Interstate showing off new Henderson bakery

Alana Roberts

Friday, March 12, 2004 | 10:56 a.m.

Interstate Bakeries Corp. is revamping its operations to stop erosion in its profit, with the company's 14-month-old Henderson plant now broken in and playing a role in streamlining operations.

The Kansas City, Mo., company spent $6 million to purchase the former Levi Strauss & Co. plant in January 2002 on Conestoga Way and spent another $30 million converting it to what it calls one of the country's most modern bakery plants.

IBC is the country's largest wholesale baker and distributor of fresh baked bread and sweet goods. The company produces Weber's, Millbrook and Wonder bread brands, Hostess and Dolly Madison cakes, Mrs. Cubbison's stuffing and croutons and Marie Callender's crouton products.

The company is undergoing an internal reorganization plan called Systems Optimization and Re-engineering (Program SOAR) to drive costs down, Mark Dirkes, a company spokesman, said. The three-year program seeks to centralize the company's management and operations structure. As a part of that program, the company opened the largely automated Henderson plant in January 2003.

"The reason for the re-engineering is to become much more efficient than we are now with production and distribution. The Henderson facility is our newest plant and will be one of our more efficient plants," Dirkes said.

The plant is part of the company's Western Division, headquartered in Phoenix. The company's other two divisions include the Central Division, headquartered in Kansas City, and the Eastern Division, headquartered in Charlotte, N.C.

Jim Grosvenor, operations manager at the plant, said although the plant began producing in January 2003, it takes time for a plant's production to reach a level where it can serve an area by itself. He said production at the plant has gradually increased since production began and now the plant is ready for an official grand opening on Saturday.

"We're just now getting to where we're going to be a totally self-sufficient bakery. We run roughly 60 (truck) routes from here," Grosvenor said.

The plant serves Southern Nevada, Southern California and parts of Arizona. It supplies schools, prisons and area grocery stores.

Grosvenor said the plant's capacity continues to increase and the plant is still hiring workers. Currently the plant employs 135 operations employees and another 150 to 200 route sales drivers.

Grosvenor said the plant's production levels fluctuate based on sales.

"We're starting to ramp-up for the summer holiday season. Everything's market-driven. We make product fairly fast and it just keeps coming," Grosvenor said.

Employees at the plant are represented by two unions. Operations employees are represented by the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union Local 37 and the plant's truck drivers and route sales representatives are represented by the Teamsters Local 14.

The three-year Program SOAR plan is meant to drive costs down, which is something the company needs. Profit for the company has dropped recently. On Dec. 18, the company reported a second-quarter profit of $7.1 million, or 16 cents per share, down from $11.6 million, or 26 cents, as sales slipped 1.1 percent to $814 million.

The company faced financial challenges in 2003 when its debt was downgraded because of sharp declines in its financial performance. Analysts cited an unfavorable competitive and business environment for IBC, which like many bakers is struggling to reduce costs.

In May, as the Henderson plant was undergoing the slow ramp-up process, the company's bread and roll bakery in Boise was closed. The closing was because of the increase of efficiency the company would experience because of the Henderson plant's automation.

"The decision to close the Boise bakery was difficult," James Elsesser, IBC's chief executive, said in March 2003.

"With the planned opening of our bread and roll bakery in Henderson, Nev., next month, the company will have more production capacity than it needs to meet demand in the Mountain states region. We needed to move production to our most efficient facilities in the region," Elsesser said at the time.

Analysts say bakers have seen a drop in white bread sales as consumers choose low-carb diets.

However, Dirkes said he isn't sure that the low-carb diet craze is responsible for a loss in white bread sales.

"If you look at the trend, there are certain segments where we've actually got increases. Diet bread, which is low calorie bread, is up, wheat bread is up and bagels and tortillas are up," Dirkes said.

Still he said the industry is concerned about the low-carb craze.

"I'm concerned about low-carb diets. There's a lot of buzz in the media about low-carb diets, but just looking at the trends I don't see any evidence that people have stopped eating bread and cake," Dirkes said.

He pointed out that at a recent medical conference in San Francisco, a new study reaffirmed the Food and Drug Administration's move to require that grain foods, such as Wonderbread, be fortified with folate. Studies have shown that the move helps prevent birth defects and could prevent other life threatening conditions.

"I think it is further confirmation that grain foods, and in this case enriched grain foods, are healthful," Dirkes said.

As the company fights such trends, the company's Program SOAR is under way and Grosvenor said he is optimistic. He said the Henderson plant could be part of the company's emergence from financial straits.

"Henderson is the largest facility in the west, with over 250,000 square feet. It's largely automated. We are one of the largest facilities so we'll be part of IBC's future," Grosvenor said.