Baking & Snack - February 2008 - 48

RESEARCH & STATISTICS

Allocation of 2008 Capital Spending Budget
52%

New processing/packaging equipment
Maintenance & replacement parts

12%

Upgrade existing facilities

Systems improvements

New buildings

Warehousing/distribution

4%
7%

Other

equipment purchases will be high on the priority list. Of
these purchases, processing equipment was noted by 30%
compared with packaging equipment at 22%. Just fewer
than 30% of respondents noted infrastructure projects
planned for this year. These included maintenance and
replacement parts, upgrades to facilities and system improvements, among similar tasks. The remaining 12% of
specific allocation areas will include new buildings and
warehouse improvements, according to the survey.
With packaging there are a lot of automation possibilities to reduce head count through robotics, dolly loading and out to the shipping dock, according to the industry executives. Studies show that spending $1 million
in packaging automation could replace as many as five
people. Spend the same in the bake shop and you may
only be able to remove one person.
BakeryCorp will focus its capital project in other areas.
"We're going to spend more money in infrastructure upgrades," Mr. Lacal said. "We've updated our production
lines and equipment, and now it is time to support the
plant itself. There is a lot of waste in air lines, compressor rooms, boilers and heat loads from oven vents. Oven
burners need to be tuned, and we need to look into replacing motors to get better efficiency. We're going back to the
basics and looking at what's supporting the production."
Increase production speed

77%

Decrease labor costs

68%

Improve product quality/
consistency

68%

Improve process capability

64%

Note: Percent rated "6" or "7" on 7-point
scale of importance, "7" being highest

Labor productivity continued to be a priority for Pepperidge Farm. "The easy projects were done years ago,"
Mr. Watson said. "Now we are looking to tackle the more
capital-intensive solutions or technically challenging
projects to get that next incremental productivity improvement." He also noted that new technologies that
were more difficult to integrate years ago are more cost
effective today and can be implemented in a quicker fashion. "There's not as much work to get them installed and
working as even four years ago."
WHY. Everyone knows the obvious reasons bakeries
spend capital funds. We took the questioning one step
further this year, asking respondents the most influential impacts on capital spending during the past couple
years and looking ahead to this year. Several choices were
offered, and space was left open for write-in answers.
Interestingly, external forces were more acute than
internal pressures. Survey respondents first considered
the past two years and most often cited new health/
wellness products followed by commodity prices. According to respondents, those priorities will experience a
significant turnabout with commodity prices taking center stage with regard to impacting capital spending this
year. However, both responses still ranked at the top.
Executives noted increased spending in the following product areas: portion control calorie packs in sweet
goods and crackers; premium wheat and white breads;
products without as many preservatives or additives
- "cleaner" ingredient statements; artisan products;
healthy products; whole-grain products including fruit
and breakfast bars; and specialty items with antioxidant
value or "heart healthy."
"A lot of what we're looking at is new line extensions
- whole grains, healthier ingredients." added Mr. Watson. "We're attempting to get something different out
there. This is true on the snack side, too - adding whole
grain into existing products."
Mr. Van Laar agreed. "Research is rampant right now on
product development into whole grains and specialty items
with antioxidant value or heart healthy," he said. "We've
tested more than 20 ingredients that make health claims

Reduce maintenance/
repair costs

52%

Develop and produce
new products

48%

Create more environmentally
responsible/sustainable
operations
42%
Improve food safety/
plant security

42%

Track/trace origins of raw
ingredients/finished product

35%

Importance of 2008 Capital Improvements Goals
BAKING & SNACK / February 2008

Baking & Snack - February 2008

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