Tasty Baking Co. took a significant step by commissioning its first line in its new $75 million bakery.
With the opening of its new 345,000-sq.-ft., single-storied bakery in Philadelphia’s Navy Yard, the 95-year-old company will close its six-story operation on Hunting Park Avenue where it has been producing products for the last 86 years.
So far, the new bakery and distribution center remains within budget and ahead of schedule, says Charles Pizzi, president and CEO. Building construction was substantially completed on Oct. 1, about two weeks ahead of the original schedule.
“We have also completed facility testing and all utility systems are operational,” Pizzi said during the company’s third-quarter conference call. “We are fully engaged in equipment startup and commissioning activities across the plant.”
The pie line is the first of seven lines that Tasty Baking will start up through the second quarter of 2010.
According to Paul Ridder, senior vice president and CFO, total capital expenditures in the third quarter totaled about $8.4 million, including $7.6 million of payments for equipment related to the new manufacturing and distribution facility.
“With respect to the financial benefit of the new bakery, we continue to project it will continue to have a significant beneficial impact to our operations and result in $13 to $15 million annually of incremental pre-tax cash savings before any impact from debt service but after taking into account the facility lease,” Ridder said.
Ridder called the commissioning of the pie line an “exciting” milestone, but stressed that the “ongoing startup, commissioning and transition period will likely impact ongoing operating results. During this period we may experience incremental scrap, transportation, trade and labor expenses,” he added.
Autumn Bayles, senior vice president, strategic operations, noted that pie production will start transitioning from the Hunting Park facility to the new line over the next few weeks.
In addition to equipment installation, Pizzi said Tasty Baking is focusing on training workers on the new line.
“This new facility provides us the ability to develop a new culture, a new awareness, a new accountability and new ways to improve our existing products while providing the opportunity for product innovation,” he said.
He added, however, that there is a possibility for higher than average stale rates as the transition to the new facility continues. Ensuring quality, he says, remains the company’s top priority.
Tasty Installs First Line in New Bakery
November 3, 2009