March 1, 2005
By Andy Hanacek
How does a company focused on success and quality grow sales at an average annual rate of 10% and still find ways to improve the business?
Utz Quality Foods, Inc., Snack Food & Wholesale Bakery’s 2005 “Snack Manufacturer of the Year,” seems to have it figured out. By streamlining its operations, dedicating each of its four Hanover, Pa.-based plants to a specific category of products, Utz has come through tough times in the salted snack food industry virtually unscathed.
Many years of double-digit sales growth enjoyed by Utz was finally catching up to the company’s operations, and management believed there was a more efficient way of doing things, explains Jack Corrierre, Utz senior vice president and general manager.
“As we were expanding, we’d put one line — for instance, an extruded line — in the pretzel plant, because that seemed like the right place to go,” he says. “The next thing you know, we needed a second line. And just as we found a way to wiggle that in there, somebody said, ‘We really ought to expand this line.’”
With ingredients and materials being shipped all over town to the three different plants Utz then operated, putting similar lines together in dedicated plants made plenty of sense, Corriere adds.
Streamlining the physical aspect by building a fourth, 200,000-sq.-ft. plant to house six new and relocated lines wasn’t the only monumental task, says Terry Schmoldt, Utz’s vice president of manufacturing. An evolution of strategy also took hold. In 1998, the last time Utz won “Snack Manufacturer of the Year,” it had in place a five-year game plan.
“We took a look at it and said, ‘OK, a five-year gameplan is great; that can be more or less your master plan,’” Schmoldt explains. “But it needs to be updated continuously as things evolve to take opportunities as they come. Sales has to jump on them, and generally, we have to react and make sure we can support each new initiative.”
Of course, supporting the rest of the company has been much easier lately, now that operations can run more smoothly and efficiently in dedicated facilities.
And the streamlining project isn’t quite finished, either, Schmoldt says. Utz is planning to move two tortilla-chip lines out of its main facility on High Street to the new Kindig Lane plant to make room for two new potato chip lines, which Utz hopes to install in the next two to four years.
Currently, on High Street, six continuous potato-chip lines, six kettle-chip fryers and two tortilla-chip lines take up residence. During SF&WB’s visit, continuous fryers on five lines made potato chips with cottonseed oil while another cranked out potato chips made with Olean. Six kettles made peanut-oil Kettle Classics chips, and tortilla rounds were being manufactured on the tortilla-chip lines.
Over the years, the overall operation hasn’t changed all that much, with production on the continuous lines and the tortilla-chip lines being pretty standard for the industry.
Both products travel up incline conveyors to the packaging room, where they are seasoned, and form/fill/seal machines weigh and bag them. Case-packing is semi-automated at Utz, something it has maintained to keep its flexibility, says Schmoldt. During our visit, in fact, flexibility was on display, as employees were putting together Utz variety sacks — jumbo polybags consisting of 42 1-oz. bags of different snacks, including chips, pretzels, cheese curls and party mix.
Of course, Utz has set itself up for the future possibility that things such as the packaging operations, which are currently only semi-automated, could become fully automated. But thus far, in all their analyses of automating the process, Utz hasn’t been satisfied with the end result.
“One of the hardest things to figure out is how do you keep your flexibility with automation?” Schmoldt explains. “Our company is set up with flexibility being one of the top priorities, and we’ve got to [stay] flexible. … [Automation] gives us constraints; we couldn’t turn on a dime.”
The flexibility to turn on a dime, the dedicated workforce and the strong distribution network give Utz the ability to churn out and deliver product at high rates. But plant employees aren’t simply the overworked, overlooked brawn behind the success. They are involved in the day-to-day ideas and innovations of the company, having the ability to directly communicate their complaints and comments to the rest of the operation.
Plant operators even have a voice in determining the fate of new products, Schmoldt says.
“Even in the marketing subcommittees, there’s a representative from manufacturing that sits in, and there’s a representative from purchasing that sits in,” he says. “Sometimes you feel ‘meeting-ed’ to death, but it works for us. Because the communication and details are taken care of, … we don’t slip very often.”
With three of four plants now focused on a specific category of salted snacks, Utz can go about expanding its operations.
