McIlvaine Coronavirus Market Ale

Millions of People in Food Manufacturing and Distribution will Need COVID Protection

Weld County Health Officials Shut Down the JBS plant in Colorado but Kentucky Plant Remains in Operation

Millions of People in Food Manufacturing and Distribution will Need COVID Protection

Twenty-one million people work in the U.S. food chain. Human labor is a central component at every step of the chain, which includes production, processing, distribution, retail, and service. Food workers include laborers in fields and fisheries (production), bakers and slaughterhouse workers (processing), drivers and warehouse workers (distribution), grocery store cashiers and stockers (retail), and restaurant servers, cooks, dishwashers, and street vendors (service). While some of these workers routinely interact with consumers, many of them—and their job site conditions—remain hidden, whether in remote agricultural fields, behind the closed doors of processing facilities, or in the back of restaurants and retail stores.

Animal slaughtering and processing employs over 500,000 in the U.S. of which there are 331,000 production workers.

Occupation	Number
First-Line Supervisors of Production and Operating Workers	16,430
Assemblers and Fabricators	3,430
Assemblers and Fabricators, All Other, Including Team Assemblers	3,350
Food Processing Workers	227,900
Butchers and Other Meat, Poultry, and Fish Processing Workers	196,350
Butchers and Meat Cutters	8,570
Meat, Poultry, and Fish Cutters and Trimmers	117,970
Slaughterers and Meat Packers	69,810
Miscellaneous Food Processing Workers	(8)
Food and Tobacco Roasting, Baking, and Drying Machine Operators and Tenders	2,290
Food Batchmakers	7,990
Food Cooking Machine Operators and Tenders	6,450

Weld County Health Officials Shut Down the JBS plant in Colorado but Kentucky Plant Remains in Operation

"While the Greeley beef facility is critical to the U.S. food supply and local producers, the continued spread of coronavirus in Weld County requires decisive action," said Andre Nogueira, the U.S. CEO of JBS: "As a leading member of this community, we believe we must do our part to support our local health professionals and first responders leading the fight against coronavirus."

The company closed its plant in Pennsylvania last week because management employees there were showing flu-like symptoms, according to a company spokesperson.

State and Weld County health departments said that reopening the plant depends on a testing program must include a symptom and exposure screening as well as ongoing testing and monitoring for employees that test negative.

About 3,400 people work at the meat packing plant, which is considered an essential business under Colorado’s stay-at-home order because it is part of the food supply chain. A variety of measures were taken at the plant to protect workers, said Tim Schellpeper, president of JBS’s Fed Beef division. He said the plant had increased cleaning crews and sanitation, screened workers for elevated temperatures, put up dividers on cafeteria tables so workers are separated into individual eating stations, provided some employees with face masks or shields, and encouraged social distancing by staggering breaks and increasing the space available for breaks, among other precautions.

The plant in Louisville, KY continues to operate with extensive sanitation procedures plus staggered breaks and other means for social distancing. Officials say they are also requiring employees to have their temperatures checked using hands-free thermometers and thermal imaging technology before entering the plant.

China is likely to restructure its meat production and distribution system by doing away with smaller producers in favor of large-scale animal farming once the coronavirus outbreak recedes, according to analysts at Jefferies. Producers of plant-based meat substitutes could benefit too, it said.

The government is approaching some meat importers and offering them the opportunity to set up state-of-the-art meat and animal processing factories on the mainland, the analysts said in the February 10 report, citing sources. It is also bringing in specialists in setting up meat processing production lines to advise on international best practices for food safety, the report added.

“We expect that in the wake of recent issues, the government will make further announcements ending, once and for all, the practice of butchering animals in cities/markets,” its Hong Kong-based analysts wrote. This will put protein production “in the hands of large corporations and SOEs.”

The thinking follows a series of health scares that have plagued the nation’s meat supply and security, with the latest coronavirus epidemic adding to recent outbreaks of African Swine Fever and Avian Flu. Five Chinese provinces have temporarily closed live poultry trading and slaughtering locations, according to Jefferies, while the swine fever has forced the government to cull most of its hog herd in 2019, stoking inflation.

“We believe that the current senior party officials do not want this to be seen as their legacy,” according to the Jefferies report.

Jefferies said large corporations and state-owned enterprises such as WH Group, Wens, Muyuan and COFCO, would be the chief beneficiaries of the plan. The shift is also likely to quicken the acceptance of plant-based protein, Jefferies said. That has a big implication for Hong Kong, which imported all of its fresh pork and 94 per cent of its fresh beef from mainland China.

