Jan. 11, 2021

An Asian food production facility that could reach $500 million in construction value is coming to Sioux Falls, making it the largest project in state and city history.

CJ Foods USA Inc., a U.S.-based affiliate of South Korean global lifestyle company CJ CheilJedang, is building the 700,000-square-foot building, which will be located on 140 acres at Foundation Park in northwest Sioux Falls and will bring more than 600 jobs by 2025.

The plant will include automated state-of-the-art food production lines, a warehouse and distribution center, shipping and receiving docks, and office space.

All foods made at the production facility will be sold and distributed by CJ Foods and Schwan’s Co., a fellow U.S.-based affiliate of CJ Foods.

It’s expected to be the largest Asian food production facility in North America.

“We’re really excited,” said Dimitrios Smyrnios, CEO of Schwan’s and executive chairman of CJCJ Food, Americas, an organization that is aligning CJ CheilJedang’s food business strategy, companies and operations in North America.

“We have 21 plants from California to New Jersey, Texas to Minnesota. This Asian plant we’re talking about was really the next step.”

The move places the plant centrally within the country, but other factors also went into the decision, Smyrnios said.

“All components are important. Workforce is important. Business climate is important. Logistics costs are important. The ability to have nearby ingredients is important … so all components come into play. And when you build this kind of a facility, the size of this facility, you do get support, and we need that support. All the officials in South Dakota were very helpful and very supporting of a plant that goes into South Dakota. I can’t underscore how much we appreciate that support.”

The future site of CJ Foods at Foundation Park.

The Governor’s Office of Economic Development, partnering with the governor’s office, has worked on the deal for “a very long time” and navigated “an extremely competitive process,” Gov. Kristi Noem said.

“There were several other states trying very hard to get this investment in their state, and I think the reason we came out on top was the package we put together and our people and our willingness to work with them. It’s not just about the land or the tax incentives or the low regulatory environment. They care extensively about the people they will be in partnership with, and we do that better than anyone.”

While the state is still finalizing its incentive package for the company, it does not go beyond the scope of what any company making a similar investment would receive, she confirmed.

“This is going to be great,” Noem said. “I think this project is so important and significant to South Dakota because it will be the world’s most advanced food production facility … but also because of the company. The company and the people are extremely familiar with our state, and we’re excited to have them here.”

While the company is a humble one, Smyrnios said, he acknowledged “undeniably this will be a world-class plant.”

CJ CheilJedang acquired Minnesota-based Schwan’s in 2019 — its subsidiaries that focus on foods sold in retail and grocery channels as well as food-service venues and Schwan’s manufacturing and logistics operations, and various professional and administrative services.

The Schwan family has retained minority ownership in the businesses acquired by CJ Foods. It continues to be the sole owner of the legacy home delivery business, Cygnus Home Service, the legacy home-delivery business launched by Marvin Schwan in 1952.

“CJ and Schwan’s pride themselves on having a great culture,” Smyrnios said. “We want to be first. We want to be the best. We want to be different, and we want to grow. That growth means helping the community, helping our people, helping our customers and consumers.”

The company values integrity, passion, creativity and respect, he said.

“Those are easy words to say on a piece of paper, but it takes a lot of leadership and focus to have that come to life,” he said. “We’re very proud of the culture CJ (and) Schwan’s has, and we think it’s a competitive advantage and look forward to sharing that culture.”

CJ CheilJeDang has been a leader in the Korean food industry for the past 60 years. It was established in 1953 as a food manufacturing company with the Samsung Corp. and spun off in 1993.

The U.S. CJ business, which opened in 1978, has Asian food operations in California, Ohio, New Jersey and New York. Schwan’s Co. operates two in Texas.

The Asian category is already a more than $38 billion industry in the U.S. and positioned for further growth.

Food industry consulting and research firm Technomic has reported that 23 percent of global food consumers say they are preparing more global flavors at home than two years ago. Among millennials, the rate was 39 percent.

While CJ Foods isn’t announcing yet which products will be made in Sioux Falls, its brands include Annie Chun’s, Bibigo, Kahiki, Minh and Pagoda.

The product line is an extensive array of packaged food products including dumplings, noodles and sauces.