Currently, the Broadway plant houses nine pretzel lines, each of which runs 24 hours, seven days a week during peak season. At off-peak times only six to seven lines run 24/7.
Flour is held in two 86,000-lb. silos at the Broadway plant. It is sent through a flour system that leads to the horizontal mixers. Each mixer can handle 500 lbs. of pretzel dough. During SF&WB’s visit, pretzel nuggets, pretzel rods and pretzel twists were being manufactured. When the Utz Select Gourmet internally flavored pretzels are being produced, the flavoring is mixed directly into the dough batches.
Extruders spread the dough into long, thin strands, 54 across for the nuggets. A belt-wide guillotine rolls in place at a preset speed as the strands pass below it on the conveyor and cuts the strands into the nugget shapes. From there, the nuggets head into a radiant-heat oven, where they bake for 10 minutes at about 500°F. They finally spend 40 more minutes drying in the kiln.
Depending on the final destination, pretzel products are either bagged or they are packaged in clear, rigid plastic containers, case-packed and sent to distribution.
In Utz’s Carlisle Street plant, kettles are the modus operandi. Most specialized potato-chip products, such as Utz Dark Russet Kettle Classics and Utz Sweet Potato Kettle Classics or Homestyle chips, are manufactured in this plant. During SF&WB’s visit, the kettles were cooking up batches of Grandma Utz potato chips and Utz Dark Russets.
Because of the specialization of different products, different measures have to be taken as far as changeovers go in this plant. For example, all Grandma Utz potato chips are fried in lard, but Sweet Potato chips and Russet chips are fried in peanut oil, and Homestyle chips are fried in soybean oil. After an initial adjustment phase, Utz’s open lines of communication allowed the company to ease the burden of changing oils in kettles for producing different chips.
“If you coordinate your activities, sales promotions and your normal needs closely enough with sales and marketing, it can be worked out so it becomes a minimum problem for us,” Schmoldt says. “When we first looked at it, it was this huge elephant, and [we thought,] ‘How do you eat an elephant?’ One bite at a time.”
The Carlisle Street plant also houses Utz’s Outlet Store, a veritable treasure trove of Utz products in every size imaginable, and Utz’s nationwide mail-order operation.
The Kindig Lane plant, a former distribution center for Hanover Direct that Utz bought four years ago and extensively renovated, is the current home to the company’s corn-chip, popcorn and extrusion lines.
This plant possibly has the most open space, waiting to be used for future expansion projects. In fact, the company Christmas party is held in one of the warehouses, which is temporarily cleared of its stock, because it is one of the few rooms that can accommodate 1,000 employees and guests.
Production of extruded and corn items is pretty standard for that category, although Utz features customized bulk-packaging equipment on the back end, which was designed in-house by Bob Epley, Utz’s packaging engineer. The snack producer also has the standard form/fill/seal machines for bagging of single-serve and supermarket products. Case-packing is currently done manually at this facility.
Epley and corporate engineer Jeff Fuhrman, who writes many of the computer programs for the equipment in-house, have helped Utz spearhead and keep operations going while meeting the challenges of streamlining and continually expanding into new markets and areas.
Epley and Fuhrman are only two of the employees that Utz management certainly values. Hanover is known as the “Snack Capital of the World” to many, and employers realize the importance of the hard-working people of Hanover.
Says Rick King, president and chief operating officer: “We put it together with a strong, stable, committed management team leading what I honestly believe are the finest groups of manufacturing managers, associates, DSD salespeople and distributors in America.
“That’s all businesses are. Sure it’s quality, sure it’s vision, but finally, it’s people.”
The people at Utz have been developing successful strategies for years now, and they shouldn’t be expected to pause to revel in the glow of success.
Not only has Utz found its way to success amid a tumultuous time in the snack food industry, but it also has managed to grow sales, all while reinventing its operations procedures and strategy within the walls of its plants. They had a vision on where they were going years ago, and they still demonstrate excellent foresight, supplemented by ultimate flexibility.
“We believe that what we’ve built now will probably take us through 2008 or 2010 under the normal growth rates,” Schmoldt says.
With the planning, knowledge and communication that Utz has demonstrated all along, that strategy will be carried out confidently and — if history is any indication — successfully.