Putting up the COOD FIGHT

Every decade or so comes one of those times when the stars align and decision-makers find themselves in the position of determining the future of an industry for years to come. For the baking industry, 2004 looks like it’s going to be one of those years that will determine how companies will conduct business down the line.

In addition to the battle over carbohydrates, snack and bakery food producers face a whole slew of other issues that are quickly reaching the point of no return. In this important election year, the industry must also contend with skyrocketing healthcare costs, increasingly burdensome environmental regulations and the upcoming debate over dietary guidelines, which could significantly impact consumers’ perceptions of baked goods.

At the same time, there are opportunities to take advantage of advances in technology that will be featured at the International Baking Industry Exposition in Las Vegas this year.
In our annual Power of Association, SF&WB magazine invited the American Bakers Association, the American Society of Baking, the Baking Industry Sanitation Standards Committee and BEMA, the baking industry suppliers association, to describe how they are addressing a wide variety of critical issues.
We strongly urge you to take a few minutes to see what your associations are doing and how you can acquire influence to change what is going on in this industry. If you don’t belong to these associations, there’s no better time to get involved and to put up the good fight.

—Dan Malovany

It’s Showtime!
Here we go again. Get ready to mark your calendars, pack your bags and head for the baking industry’s key shows, conferences, board meetings and other important events of 2004.
We’ll give you some details on show dates, times and contact numbers, but we won’t buy you a ticket. That’s your responsibility. But remember:
If you miss these important shows, you’ll spend the rest of the year kicking yourself:

  • American Bakers Association’s Annual Convention, March 17-20, The Phoenician, Scottsdale, Ariz. 1-202-789-0300
  • American Society of Baking Annual Technical Conference, Feb. 29-March 3, Chicago Marriott Downtown, Chicago. 1-866-920-9885
  • Baking Industry Sanitation Standards Committee Annual Meeting, Feb. 27, Chicago Marriott Downtown, Chicago. 1-773-761-4100
  • BEMA, the baking industry suppliers association, Winter Summit, Feb. 27-29, Chicago. 1-847-920-1230.
  • The 2004 International Baking Industry Exposition, Aug. 15-18, Las Vegas. 1-847-920-1230

ABA President’s Letter
ABA Provides Leadership for Industry at the Crossroads

Paul Abenante
President & CEO
American Bakers Association

Speaking of challenges, each year the “bar gets raised” with the issues and objectives we face. However, I can’t remember an ensuing year with greater challenges and events that will set a course for the grain-based foods industry with such lasting effects.
In a very short period of time, the baking industry will no doubt be asked to either launch or not implement an aggressive and expanded national public relations program, which will restore the truth and dispel misinformation regarding bread grain-based foods.
Following a year of planning, extensive consumer research and selection of a very effective public relations firm, the baking industry joined by the milling industry will have an opportunity to exercise a program that has not been tried before. It will certainly be an historical moment and one whose time has come.
As you know, this year is not an off-year election. It’s the Super Bowl of elections and politics — both a presidential election and a Congressional election that will challenge the unprecedented Republican control of the House and Senate and, of course, the White House.
This is not a time for the private sector and the grain-based foods industry to be complacent or place their personal involvement in the process on cruise control. ABA plans, once again, to bring its political action committee to congressional-based districts and baking plant locations. We plan to hold several fundraising events for key candidates Additionally, we will be supporting various events throughout the nation to re-elect President Bush. There is no substitute for personal and corporate involvement in the election process. I strongly encourage each of you to do your part this election season.
You can’t look down the road this year without planning to attend the 2004 International Baking Industry Exposition, which will be held from August 15-18 in Las Vegas. ABA, in partnership with BEMA, the baking industry supplier association, will be hosting one of the most exciting expositions guarantees to bring tremendous innovation and the latest advances in technology to all sectors of the grain-based foods industry. The opportunities that lay ahead will no doubt bring and encourage a healthy, business environment for the industry. I look forward to seeing the entire industry there!
Yes, it not only going to be a year of challenges and change, but also one of potentially huge opportunities. First, you have an opportunity to set into motion one of the most effective public relations programs to stand up against the anti-carb critics. You also should attend a baking exposition that will no doubt offer tremendous economic value to your company. Finally, toward the end the year, in November, you have the chance to ensure the re-election of a Republican controlled Congress and White House.
From our standpoint, the ABA is ready and prepared to see these opportunities happen. However, its ultimate success does not rest on our staff. Rather, it lies on your support and involvement. The leadership of the ABA is prepared to do whatever needs to be accomplished for the greater good — and we’re ready!
Robb MacKie’s Report
Health Care Costs Dominate Agenda

