Bob Evans: Efficiency drove decision to close Ohio plants, move work to Texas
The loss of two Ohio food production plants for Bob Evans Farms Inc. will be the gain for a company facility in Texas.
The Columbus-based restaurant and food products company announced the closings last month, but provided more color on the decision in a conference call for stock analysts Wednesday.
CEO Steve Davis said Bob Evans plans to invest between $23 million and $26 million in an expansion of its Sulphur Springs, Texas production plant. Plants in Springfield and Bidwell are expected to close by late summer 2013, eliminating 110 jobs as that work shifts to Texas. The company also is creating 110 jobs as it consolidates transportation operations in Springfield.
The Texas plant is highly efficient and is the best way to increase and optimize manufacturing capabilities, Davis said. An estimated 50,000 square feet will be added to the facility. Among the improvements will be advanced packaging technology and the ability to handle multiple proteins including pork, chicken, beef and turkey all in one facility. New lines will focus on the ready-to-eat segment.
Davis said sales of side dishes continue to grow, sausage sales are steady and frozen products were down for 2012. Recent new customers include a 1,600 store private label sausage deal, a 1,500 shop commitment for oven-baked side dishes and a 3,000 store chain signed up for frozen breakfast burritos.
Bob Evans also will roll out two new food products this summer – a frozen, portable breakfast item and an extension of its refrigerated sides line.
Davis said the Sulphur Springs expansion is good for product development and would accommodate any acquisitions.
On the financial side, the consolidation of the two Ohio facilities into the Texas operation is expected to yield and annual pre-tax savings of between $7 million and $8 million starting in 2015, according to information from the company.
The Sulphur Springs plant opened in 2003 and was doubled in size to more than 100,000 square feet in 2008.
This shift and expansion is the latest in several years of optimization efforts on the food products side of the business, including changing its distribution model, maximizing plant capacity and instilling lean manufacturing, all of which resulted in a $20 million gain for the segment in 2012.
The work is paying off.
CFO Paul DeSantis, in the call, said without those savings the segment would’ve been at a loss for the year due to ever-increasing sow costs.
Bob Evans (NASDAQ:BOBE) reported its fiscal 2012 earnings and provided 2013 guidance Wednesday.
The company has 565 Bob Evans restaurants in 19 states and 145 Mimi’s Café eateries in 24 states in addition to its food products business.
Source: Columbus Business First
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