. From 2004 through 2006, MTP’s total cooked business, including sales to the state of Michigan, has grown to be about 3 million pounds per year. Because of this business, “We didn’t have to start the plant out empty,” he said.
Co-packing Its Way To Cooking
“We started looking in earnest back in the fall of 2004 for a plant site. We identified about a half dozen locations where there was a structure for sale or new construction was available and, after going through all of the scenarios, we settled on this location which is only 2.1 miles from the original Wyoming, Mich., plant,” Lennon said. The building was a distribution facility and it already had coolers and freezers. The company purchased the facility in March of 2005 and tore up the floor and started from scratch laying out the processing areas. The plant is situated on 13 acres in an industrial park in Wyoming, which is adjacent to Grand Rapids. Like the slaughter plant, the cooked products plant has city water and sewer, and MTP does not have to do any wastewater treatment.
It took MTP about nine months to convert the facility for ready-to-eat product production, and the plant received its grant of inspection in late January of 2006. Including cooler and freezer space, the plant has 100,000 square feet available for processing, and the additional acreage around the plant can be used for any future expansions. As currently configured, the plant has two ovens and cooking capacity of around 10 million pounds per year. With additional ovens, the plant’s capacity will be around 50 million pounds annually. Lennon said that all of the ovens were not purchased right away, because the company wants to give itself flexibility to respond to customer needs as the business is built. He reports that MTP may outgrow its first two ovens soon. “We have already been discussing the next oven, sooner than we expected,” he said.
The cooked and raw sides of the plant are separated, each having its own air circulation systems and floor drains. Utilities come through the floor in metal couplings to minimize places where bacteria can grow and to reduce the number of overhead fixtures, which could become sources of airborne contamination. The ovens were placed over a stainless steel “pit” to allow for easy access to the underside of the ovens and make the area easy to clean. This is just one example of how cleanability was considered in all aspects of the plant’s design. Kevin Horner, manager of MTP’s cooked products plant, gives much of the design credit for the plant to Mike DeVries, MTP’s engineer. Great care was taken in the layout so that bacteria were not given anywhere to hide.
Electronic identification cards are needed to enter the plant, and raw-side employees and ready-to-eat side employees are only allowed access to their respective portion of the plant. Maintenance equipment, shops and employees are separate for the two sides of the plant. Employee uniforms are color coded for each side of the plant, and employee welfare facilities are also separate for the two sides of the plant.
All post-lethality exposed product, like product that is stripped and browned or naturally smoked, is either post-pasteurized and/or has inhibitory ingredients included in the product formulation. No Alternative III product is produced. The plant has the capability of producing a wide range of products, including ones that are naturally smoked, oil-browned or sliced. MTP markets under the Golden Legacy, Silver Legacy and Legacy brands, but the company is also looking for co-packing opportunities. MTP is co-packing for other turkey processors now.
Injection and tumbling of meat for further processing are done at the slaughter plant. This arrangement was started when MTP was having cooked products produced for the company by other processors. Ingredients in the brines and the chilling that can be done during tumbling inhibit microbial growth in the meat, so injecting and tumbling before shipment to the cooked plant help to preserve meat quality.
In addition to housing MTP’s cooked products plant, the company’s new facility also houses MTP’s corporate offices. The building came with 16,000 square feet of office space, and an observation hallway was added in the office area so that visitors can see both sides of the plant without having to suit up.
One of the positives of the Wyoming location for both of MTP’s plants is the availability of workers. MTP did not run any employment ads when the company opened the slaughter plant, but MTP still received 1,400 applications for 225 jobs. Lennon reports that MTP pays an average wage of just under $11 per hour in addition to an attractive benefits package. According to Lennon, both of the plants’ urban locations also help with employee attendance. “We have very good attendance; people don’t have to miss work because their car broke down or because they have to drive 30 miles in the snow. We are close by,” he said. Stability in the work force has also been a positive for MTP. Lennon reports that the slaughter plant has an annual turnover rate of only around 20 percent. Lower turnover means fewer new employees that need to be trained and this helps with MTP’s product quality coming out of the deboning room. Lennon said that the company can hand debone all of its product because the company can hire and retain the people that needed to make this possible. Hand deboning has helped MTP differentiate its meat from some other commodity meat suppliers.
