I wonder about the phrase 'capital intensive' ideas. If investors (finance and builders) don't prefer capital intensive business ideas, I mean majority don't want to get into it, (I am reading it a lot and facing in discussions at work... this phrase thrown around everywhere in strategy blogs, sessions) .. ... then who will get into it?
May be we are coming to bundling and unbundling of capital intensive businesses..
A majority of the major poultry packers now contract an immense amount of the portioning, grading, cooking and frying of products. Since the pandemic they are also having to contract the boning process and it is causing a lot of disruption in the cash markets and very costly for the packers.
If the labor issue can be reconciled, at least the boning would go back in-house. There are a lot of capital projects going on with regards to automation. The reason automation has not been used before is not cost but yield. So if you have to rely on increased automation and realize less yield, it would cause increased cost plus the need for additional pounds to accomplish the same finished goods. There is a huge short term need for fully cooked products. Several capital projects to fill that void within the next 24 months should take care of that need.
I wonder about the phrase 'capital intensive' ideas. If investors (finance and builders) don't prefer capital intensive business ideas, I mean majority don't want to get into it, (I am reading it a lot and facing in discussions at work... this phrase thrown around everywhere in strategy blogs, sessions) .. ... then who will get into it?
May be we are coming to bundling and unbundling of capital intensive businesses..
A majority of the major poultry packers now contract an immense amount of the portioning, grading, cooking and frying of products. Since the pandemic they are also having to contract the boning process and it is causing a lot of disruption in the cash markets and very costly for the packers.
Great point, David - do you see that trend sticking around post-pandemic or reversing?
If the labor issue can be reconciled, at least the boning would go back in-house. There are a lot of capital projects going on with regards to automation. The reason automation has not been used before is not cost but yield. So if you have to rely on increased automation and realize less yield, it would cause increased cost plus the need for additional pounds to accomplish the same finished goods. There is a huge short term need for fully cooked products. Several capital projects to fill that void within the next 24 months should take care of that need.
Awesome insights - thanks David!