Fiscal restraints can be a source of frustration or, as Celebration Foods LLC demonstrates, an opportunity for innovative thinking.
Managers at Celebration predicted a proposed new plant would be a tough sell to ownership, despite a compelling case. When original cost estimates came in 50% higher than their parent organization’s appetite for investment, the challenge crystallized: find creative ways to drive down costs without compromising the integrity of the manufacturing process. An open design, innovative flooring and collaborations with suppliers to develop new-to-the-market equipment helped Celebration address budget constraints while creating a high-volume production environment to support expanding national distribution.
Though it traces its roots to 1934, Celebration is relatively new to food manufacturing. Athanassios Karvelas, aka Tom Carvel, was a New York inventor who developed the chain of Carvel ice cream shops, mostly located on the Eastern seaboard. Carvel also built one of the first soft-serve ice cream machines. Rather than throw away mix leftover in the machine at the end of the day, Carvel poured it into molds and froze it. The ice cream cake was born.
By the early 1990s, Carvel’s previous owners launched an ambitious plan to create a direct store delivery (DSD) network to expand distribution beyond the scoop shops to supermarkets and other retail outlets. Up to six manufacturing sites were set up to make the hand-decorated ice cream cakes, and while the DSD strategy proved successful (the firm accounts for almost two-thirds of category sales, according to IRI data), production was inefficient and costly. Even when consolidated into three locations, the facilities lacked professional polish and were little more than “garages where we figured out how to manufacture,” grimaces President Tim Shanley. A modern manufacturing building was needed.
Celebration’s current owners created Focus Brands in 2004. Focus’s mission is franchising, and it has expanded Carvel to more than 500 shops while acquiring the Cinnabon, Moe’s Southwest Grill and Schlotsky’s chains and other franchise networks. Manufacturing is an awkward fit, and the Celebration management knew a compelling case would have to be made to win ownership’s support for a multi-million dollar investment.
The first step was a supply chain optimization study. Officials selected a program from LogicTools, a Chicago-based supply chain specialist recently acquired by IBM. “Originally we were going to run about 75 models but ended up running more than 130, to be sure there was no second guessing when we turned dirt,” remembers Shanley. “No matter what scenario we presented-expanding the existing plants, using more copackers-the program only wanted to build one plant.”
In 2006, Austin Consulting was retained for site-selection work. “They wanted to be within 100 miles of New York City, and labor availability and cost was a very big driver,” recalls Michelle Comerford, the project’s senior location consultant. By fall, potential locations had been whittled down to a short list of three, including a brownfield in the heart of New Britain, CT. Soil transfer was restricted, and ground improvements were required before construction could commence, according to project manager David Potts of Whiting-Turner, the general contractor. On the plus side, city officials and residents alike were eager to see redevelopment on a 13-acre parcel that had been fallow for 20 years. And, unlike a rural location, employees would be able to walk or take public transit to work.
Connecticut is saddled with a business-unfriendly reputation, and some food companies refuse to even consider manufacturing there. Yet New Britain has a large pool of immigrant laborers and local officials hungry to attract new businesses and jobs to inner-city parcels where hand tools and hardware for Stanley Works used to be made. Fact-finding talks with area food companies, including Pepperidge Farm in nearby Bloomfield (Food Engineering’s 2005 Plant of the Year), were positive, and the professionalism of state and local economic development authorities sealed the deal. “Connecticut might not work for every food manufacturer,” allows Comerford, “but in terms of transportation, labor and the local attitude, it was a good fit.”
The final hurdle was ownership’s approval. The central argument was the capacity constraints a new plant would alleviate. Armed with rock-solid documentation, management also was able to point to savings of 450 basis points-that is, the same amount of product that used to cost $100 to make would cost $95.50. The business case was compelling, and reluctance to invest in manufacturing evaporated.
Creative solutionsPreliminary designs from TranSystems and Whiting-Turner envisioned a somewhat larger building constructed of precast double-Ts, with a walkable ceiling and other features. Unfortunately, the cost estimate was significantly higher than the budget would allow. The challenge was building a modern, sanitary facility with best-in-class features at a total cost of $22 million, equipment included.
Instead of segregating production, decorating and other process activities into separate rooms or partitioned areas, a clear 43,000 sq. ft. space was created. Another 13,800 sq. ft. to accommodate a third line can be claimed by knocking down a wall separating the area from a dry warehouse. “The fewer surfaces you have, the easier it is to clean,” reasons Engineering Director Robert Palczewski, who oversaw the project. “If you don’t have to isolate something, why would you?”
