Dave Geise, president and chief executive officer of Furman Foods in Northumberland, says that the company has prospered by exploiting its access to the huge consumer market in the eastern United States.

Pennsylvania's transportation system is well suited to serving domestic and international markets. The 43,000-mile state highway system is the fourth-largest in the United States, and Pennsylvania's rail system carries 16 percent of all rail cargo in the nation. Philadelphia, which is served by 25 steam lines that dock about 2,900 ships annually, is the largest freshwater port in the world, and Pittsburgh is the world's largest inland port, with 200 freight terminals lining the Ohio, Monongahela, and Allegheny rivers. From Erie, goods are shipped through the Great Lakes system. Pennsylvania also has nearly 800 airports, including six international facilities that ship more than 500,000 tons of cargo each year. In addition, the state has strong trucking and warehousing industries.

Caroline Ployer, marketing development specialist for the Governor's Action Team in the Pennsylvania Department of Commerce, points out that an emerging industry in the state centers on cold-storage and dry-storage warehousing and shipping. "It's like a domino effect," she says. "Companies locate here because of the specialized warehousing and distribution firms, which are willing to expand and upgrade their facilities and trucks to meet the demands of the processors." This even affects international trade. For example, the refrigerated tractor-trailers that serve the mushroom and vegetable industries in southeastern Pennsylvania also are a business magnet for South American fruit exporters. "Fruit from Chile can be shipped to any East Coast port, but most ports don't have specialized refrigerated trucking firms located nearby," Dunn says. "Since Philadelphia does, it's the port of entry for about half of the country's imported produce."

Even though Pennsylvania is a leader in food processing, it faces stiff competition nationwide. Pennsylvania's food processors are constantly searching for new market niches, increased efficiency, and new and improved products, especially value-added products. Value-added processing means taking raw materials–for instance, cocoa beans, sugar, and milk–and making a more valuable product, chocolate. To see how food processors add value to a final product, consider a loaf of bread. Raw materials from the farm make up about 4 percent of a loaf's value, which is equivalent to one slice of bread. Transportation costs account for another 4 percent, and the flour miller adds about 2 percent more. But the baker adds nearly 70 percent of the loaf's value. "Simply put, the more you process the raw material, the more jobs are created and retained," says Dunn.

Furman employees sort beans for quality. The company sells a variety of canned beans and vegetables, specializing in unconcentrated tomato products such as diced, stewed, and whole peeled tomatoes.

"The poultry industry has been very aggressive in creating value-added products," says Joe Moran, complex manager at Tyson Foods. "Just look at the wide range of chicken products available today. At our New Holland facility, we make chicken tenders and BK Broiler patties for Burger King, chicken croquettes and chicken patties for institutional markets, and a host of other products." The company processes about 67,200 chickens in an eight-hour shift–about 8,400 birds per hour–and plans to expand next year to a second shift.

While Pennsylvania has made a strong effort to capitalize on its value-added processing, Dunn believes that the state's processors must do more to survive over time. "I don't feel there are any companies that can rest on their laurels," he says. "The population is growing more slowly, there's a lot of competition for the food dollar, and rival firms are just as smart as you are. Complacent firms get driven out of business."

The first step in fighting complacency is finding a market niche that can fuel sales and product development. Furman Foods, Inc., a Northumberland-based company specializing in canned vegetables and tomato products, has thrived by exploiting its access to the huge consumer market in the East. "California produces more than 90 percent of the tomatoes consumed in the United States, but it costs too much for California companies to ship unconcen-trated products across the country," says Dave Geise, Furman's president and chief executive officer. "We can't compete on highly concentrated products like tomato paste, but we can compete by manufacturing canned diced tomatoes, stewed tomatoes, and peeled whole tomatoes." Furman's canned tomatoes, along with its snap beans and peas, are processed from August to October–the "fresh-pack season" for the industry. During the rest of the year, the company cans a variety of beans ranging from kidney beans to garbanzos, as well as tomato-based salsas, spaghetti sauces, and pizza sauces. In the past few years, Furman Foods has introduced other value-added products such as bean salads. "What differentiates us in the marketplace is our service to these niche markets," Geise says. "Orders that take California firms three to five weeks to fill, we can turn around in three to five days."