Baking&Snack - February 2012 - 41

TRENDS

FORMULATION

EQUIPMENT

OPERATIONS

SPECIAL REPORT

Bakery in Bowling Green, KY, according to Dave Hipenbecker, director, network strategy and project engineering for the Cincinnati, OH-based company. Kroger also expanded and upgraded its bread production capabilities in Bowling Green and elsewhere during the past couple of years. Since joining Kroger four years ago, Mr. Hipenbecker noted, capital spending has remained steady with the company following a fairly disciplined and straightforward strategy. “There are two buckets that are evenly split — where we have capacity constraints and where we have productivity opportunities,” he said. “That’s what drives our investments.” In 2012, Kroger plans to focus on productivity. “We’re continuing to drive costs out of the manufacturing process,” he explained. “[Investment is] pretty evenly split between equipment and infrastructure. As plants get older, we have to make updates. We’re talking about replacing roofs and air and ammonia compressors, and looking at what efficiencies we can get going forward. We’re looking at parking lot improvements. We’re tearing out outdated control systems and replacing them with new ones.” Bill Quigg, president, Richmond Baking, Richmond, IN, noted that the private label cookie producer is making a significant investment to boost capacity in 2012. “Ancillary goals are efficiency and labor usage, but they’re not the main drivers,” he observed. Because it contract manufactures cookies and other products, investments by Richmond Baking tends to be in reaction to customers’ requests. “I can’t tell yet what will drive us in the future. Our position in the market isn’t such that we can do multiyear plans,” Mr. Quigg explained. “We have to be flexible to our customers’ needs. We

are prepared financially, but how we deploy those assets is no more planned out than 12 months. This is due to our positioning in the market more than anything.” In the end, when it comes to capital spending, bakers and snack producers are reinventing them-

selves, according to our experts. They’re re-examining how to best invest in their businesses, and they’re focusing not only on returns on investments but also on how those investments will allow them to respond to changing market trends in the future.

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