Robb MacKie
Vice President of Government Relations
American Bakers Association

Now that 2004 has dawned, the cost increases to provide quality health insurance coverage to the wholesale baking industry’s skilled workforce have jumped once again. Recent studies of all employers showing a nearly 15% average increase last year are hard to swallow for most baking companies — 15% is at the bottom end of the industry rate of increase.
While an aging workforce and other contributors to rising insurance prices cannot be avoided, there are many others that can be addressed if policy-makers are willing to tackle the serious problems. Unfortunately for the baking industry, most of the healthcare agenda in 2003 was focused on adding a new prescription drug benefit to the Medicare program. Regardless of one’s position on the new program, it is clear to see that it offers little if any benefit to companies struggling to pay for health insurance benefits for their employees.
Despite the ABA and many other business groups pushing for malpractice reform, increasing access for the uninsured, and reducing bureaucratic hurdles to expanding the generic drug market, precious little was accomplished in 2003 and the outlook isn’t much better for 2004. With the presidential campaign in full swing and Congress with fewer than 100 legislative days left, there’s hardly enough time to approve must-pass and non-controversial legislation. Medical malpractice reform and association health plan legislation, which ABA strongly supports, fit neither of those categories.  
However, 2004 will be a good year to continue to push lawmakers for early action on healthcare reforms for the following year. It also will be important for the American Bakers PAC and the industry to work hard to elect candidates who will make the tough decisions needed to solve this vexing problem. Until that time, however, the industry’s human resource professionals are exploring and experimenting with every tool possible to keep the increases as manageable as possible.
Regulatory compliance issues also will be a big part of the ABA agenda in 2004. The newly minted Hours of Service regulations from the Department of Transportation will be a challenge for some in the baking industry. ABA is working with lawmakers and regulators to try and provide some flexibility for the strict limitation on daily work hours included in the new regulations. The ABA also is working with the U.S. Department of Labor to update the 50-year-old regulations governing wages and hours worked. The so-called overtime regulations would clarify the duties of outside sales representatives so that baking companies can avoid multi-million dollar class action exposure caused by the current confusing rules.
For those baking companies with independent distributors, the current Internal Revenue Service rules are blatantly unfair. The industry is singled out by the IRS and treated far differently than other industries using independent contractors. ABA is working with the IRS and members of Congress to resolve this long-standing issue.
While 2004 may not see a wave of legislative action, it will be a very busy year for ABA projects to help improve the bottom line. In the safety area alone three major projects are underway to help protect the industry’s employees and hopefully avoid costly workers’ compensation claims. The Ergonomics Best Practices Web site, Defensive Driving Training module and the Materials Handling Training Module will all be invaluable industry resources. In addition, the ABA Human Resources Committee will once again be conducting a comprehensive Salary and Benefit Survey of the wholesale baking industry.  
Anne Giesecke’s Report
Reaping Benefits by Managing Issues

Anne Giesecke, Ph.D.
Vice President, Environmental Activities
American Bakers Association

