Research suggests forthcoming upswing in capital spending

by Dan Malovany
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Since the Great Recession, bakers have been singing a familiar tune — one of cautious optimism — when it comes to predicting capital spending. Even baking and snack executives who were privately bullish on their own companies’ futures felt compelled to publicly temper their enthusiasm in Baking & Snack’s annual capital spending reports over the last few years.

This year, however, a dozen bakers and snack producers interviewed recently by Kansas City-based Cypress Research Associates crooned a different song, said Marjorie Troxel Hellmer, president of Cypress.

“The tone this year is decidedly different,” she observed. “In past years, we had some equivocation. Many executives held their planning close to the vest. This year, we heard steady comments from various sizes of companies, ‘We’re spending, and we’re going to continue to keep on spending for the next three years.’”

That’s certainly music to the ears of many industry observers who have gotten used to hearing a chorus of consternation from this fiscally conservative industry. When it comes to capital spending, most bakers and snack manufacturers typically seek returns of two years or less in their budgets.

For 2015, Ms. Troxel Hellmer said, the tempo is substantially more upbeat, with several experts expressing that they plan to expand their facilities — or build new ones — if they’re unable to meet their customers’ demands within their current confines.

“The main thing we heard is an upswing in spending,” she said. “We’re going to see modest increases year-after-year in capital investments for the next three years.”

Check out more on capital spending in Baking & Snack’s exclusive report in its February issue.
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