The ancient Greek philosopher Heraclitus is quoted as saying, “The only constant is change.” While flour, yeast, water and salt are still used to make bread like they were in Heraclitus’ time, change — and the ever-present need to change — is a constant challenge to the baking industry.
When it comes to making the investments necessary to compete and survive in this industry, bakers must address many trends. They need to apply flexibility and adaptability in facility planning and design to respond to rapid changes. Understanding market fluctuations and regulatory issues is critical to the long-term value of a new project.
For bakers competing for space in the bread aisle, there has been a significant shift away from the mega plants to smaller regional plants with one to three product lines. This shift is a result of many changes, including labor, cost of fuel, the need to be closer to the market, and asset diversification. Smaller plants allow for market regionalization and, therefore, greater visibility for management as to what is happening locally. They can respond to changes before demands pass them by; they can be more nimble.
With regional plants, the planning process involves making a number of value-based decisions, including location, level of automation, desirability of sustainable design features and the strategy to pursue some form of certification.
Additionally, within this planning process, it is imperative for bakers to take the increasing burden of regulatory oversight into consideration
Location and logistics
Strategic site location decisions can be vital to the successful outcome of a new facility. For bakers serving a large multi-state region from one facility, many factors affect the evaluation of competing sites.
States compete for business with incentives on labor, development costs, tax abatements and utility discounts. It is smart to optimize the incentive packages from competing states and communities, but it rarely is a good idea to base a plant location decision solely on incentives. Logistics play a huge role.
Beyond fuel prices, transportation costs have been affected by many factors in recent years. Increases in tolls, hours of operation regulations and availability of drivers and equipment have all raised trucking costs.
Automating for stability
It used to be that bakeries had stable workforces with employees who knew the equipment and systems used in their plant almost intuitively. Changes in the labor market have changed that workforce stability.
Automation fills the gap in a way that provides bakers with more consistent and reliable processes. It also provides data feedback to correct variables before they affect product quality.
And while automation can reduce headcount, it places a greater demand on a technologically proficient workforce. In the past few years, the Baking Industry Forum, sponsored by BEMA, has focused its work on issues surrounding automation, including best practices for training, factory acceptance testing and establishing a common glossary of terms and icons for human-machine interface (HMI) panels.
Designing for sustainability
Sustainable design, green building, or whatever one calls it, is here to stay. Originally lead by Wal-Mart, retailers brought sustainability to critical mass by demanding suppliers pay more attention to the precepts of sustainable design.
But designing for sustainability is not only about reducing energy and the carbon footprint of a facility. It is just as important to provide a healthy and safe environment for the people working in the building. For example, a bakery in a hot climate may get sustainable design points for providing spot cooling with conditioned air in work zones within the bake shop; a facility in a northern climate with the same design is less likely to get credit.
The main metric for sustainability in the US is Leadership in Energy and Environmental Design (LEED) as established by the US Green Building Council (USGBC). In recent years, the USGBC rating system has made it more difficult for process operations to achieve LEED certification, as the processes themselves have to be included in the analysis.
Nonetheless, certification is attainable through good design and innovative solutions that ensure the work environment is comfortable for employees and the impact on the environment is beneficial. Points are awarded for such solutions that also create opportunities for the industry to improve the environment.
Proper planning recommendations
Bakers who address these changes while planning a new or expanded project can benefit from outside help. Site location consultants with significant food industry experience will likely provide a substantial ROI because they understand the markets, can complete much of the upfront legwork on a confidential basis and can help bakers avoid the pitfalls of incentive negotiations. For confidential projects, working with a third-party specialist can help protect the project until it’s time to buy the land.
Vendors are always ready to assist in adapting their automation to suit a bakery’s needs. Getting them involved early and asking the right questions are vital to an effective process. To get a clear idea of the most challenging topics and what bakers and vendors are facing, check out the Bakery Industry Forum at www.bema.org for white papers on collaborative research efforts since 2007.
Sustainable design is good design, and pursuing official certification is up to that bakery. It does not always cost more, and it provides a better work environment for associates and may result in less turnover and better productivity.
The trends in capital investment for new or expanded facilities are all about continuous improvement in quality, profitability and the environment. And after all — isn’t that what we all strive for?
Editor’s Note: Mike Pierce is the president of The Austin Co., Cleveland, OH. Mr. Pierce is a member of ASB, BEMA, ABA and the Baking Industry Forum.