Regulations are not value-added for the business product, but good management can reap benefits in efficiencies of operation and balance the increased cost. On the other hand, poor implementation of regulatory requirements can create a serious financial liability for a company.  
Implementation of the “precautionary principle” is a significant trend in this direction. Environmental groups in the United States and European Union have interpreted the precautionary principle as either prohibiting activities or failing to approve activities unless science can unquestionably show no harm to health and the environment. The resultant government demands for chemical testing and record-keeping are impacting the costs for food additives, flavors and colors.
Sustainable production and processes are laudable goals. The definition of what is “sustainable” is the subject of fierce international debate, but only the crudest economic tools are being used to carry out life-cycle analyses of products.
This is seen, for example, in government efforts aimed at mandating recycling. Such activities are dramatically impacting the costs of the packaging industry.
Another example comes from machine lubricant usage, where operators are forced to use expensive synthetics rather than conventional petroleum. In the agricultural industry, the impact of such trends is reflected in higher ingredient costs.
The impact of rising regulatory costs on business can also be seen in the trend toward transparency in business that came with the implementation of the Sarbanes-Oxley Act.
The act requires that the Security and Exchange Commission receive environmental, health and safety reports with audited financial statements. Reporting requirements are being discussed by the SEC and other federal agencies. Bakers should expect some guidance this year.
The American Bakers Association is distributing information on environmental reporting, including the United Nations Environment Program Global Reporting Initiatives, as it becomes available.
In other news, water is an increasingly scarce and costly resource. Specifically, two current rule makings will impact bakery costs. The Spill Prevention Control and Countermeasures (SPCC) rule for the bakery storage of oils has a compliance date of August 17, 2004, for plans and February 17, 2005, for the completion of construction to prevent oil spills.
ABA and others groups in the food industry were successful in getting the extended dates and are arguing that animal fats and vegetable oils should be considered under a separate Environmental Protection Agency rule. ABA developed a model SPCC plan for bakers that can be tailored to particular bakeries, potentially saving thousands in consultant costs.
The Water Shed rule that sets pollution loads for waters of the United States has not been reissued by this administration. ABA and others were successful in having a Clinton rule withdrawn and are optimistic about the content of the new rule. That rule will facilitate company planning, which is now dominated by an out-dated rule extensive litigation. A poor rule could require bakers to spend millions of dollars on waste-water treatment.
In an overall effort to control the cost of government regulation in 2003, ABA commented on 22 pending pieces of legislation including, the EPA Cabinet post, Chemical Security requirements for ammonia refrigeration systems, Clear Skies clean air legislation for power plants and cogeneration.
In addition, ABA has argued the critical need for reliable energy under the Energy Bill. The Clean Air Act driven on-and-off-ramp provisions of the Safe, Accountable, Flexible and Efficient Transportation Equity Act of 2003 (SAFETEA) are being tracked.
As a final note, here’s a status report on the EPA enforcement initiative on bakery use of certain refrigerants that started in 1998. ABA members worked closely with the agency to minimize the impact on the industry. As a result of two consent orders, many companies were able to invest most of the funds agreed to under the orders in their facilities.
By July 15, 2003, 59 companies had signed consent orders; six companies had completed audits as part of the Bakery Partnership Agreement signed in April 2002, and 28 companies had signed the Bakery Order. Moreover, 25 companies completed all work and completed paper work with EPA by May 31, 2002, and 34 companies will complete consent orders by July 15, 2004.
ABA continues to work with its members and with the EPA to keep the paper work and policy as consistent and fair as possible.

Lee Sanders’ Report
Year of the Big Decisions

By Lee Sanders
Vice President — Regulatory and Technical Services
American Bakers Association

Nutrition policy, fighting the low-carb craze and obesity are all issues of high concern to bakers this year. In the midst of the five-year review of the U.S. Department of Agriculture’s Dietary Guidelines and review of the Food Guide Pyramid, there are many positive opportunities for ABA to advance our message that enriched bread and grain-based foods are a nutritious and important part of a balanced diet.
This year as part of ABA’s core National Nutrition Education Program, ABA and the Wheat Foods Council have co-sponsored a folic acid white paper authored by Dr. Karin Kratina, a Ph.D. in cognitive anthropology, registered dietician and exercise physiologist. The paper is being distributed not only to the U.S. Dietary Guidelines Advisory Committee for consideration as part of their literature review, but also to key health and nutrition leaders and food editors. This effort is a tremendous opportunity to tout the health benefits of bread and grain-based foods.
Also, ABA has learned that the Centers for Disease Control and Prevention (CDC) will co-sponsor our new public service announcement that communicates the fact that enriched bread and grain-based foods provide a good source of folic acid, which has been proven to help prevent neural tube birth defects. This new public service announcement will be broadcast in both English and Spanish, thus reaching a broader audience.
Additionally, ABA is currently in the first phase of work with the North American Millers Association on a joint product promotion project that includes research on consumers’ perceptions regarding bread and other carbohydrates. We’re confident this study will enable our organizations to effectively move forward in the battle to tackle the high protein diet craze and other misinformation being circulated about bread and other carbohydrates.
On the legislative side, ABA is actively supporting Congressional legislation such as the Personal Responsibility in Food Consumption Act to limit frivolous lawsuits.
We will also address the onslaught of state level legislation that seeks to limit foods available for school lunches and in vending machines which we believe sets a discriminatory atmosphere of bad versus good food.  
Also high on the priority scale are issues surrounding implementation of the new FDA food security regulations. ABA is actively addressing members’ concerns regarding the two interim final rules on registration and prior notice that were released in mid-December.
Recently, I discussed the bakery specific concerns with FDA Deputy Commissioner Lester Crawford. He was anxious to work with industry to solve the issues that are interfering with the smooth flow of commerce.
In late March 2004, we are expecting the last installment of food security interim final rules – record-keeping and administrative detention. ABA’s Food Technical Regulatory Affairs Committee (FTRAC) will meet in mid-April to review these rules and discuss implementation strategies.  
ABA will also focus on a variety of labeling issues including trans fatty acid labeling regulations, pending allergen labeling legislation, the low-carbohydrate labeling issue and qualified health claims. Recently, ABA signed onto comments with the Trans Fat Industry Coalition that were submitted to the Office of Management and Budget raising questions on FDA’s planned consumer research on trans fat labeling.
ABA will continue to work with other industry groups and Congressional staff on pending allergen labeling legislation. The association wants to ensure that any package that moves forward is palatable to industry and creates effective, easy-to-comprehend allergen labeling for consumers.
Historically, the baking industry has been pro-active in handling allergen labeling in a responsible way for allergic consumers. This spring ABA’s FTRAC will review the citizens’ petitions that were recently submitted to FDA to define low carbohydrate foods and will come up with a consensus position for the baking industry.  
Lastly, ABA will carefully review USDA’s proposed plan to revise its biotechnology regulations moving to a multi-tiered approach to address evolving technology. ABA also continues its dialogue with technology providers on biotech wheat development and its impact on the industry, its products and consumer acceptance.
All in all, it will be another busy year for the American Bakers Association, one that holds many opportunities for our industry.  
ASB President’s Letter
How the Society Can Benefit You

