Flowers exec says labor costs make automation affordable

Flowers exec says labor costs make automation affordable

MARCO ISLAND, FLA. — Amid rising labor costs and a worsening shortage of workers, the bar for investment in bakery plant automation appears to be moving lower, said Bradley K. Alexander, chief operating officer, Flowers Foods, Inc., Thomasville, Ga.

“For us, it’s really going to be looking at those ROIs (returns on investment),” Mr. Alexander said June 25 in a panel discussion at the BEMA annual meeting held at the JW Marriott hotel on Marco Island. Finding ways to ease the company’s labor challenges are key, he said.

Equipment manufacturers are seeing evidence of this shift in how bakers are viewing projects that previously seemed out of reach. Rick Hoskins, chief executive officer of Colborne Foodbotics and Yeaman Machine Technologies, Lake Forest, Ill., said his company has witnessed a change of attitude from its customers.

“Lots of projects that didn’t make financial hurdles are back on the burner,” he said. “Project finance models seem to be changing with respect to labor cost calculations, taking X number of people off the line, payback or whatever the internal rate of returns. A lot of these companies are basically saying, ‘Hey, I can’t even find the employees.”

As a result, the willingness to spend money on automation is measurably greater, Mr. Hoskins, who was chairman of BEMA, said. Mr. Alexander said financial discipline remains important, but the value of automation has risen.

“How do we automate more effectively?” he asked. “We need your ideas. Something that didn’t make sense before because of the cost might make more sense. You have to be realistic with your capital numbers. You’re using some number for calculation of ROI, but now, you think there really are all these people on overtime most of the time, so that hourly rate is different. Health care costs, unfortunately, seem to go up every year. Labor costs go up every year, if you can find people. We definitely are looking at anything we can to improve quality, sustainability is critical and then also people.

“What’s challenging is that we have bakeries that are flexible and do different things. That’s great, but they are generally not highly automated. So we have to think through, what do we want to be good at? Where can we win? And make sure our lines are in the right place. We say, ‘Put the pans where the people are.’ Put the bakeries where they are because costs for transportation and fuel can go up, so reduce that as much as possible but automation is really, really important. At the upcoming IBIE convention, which we are very excited about, I think that will be a key thing.”

Other panelists in the discussion were Robb MacKie, CEO of the American Bakers Association, and Kerwin Brown, BEMA president and CEO. Mr. MacKie said for the first time in his career, bakers are saying they are turning away business because of the labor shortage.

“If you can’t find employees to add a shift or a partial shift (they are turning away business), and I think this is really smart,” he said. “They aren’t willing to overstress their current employees, by making them work more overtime or another shift. In 26 years, I’ve never heard a baker turn away business ever.”

Mr. Brown spoke optimistically about IBIE 2022, saying “everything is aligning for that to be a really positive show.”

Regarding the positive alignment, Mr. MacKie credited iba, the major European baking show, for moving the date of its event to 2023, in consultation with the IBIE committee.

“They did a huge solid for us,” he said. “The good news for us is that IBIE next fall will be the first significant global baking show” (since the start of COVID).

Mr. MacKie predicted efficiency of operation and sanitation will be themes that stand out at IBIE 2022.

Asked by Mr. MacKie about sustainability at Flowers, Mr. Alexander said the issue is not only a priority of customers and consumers, it also has emerged as an issue for the company’s workforce.

“We have a great team working on it,” he said. “It’s more and more in the news. It’s also very important to our new employees. They want to know what your sustainability plan is. That kind of caught us by surprise, but the new generation wants to know the cause or why should I work for this company. If they don’t believe in what you are trying to do, your mission and your vision and what you stand for, they’ll find someone else.”

The baking industry has added challenges when it comes to attracting and retaining workers, Mr. Alexander said. Mentoring and showing employees a career path, demonstrating that many executives at one time started on the production floor, are part of the onboarding process, he added.

“It’s a huge problem,” he said. “We have 46 bakeries in the United States. And it’s area by area. There are some areas that are not very bad right now. We have some areas that are extremely challenging. Seems to be geographic. It seems to be for us in larger cities where we are challenged. We’re in smaller towns, and we are pretty important in those communities. We seem to do better there. Not always, but we seem to attract and retain people better. We are trying to think of everything we can from schedules to how can we make it cooler in the plants to how can we onboard better. How can we train them better? How can we give them positive feedback? How do we show them a career path? Everything. Making sure our pay is fair. Maybe do more part time. There are a lot of people who don’t want to work 40 or 50 hours a week. They may want to work two days a week. Well, traditionally we haven’t done a lot of that, but maybe we need to. Maybe we need to think about it. What’s happening now for us is with demand up and not a lot of employees, we’re penalizing our good employees and making them do a lot of overtime. They like overtime the first few weeks but after a while, they are like ‘I want to have some work-life balance. I want some time with my family. Money is not as important.’ It’s a new generation. We have to think differently.”