MTP has used its unique live-bird handling systems to try and establish a point of differentiation from its competitors in the commodity meat arena. The company developed its own patented controlled atmosphere stunning (CAS) system, which was installed when the slaughter plant first opened. The CAS uses a mixture of carbon dioxide and ambient air to induce anoxia and stun the birds. Lennon said that the CAS gives MTP a yield benefit which they see at pack out, and the system improves the quality of the deboned meat because there are fewer blood spots. Visitors to the MTP plant frequently comment on the lower number of broken wings and bruises that they see on MTP birds versus at other plants, Lennon says. The toms are stunned while they are still in the cages, and the cages are then tilted up and the stunned birds slide out of the cage so that the hangers can place the birds’ feet in the shackles. MTP’s cages are not permanently attached to the trailer, as are most turkey cages. The cages are loaded at the farm when they are on the truck, but they are removed from the trailer when the birds are to be stunned and hung on the line. MTP is marketing its CAS system to the other turkey companies.
Recently, MTP incorporated another innovation into its live-bird handling practices. MTP is using Ciemme TA 1000 turkey loaders with the company’s two load-and-haul crews. Techno-Catch has collaborated with Ciemme on development of the loader. The loader has a conveyor which extends into the cage on the live-haul trailer, and this conveyor places the turkeys in the cage. With other turkey loaders, employees are responsible for physically moving turkeys from the end of the belt into the cages. By employing the TA 1000 and the CAS system, birds can be loaded at the farm and unloaded at the plant without being touched by human hands when the birds are conscious.
MTP’s cages do not have a center divider, so a truck can be loaded entirely from one side using the TA 1000. This eliminates the time that it takes to turn the truck around and move the loader back in position, which has to be done on each load if the truck is loaded on both sides as is the industry norm. Loading in this manner can save a half hour to an hour per shift for the eight-man crew, depending on the number of loads picked up. Some companies use two people at the top of the loader to put birds into the cages, and the new loader requires only one person to operate the controls to load the cages. When asked to comment on the new loader, Lennon said, “That is working very well. It is not cheap, but it definitely reduces the bird stress and loading damage.”
“We will probably value-add a large percentage of our commodity product, but we will always be a commodity provider as well. Even with breast meat, we have developed an excellent customer base and we appreciate and value the customers that we sell commodity meats to,” Lennon says.
MTP runs one “two-inspector” line, one shift per day, but the plant is a HIMP facility, and Lennon reports that the line can average as much as 46 birds per minute on a good day, rather than the NTIS maximum line speed of 41 birds per minute on a two-inspector line. Lennon says that MTP could expand slaughter over the longer term as sales for cooked product increase.
“While expansion in the turkey business is often what can lead to oversupply and poor prices, I think there will be a time that our consumption levels will go up for turkey. I think that the Wendy’s Frescata sandwich is a wonderful thing, because it gets turkey on another fast food menu. Now the Wendy’s sandwich joins the Market Fresh turkey sandwich from Arby’s and a variety of turkey offerings at Subway as quality turkey offerings from quick service chains. I think that’s quite a breakthrough.
“I see the flavor profiles broadening significantly and the oil-fried products we are seeing more and more of, and I think that we as an industry will grow rather than be stagnant in demand like we have been for the last five or six years.
“We will always be a commodity supplier, but we will value-add as much as we can. At such time that we get a majority of our product value-added, then we can expand our raw side as well and continue to provide our commodity customers good quality products. It has been a good business for us, because even though commodity prices were very poor for a couple of years they have been equally strong on the flip side these past few years. There is money to be made there if you know what you are doing and you do it well. You need to keep your costs in line and you need to grow a good bird, which our growers have been able to do consistently,” he said.