By Thomas Kuk
President and CEO
American Society of Baking

The functionalist side of me would conclude that if you were employed in the wholesale baking industry, membership would be a great bargain. The 20-plus distinct services we offer are, each in its own right, worth $125.
But now, my replies are less contrived, more open-ended … “It depends,” I answer.
Like many organizations, the Society continues to evaluate its mission, the types of services we offer, and how we may contribute to the industry at large. Each year, many of our members choose to renew their annual membership while others do not. Some 97% of members who do renew have more than 10 years of service, while 70% of those who choose not to have less than three years. What do some members see that others do not?
Perhaps Noble Peace Prize nominee Thich Nhat Hanh answered that question when he once said,  “We are very good at preparing to live, but not very good at living.”
Such a powerful statement goes right to the core of why some members benefit from the Society while others do not. As Americans, we place great value on the notion of success, but we often don’t view ourselves as being successful.
Our current environment is filled with confusion and anxiety. Downsizing, rightsizing, mergers, corporate malfeasance, recession, war, terrorism all add to the confusion.
Organizational expectations continue to change, and our personal resources become more and more limited. Employees are expected to manage their own careers, keep their job skills current while learning new ones and at the same time protect themselves from corporate reorganization. In the effort just to keep up, many of us have failed to create mutual, meaningful relationships. We have not acquired the skill of self-advocacy or mastered the art of inter-dependence.
Participation, whether it is in a professional, religious or community organization, can be either functional or purposeful, but it must be meaningful. One must understand the reasons for participating, whether it is as simple as access to information, the ability to influence customers or whether it is something far more personal such as a need for inclusion, peer recognition or service.
Without defining a reason to participate, there is no benefit.
So what is it that makes joining the Society beneficial? Some join because it’s cheaper to attend the annual conference. Others join for access to our professional resources.
If one were to ask any of the 66 members celebrating 50-plus years of service, their membership is based upon meaningful relationships.
Their success has been learned through interaction, built upon by opportunity and earned by respect. They have mastered the art of inter-dependence because through interaction with their peers they have crafted a vision, defined a purpose, established core personal and organizational values, confirmed a high degree of professional commitment, acquired creativity and learned the skill of adaptability.
For many, membership in the Society is directly linked to who they are and what they do. The Society’s 2004 Distinguished Service Award recipient, who will be announced at this year’s upcoming technical conference, best described it when he said: “I would not be the person I am today. I would not have the number of friends, the wealth of knowledge or the high degree of success I have experienced had it not been for the gifted and giving members of the Society.”
So is this membership beneficial? Is the opportunity to learn, to share and to mentor of value to you?
Well, that all depends on whether you are up to the challenge.