A short-term outlook isn’t necessarily a bad thing. Rather, it reflects the risk-averse philosophy that many baking and snack companies adopted over the years since the Great Recession decimated the economy — and capital investment, in many cases — from 2008 through 2010.
“If you look at our previous surveys and what companies are projecting from a capital spending standpoint in 2014, the data show that it’s been all positive since 2011,” Marjorie Troxel Hellmer, president of Kansas City, MO-based Cypress Research Associates, which conducted Baking & Snack’s 21st Annual Capital Spending Survey.
“The movement can be best described as ‘slow and steady,’ but that reflects positively on the industry,” she added. “It’s saying the baking industry is doing well. Investments are being made where they need to be made. It’s just a new way of approaching investment. There’s not that cavalier attitude that there may have been in the past.”
The strength of the industry can be seen in the survey question that asks executives to describe their company’s financial position.
This year, 41% noted their businesses are “firmly in the black,” compared with 20% of respondents in 2012 and only 15% in 2011. Likewise, 57% in 2013 said their companies indicated “Our profits have taken a hit, but we’re on solid ground,” compared with 70% in both 2012 and 2011. Moreover, only 2% reported their financial condition as “Unstable: Our profits are turbulent these days,” down from 10% in the 2012 survey and 15% in 2011.
“Our industry executives in the data are telling us they’ve moved through the financial instability that resulted initially from the recession,” Ms. Troxel Hellmer said. “More companies are ‘firmly in the black’ than in the previous two years. They’re feeling no ill effects from the economy, and far, far fewer reported financial instability than in the previous two years.”