CJ CheilJedang already has revamped its factories in South Korea for a post-pandemic age. Here’s a look at how it envisions the future of manufacturing, as reported by Bloomberg Businessweek.

Further investments in the Sioux Falls facility’s capabilities will be made as demand increases over the next several years, the company said.

“When I went to South Korea, I was pretty blown away, and I’ve been in the food business 35 years,” Smyrnios said.

“The technology is enticing, but frankly the quality of the products produced with the ingredients we’re talking about is very consumer-centric. I can assure you you’re going to have great-quality Asian food produced in this plant. A lot of plants have great technology, there’s a wow factor, but the consumer wants great-tasting products with great ingredients as close to homemade as possible.”

The plan is to hold a spring groundbreaking, when more details about the project, including the products and brands will be released. An updated construction time frame also will be provided at that point.

“Our team is excited for this opportunity to work with CJ Foods USA on their recent announcement and the selection of Sioux Falls for a future investment,” Mayor Paul TenHaken said in a statement.

“Diversification of our regional economy is important to defining our strong future. CJ Foods’ commitment to investing in Sioux Falls will add more than 600 full-time, quality jobs to our community and is yet another indication of our city’s strong outlook for 2021 and beyond. We look forward to further discussions where we can work through any details of this investment directly with the company.”

The company expects to close on the land in April. It’s property north of where Amazon is building that the Sioux Falls Development Foundation had identified as a “mega site” for a company requiring potentially hundreds of acres. CJ Foods is taking more than one-third of it to start. There are 230 acres left at the property.

“We are very excited to continue working with them to finalize their project here in Sioux Falls,” said Bob Mundt, president and CEO of the Sioux Falls Development Foundation.

“This is the latest example of the vision that elected and community leaders had when they created Foundation Park in 2016 and the concept of mega site for large-scale development.”

Design is expected to take about a year, along with preparing the property at Foundation Park, with building construction following in 2022.

“There’s quite a bit of work between now and early 2022 for us to do and then start from there with all the permits,” said Tony Puri, executive vice president of logistics and strategic capital.

“We will definitely leverage the local labor contractors as much as possible. We will coordinate it through an engineering and construction firm, but local is always best because they know the area, the materials and the land.”

A general contractor has not been selected yet.

“We will definitely give the local community and contractors an opportunity to be proud of what they create,” Smyrnios said.

It will be a 24-hour operation and will begin hiring well ahead of when the first products are produced, company leaders said.

One of the factors that contributed to their decision to locate in Sioux Falls was the projected availability of a skilled workforce.

A state-of-the-art plant such as this “requires us to have employees with a high level of skills,” Puri said. “People that are comfortable with computers, people that are comfortable with automation controls, so it will be a lot more on the technical side than we would normally see in a food plant. That’s the kind of workforce and structure we’re looking at.”

The company studied both workforce availability and area technical schools, Smyrnios said.

“We talked about South Dakota’s investment from a technical standpoint. It’s very impressive,” he said. “It’s great that South Dakota is supporting that, and we want to take advantage of that. The technical expertise is what we’re going to need in this kind of plant, and the workforce study we’ve done supports that we can find great talent. It’s extremely important … from a culture and work-ethic standpoint.”

The technical schools “are very impressive, in addition to our own in-house training,” Puri said. “We can supplement that. We have a little runway and time to start these programs in conjunction with the South Dakota officials and the technical schools.”

Other experts also will relocate to the state, they said.

“One of the first questions we have to answer is … will the workforce be available and how do we get them trained with the skills they need to fill these positions,” Noem said. “We had those discussions with CJ Foods and Dimitrios quite extensively and reassured them we have the training facilities, we have the technical colleges, and we have the people and the work ethic that will meet all their needs.”

This latest announcement combined with Amazon’s more than $200 million investment in Sioux Falls and other deals in process will build on each other, she predicted.

“This is just the beginning,” Noem said. “When we have a company like this choose South Dakota, it sends a message to the rest of the country and other companies that this is a place people are choosing for reasons that are important to these companies. We have the people, we have the structure, we have the environment that can help their investment pay off for many years to come. We look forward to 2021 being filled with many more announcements.”