Baking&Snack - February 2012 - 26

CAPITAL SPENDING SURVEY

one to two or three years — and they know what they’re spending it on,” Ms. Troxel Hellmer noted. “Companies are keeping an eye on their budgets much more so than in the past. Still, if they have it in their budgets, they’re going to spend it.”

No rose-tinted glasses
While the overall economy may be in the dumps in many parts of

the country, nearly everyone surveyed remained much more optimistic about the industry as a whole. In fact, a whopping 93% of respondents had a positive outlook for the industry in 2012, even higher than the 89% who said so last year. “They’re positive about the industry, but not necessarily the economy,” Ms. Troxel Hellmer said.

How do you describe your company’s financial position in today’s economy?
Firmly in the black: We’re seeing no ill effects.

15%

Financially sound: Our profits have taken a hit, but we’re on solid ground. Unstable: Our profits are turbulent these days. In the red: Our net income continues to trend downward.

70%

15%

Methodology targets wide sample

In addition to an online survey, Cypress Research Associates, Kansas City, MO, called many of the leading companies in the industry to urge them to participate in 19th Annual Capital Spending Survey. As a result, this year’s survey skewed toward a broader array of companies than previously, including a greater number of those with $500 million or more in sales as well as midrange and smaller businesses. Demographic information indicated only 30% of respondents worked for companies that had annual revenues of less than $25 million. Another 32% of survey respondents worked for companies that had $25 million to $99.9 million, 15% of them had $100 million to $499.9 million, and 23% had $500 million or more in annual sales. Of the plants represented by 2012 respondents, 80% produced fully baked or par-baked bread and buns; 23% salted snacks; 30% cakes or sweet goods; 33% cookies and crackers; 18% frozen dough; 13% tortillas; and 27% other products such as waffles, wafers, cereal bars, pizza and mixes.

That optimism is tempered by the business environment where rising costs persist and passing on pricing can be a tricky proposition. In fact, 70% of those surveyed stated that their companies are financially sound, but their profits took a hit during the past year. Another 15% said their companies are firmly in the black while 15% suggested their companies are unstable and that profits are turbulent at this time. From a macroeconomic perspective, the economy seems better, but it’s not without significant soft spots, said Scott Smith, president, Shearer’s Foods, Brewster, OH, one of several industry veterans interviewed by Cypress Research Associates for this report. “Consumer demand is weaker, and we have continued pressure from commodity prices,” he observed. “Equipment suppliers, though, are still busy, and people are buying for their plants. Companies are finding a way to keep growing their businesses. Our industry is generally better than many other parts of the economy. It’s not a lot better, but it’s not a lot worse either.” Alon Ozery, partner, Ozery Bakery, Toronto, ON, noted the overall economy seems to have gotten worse than in the past and will continue to falter. However, he added, the outlook isn’t dire for many food industry sectors. Although consumers aren’t eating out as much in food service establishments as in the past, they’re spending on competitively priced, value-added products in the retail channel. “Through the lens of the industry, it’s about the same as last year and will get better,” he said. John Anthony Orlando, vicepresident of operations, Orlando Baking Co., Cleveland, OH, also described the operating environment as a mixed bag. “Business is increasing, and ingredients [prices] are going up,” he said. “It’s improved

/ Baking & Snack / February 2012

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