Baking & Snack - February 2021 - 30

CAPITAL SPENDING SURVEY

" I am afraid that it might take longer than I wish,
but a lot depends on how fast they roll out the vaccine,
which will give confidence to people to get back to normal, " he said. " I think people want to get back to 'normal,' and there will be a lot of pent-up demand to 'get
out and do stuff.' "

Bigger, leaner operations
In 2021, 43% of those surveyed indicated that maintaining existing equipment and production lines remains the
main reason for equipment-related capital spending followed by upgrading (28%) or adding (27%) new lines.
Specifically, 96% plan to spend their 2021 capital budget on maintenance and replacement parts followed by
81% pointing to systems improvements such as enterprise resource planning platforms. This compares to 78%
of respondents in the 2017 study and 61% in 2013 that
reported investing for systems-related improvements.
" Digital transformation continues to be a conversation, and investment has stairstepped up over the last
several years, " Ms. Hellmer said.
She added that advances in technology such as wireless communications, data-gathering sensors, programmable controls, enhanced servo motors and material reporting systems now drive operational efficiency to new
levels. They're also part of an ongoing effort to reduce
the need for skilled labor as bakers push for a fully automated, lights-out bakery with fewer or no employees.
Ms. Hellmer added that 2021 investments in upgrading facilities (68% of those surveyed) and facility expansion (47%) are likely driven, in part, by coronavirus
(COVID-19) protocols.
" We've seen a lot of plants operating at capacity this
year, " she said. " They can't get product out fast enough if
they're selling into those busy channels. "
Among the top 2021 equipment needs, an overwhelming 85% of executives plan to invest in packaging
followed by material handling (66%) and mixing (63%).
Today, the greatest amount of labor is still required in
packaging departments, which have had to respond to
foodservice, in-store bakeries and other customers' requests that most products be individually wrapped or
packaged for food safety.
Finally, the pandemic also seems to be driving the
top budgetary goals for capital spending in 2021 that include increasing capacity for existing products (68% of
respondents); decreasing labor costs (65%); improving
product quality, consistency and accuracy (65%), and
improving food safety/sanitation (60%).
Investing for new products slipped in importance for
2021, which may not come as a surprise. In the United
States, total new food and beverage product launches
for the first 10 months of 2020 fell 14.9% compared to

30 Baking & Snack February 2021 / www.bakingbusiness.com

" A LOT DEPENDS ON HOW
FAST THEY ROLL OUT THE
VACCINE, WHICH WILL GIVE
CONFIDENCE TO PEOPLE TO
GET BACK TO NORMAL. "
Larry Marcucci, Alpha Baking Co.

HOW BAKERS PLAN
TO INVEST IN THEIR
OPERATIONS

In 2021, for your equipment-related capital
projects, about what percent is your company
spending in the following areas?
(Average % shown)

43% MAINTAINING EXISTING
EQUIPMENT/PRODUCTION LINES

28% UPGRADING EXISTING
EQUIPMENT/PRODUCTION LINES

29% ADDING NEW EQUIPMENT
the same period in 2019, according to the latest data by
Innova Market Insights.
" If anything, the trend toward SKU rationalization
seemed to gain ground as the year went on, so it appears
that will continue for a while, though it looks as if panic
buying may be something that we can avoid in 2021, " explained Tom Vierhile, vice president of strategic insights,
North America, for Innova. " However, we may see a
pretty good jump in new product activity in 2021 as some
launch efforts delayed from 2020 come to fruition. "
While optimism reigns for 2021, many more questions still linger. How soon will workers return to their
offices and how many will remain working from home?
How have consumer shopping patterns fundamentally
changed in the long run?
" I am very curious to see how much of the online
shopping sticks, " Mr. Marcucci said. " Some people are
already feeling manipulated by social media and may


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