Stand amongst potato packers or processors and the conversation will invariably shift towards one topic: the constant, looming concern regarding labour. With domestic labour less willing to take on menial jobs and international labour increasingly limited, labour shortages are now costing packers and processors significant dollars.
Sizing, grading, packaging and palletizing potatoes is laborious, repetitive, tedious work. A generation ago, the same could be said of countless jobs. Now, however, automated machines have taken over the vast majority of monotonous, repetitive and/or heavy-lifting jobs in this country. Because Canadians’ expectations regarding employment have shifted dramatically, the menial labour jobs that remain are often difficult to staff.
To fill the gap, many companies turn to foreign workers. However, this labour pool is shrinking too.
Foreign labour, predominantly originating in Latin and South America, traditionally moves in a predictable annual migration. Workers start the season in the southern United States, then follow ripening crops into the Midwest and then north as work wains down south. Now, however, stringent U.S. labour reforms are slowing the flow of workers, effectively limiting the annual labour migration before it begins. Meanwhile, increasing volume at large U.S. production facilities means workers are staying longer-term at these jobs rather than following the labour tide.
These factors are impacting potato packers and processors’ access to temporary foreign labour. Increasingly, packers and processors are limiting production lines because they lack the manpower to run at full capacity.
In response, many potato packing companies are opting towards automation in their facilities. Automation also offers capacity increases, quality improvement, and better reliability.
As a general rule, a two to three year payback on a fresh potato production line equipment purchase is ideal; a three to five year return on investment (ROI) borders acceptable for most companies. Until recently, investments in automation often landed outside of a five year payback. However, today’s labour costs, together with the increasing availability of cost effective automation solutions, means even comparatively more expensive equipment generally achieves an acceptable ROI. Add in peripheral costs like capacity loss from labour shortages and the high and increasing cost of workers’ compensation insurance, and automation is suddenly much more cost effective.
At the end of the day, opting to automate should not focus on minimizing the number of people on a production line. Instead, companies should consider how they can best improve efficiency by optimizing labour and equipment. In many cases, that means reorganizing operating models to consolidate labour in certain areas in order to maximize both the effectiveness of available staff and the savings from equipment installation.