Meat processing plants have been deemed essential and yet much of the production has been terminated due to the coronavirus. There is a need to introduce the latest and best mitigation technologies to help these plants resume operations.

McIlvaine Company has a program to help suppliers and purchasers select the best products and services for safe but cost effective operations.

The global meat market was slated to pass the trillion dollar sales level this year but revenues will be down due to the virus. Meat companies could justify spending 0.1% ($1 billion) to 1% ($10 billion) of the revenues annually to insure that workers are safe and production continues. An initial capital investment of $20 billion or more with a 20 year depreciation period can be justified.

The U.S. market exceeds $200 billion/yr justifying an initial investment of $4 billion and annual expenses of $200 million to $2 billion per year to provide an alternative to periodic lockdowns.

To put the potential into perspective with other opportunities, there are 3.8 million nurses in the U.S and 19 million worldwide. Twenty-one million people work in the U.S food chain or seven times the number of nurses.

Over 500,000 people work in the animal slaughtering and processing industry in the U.S. 331,000 are in production. The top 100 U.S. based meat processing companies employ more than 500,000 people but many are not in the plants. Nevertheless office workers will need to be protected as well.

Top 5 U.S. Based Meat Processing Companies
Company	Sales $ billions	Plants	Employees
JBS	38	44	73,000
Tyson	38	111	122,000
Cargill	20	36	28,000
SYSCO	16	17	1,200
Smithfield	15	50	60,000

These processors have been deemed essential and have continued to operate. However many of the plants are now temporarily closed due to COVID-19 outbreaks. Over 600 workers at the Smithfield plant in South Dakota have contracted the virus. Crowded locker and lunchrooms allowed widespread transmission.

The industry is facing a huge problem but has the opportunity to be proactive and not only allow safe working conditions for employees but to reduce risk of product contamination. An additional benefit is to improve product quality. Studies have shown that cleaner environments can result in the extension of pork shelf life by 12 days. Here are some of the mitigation technologies which can be employed.

Suppliers should keep in mind that there are many new technologies which will find widespread use. Nanofiber membranes offer higher efficiency and comfort in masks. Robots can monitor conditions as they move throughout the plant. Viruses have been proven to be transmitted by shoe soles. So there are now foot sanitizers.

Suppliers will not only have to deal with new technologies offered by their competitors but to international competition. China has decided that it must modernize and revamp the meat processing industry. It is offering incentives to develop improved and safer processing solutions.

The world needs to address the pandemic with a solution which is safe but allows near normal functioning of business and society. McIlvaine believes that using the latest cleanroom and hospital mitigation technologies this Distancing and Sheltering Alternative can be safely cost effective.

The extent to which it will be employed has major implications for the filter and mask markets. It could triple the media market and double the filter equipment sales.

The potential to change the mask market is even greater. In any case the market will be much larger. In addition meltblown media may be largely replaced with new washable and more efficient nanofiber membranes. New mask designs built around a permanent washable structure with replaceable filtration media inserts could capture market share.

The distancing and sheltering alternative involves the following technologies in combinations in which optimize the life quality costs. Each technology will be used to the extent that benefits outweigh the costs

Air Filters and Systems: Here are some factors which will determine whether the air filter market boost will be modest or very large

· The ability of viruses to travel long distances including through HVAC systems

· Willingness of governments to support the investment in filtration systems to address the problem

· Coordination in a proactive program which combines air filtration technology with personal protective equipment and operating practices

· Acceptance of a common metric to measure the life quality impacts as well as economic costs of alternative strategies (McIlvaine has prepared analyses based on Quality Enhanced Life Days)

· Education of governments, industries, and individuals relative to the science and impacts

Masks: The market for face masks will soar over the next few years. Suppliers need to continually seek answers to the following questions.

· What will be the role of nanofibers and other materials to compete with spunbond, meltblown laminates?

· What will be the market segmentation between do it yourself, medical masks, surgical masks, N95, N95 medical, elastomeric reusable, novel designs?

Associated Technologies: A number of associated technologies will shape the market.

Competition: A number of competitive factors will shape the market for the individual suppliers

· Regional demand fluctuation. The large surge of mask demand and production in China will have implications for the worldwide market

o The use of membranes in filters and masks is likely to greatly influence the markets.