A greater emphasis on capital spending in recent years seems to have overtaken the historic wave of consolidation that has altered the face of the baking industry for decades. Recently, Kansas City-based Cypress Research’s analysis of the Economic Census of Manufacturing data indicated capital expenditures will increase over the long run.
Overall, census data showed that total investment rose steadily to $2.37 billion in 2012 compared with $1.86 billion in 2002, despite the impact of the financial crisis that made it nearly impossible for businesses to borrow money from 2008 to 2010. Looking forward, Cypress Research projected that capital spending may reach $3.03 billion in 2022 and approach $3.89 billion by 2032.
Marjorie Hellmer, Cypress Research president, noted those conservative projections are based on the average annual growth rate between 2002 and 2012 of 2.3% for machinery and equipment and 4.9% for buildings. But there is reason for greater optimism because bakers have better tools to determine and even justify the return on investment (R.O.I.) for equipment purchases, said Dave Van Laar, senior adviser to the American Bakers Association’s president and chief executive officer.
More sophisticated and user-friendly data management systems now allow operations to pinpoint bottlenecks, reduce downtime and garner higher yields that achieve a quicker R.O.I. than in the past. Companies also are investing to enhance food safety processes. Moreover, instead of eliminating jobs through automation, bakeries are reallocating valuable employees to more rewarding positions within their operations. These are three major reasons why many bakers are making plans to visit the International Baking Industry Exposition, which runs Sept. 7-11 in Las Vegas.