Baking & Snack - February 2024 - 36

CAPITAL SPENDING STUDY
Where does your company plan to
spend its capital improvement budget?
Systems improvements: 84%
Maintenance and replacement parts: 69%
Facility expansion: 56%
Upgrade existing facilities: 56%
New buildings: 23%
ing capital investments. In 2020, 45% of bakers said they were
increasing their capital spending, and that share has steadily
risen: 52% in 2021, 57% in 2022 and 66% in 2023. If bakers
are accurate in their projections for 2024 with 55% estimating
an increase, that would be a shift from previous years.
Bakers' goals for capital spending
have fluctuated from 2023 to 2024
Improve process capability/flexibility:
2023-24 study:
2022-23 study:
Improve product quality,
consistency, accuracy:
2023-24 study:
2022-23 study:
66%
58%
Increase capacity for existing products
2023-24 study:
2022-23 study:
61%
63%
Decrease labor costs
2023-24 study:
2022-23 study:
Increase capacity for new products
2023-24 study:
2022-23 study:
Improve food safety/sanitation
2023-24 study:
2022-23 study:
Increase production speed
2023-24 study:
2022-23 study:
Make accommodations
for lack of labor:
2023-24 study:
2022-23 study:
36 Baking & Snack February 2024 / www.bakingbusiness.com
54%
50%
61%
52%
57%
58%
57%
48%
56%
63%
Continuous improvement
While the level of positivity and investment may be holding
steady, how baking companies are investing is certainly
shifting, and that's driven by key challenges they are facing
in 2024. When asked about their biggest challenges looking
ahead to 2024, bakers reported labor and costs are their biggest
concerns. Bakers are focused on reducing the reliance
on labor and improving efficiencies to reduce costs.
" When asked what their biggest challenges were for the
72%
63%
next 12 to 18 months, 73% of bakers said attracting and retaining
a quality workforce, " said Kerwin Brown, president
of BEMA. " The next three are all cost concerns: labor costs,
increased raw material costs and inflationary pressures.
These are all hitting their bottom lines and profitability. "
These concerns are having a direct impact on companies'
2024 capital spending plans with lack of labor being
the biggest driver. Fifty-eight percent of survey respondents
reported that their companies will increase capital spending
due to lack of labor. After that, 52% said rising raw material
costs will increase capital spending.
When looking at how baking companies will spend those
dollars, the shift starts to appear. Investments in facility expansions
and new buildings are down in 2024 compared to
2023. Most companies intend to use capital spending dollars
on systems improvements (84%).
" Post-pandemic through 2023, we saw a huge investment
of people adding new production lines or expanding existing
facilities for additional capabilities or flexibility, " Mr. Miller
said. " Now they're taking a pause after expansion and reinvesting
in the equipment they already have. This also leads
into investing in automation to help with their labor issues. "
With those new expansion projects off the ground, investing
in maintenance is also high on the list with 69% of
bakers reporting plans to spend their capital investment
budget on maintenance and parts.
" Bakers have pushed their existing lines and equipment
to the limit, and now they have to go back and address that, "
Mr. Miller said.
These shifts toward improving on existing lines and processes
fall in line with bakeries' goals for 2024. Seventy-two
percent want to improve process capability/flexibility, up
from 64% in 2023. Sixty-six percent want to improve product
quality, consistency and accuracy, compared to 58%
in 2023. Decreasing labor costs is tied for third place with
increasing capacity for existing products at 61%. However,
significantly more bakers are prioritizing decreasing labor
costs in 2024 than in 2023 (61% vs. 52%).
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Baking & Snack - February 2024

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