Instead of dairy brick or a polyurethane coating, flooring consists of highly polished concrete treated with chemicals to render it nonporous. About a dozen passes with progressively finer diamond-grit disks achieved the desired shine and smoothness. “You’re relying on the skill of the craftsman,” underscores Stuart Kendig, TranSystems vice president. A specialist from Bartow, FL, with whom Kendig previously worked was brought in for the project.
The polishing machine is too large to use on a conventional substrate with drains spaced 40 ft. apart. Kendig devised a floor that slopes to the middle of the room, where a trench drain with reinforced load-bearing grates collects washdown water and other waste. “Water beads up and drains very quickly,” reports Palczewski. For personal safety, staff and visitors wear slip-resistant, rubber-soled boots.
Wall-mounted racks for utility pipes deliver steam, hot water and compressed air to two production lines, simplifying maintenance and process changes and reducing horizontal surfaces. Instead of a custom HVAC system, seven rooftop air conditioning units cool and dehumidify the work area during production and after washdown. Ceiling height was set at 23 ft. under a 30-ft. roofline.
Beefed up insulation in walls and ceilings, a white reflective roof membrane, energy-efficient lighting and other energy-saving measures help lower the building’s carbon footprint, but the biggest contributor to green design is the variable frequency drive (VFD) regulating two 400 HP ammonia compressors. The VFD is expected to shave 1.2 million kWh annually from electric consumption, and a subsidy from Connecticut Light & Power will deliver the savings at no net increased cost to Celebration.
Freon refrigeration was used at Celebration’s former plants, but those systems struggled to hold a -20
“It required mutual trust at the beginning, and they could have pulled out, but CLP was quite cooperative in giving us the best incentive possible,” Palczewski says.
Months before architectural drawings were rendered, Tyco Fire Suppression & Building Products introduced a new surround-and-drown sprinkler system for cold storage. Celebration’s architectural engineering partners brought the system, which replaces in-rack sprinklers, to the company’s attention. Fire codes require in-rack sprinklers when ceiling heights exceed 25 ft. Conventional rack-mounted valves are accidents waiting to happen: If a forklift hits a head, air is released and a torrent of water may follow. Destroyed product and a small iceberg result.
Tyco’s system is premium-priced technology, and its newness required educational outreach to short-circuit any fire-code issues. Fire marshals from throughout Connecticut came to a technical presentation in New Britain staged by Celebration to explain the technology and win acceptance. An early payback was a reduction in piping and easier installation, since racking was erected last. “That easily shaved a month off the start-up,” says Palczewski.
Vertical-storage floor levelers and other loading-dock appointments also were exempt from cost cutting.
“You only get one chance to do a dock, and I didn’t want to spare any expense,” Palczewski says.
Reinventing the processHand decorating necessitates hybrid production. Process systems are in place up until the point when frozen cake blanks exit the nitrogen tunnels. After that, discreet manufacturing takes over: 160 decorators manually apply rosettes, borders and other elements. Competitors have tried automating this work, only to see sales suffer. “We don’t put any mechanical energy into the cake, so it doesn’t get that flat, wet, sterile look,” points out Shanley. Repeat buyers account for 92% of Celebration’s sales, and their brand loyalty is based on a hand-decorated product. Complete automation is out of the question, though some equipment is being added in a shift toward what Shanley describes as a “mechanically assisted” process.
The new facility presented an opportunity to reinvent the decorating process, however. Gary Cardinali, a principal in Santa Clarita, CA-based Brighton Engineering Inc., applied lean principles to minimize motion and optimize throughput. Aside from a score of Celebration alumni from a now-shuttered Maryland plant, the decorators are new to the job, yet throughput is up 20%, with more productivity gains expected. Working in teams of four or five, each decorator produces an average of one finished cake every two-and-a-half minutes.
“It’s the KISS principal at its finest: show them what you want and let them get to the end result,” says Cardinali. “If you tell them how to do it, you’ll cut their productivity.”
“We played around with the number of people, based on lean analysis,” adds Palczewski. Five height-adjustable tables are provided, and the teams have flexibility in how they deploy. One or two southpaws could be a help or a hindrance, depending on the leeway given.
Team performance and staff morale are nurtured with a 20X20 ft. wall projection of real-time feedback on throughput rates. When teams meet their production goals, the members applaud by clattering on tabletops. The physical well-being of decorators is a top priority. Exercises designed to help relieve joint stress are done throughout the shift, and the viscosity of the whip is closely monitored to ensure that squeezing the pastry bags doesn’t create hand stress.
A base layer of whip starts the decorating process. Known as whiting, this step is being performed by mobile machines that automatically apply the whip. Similar automation was attempted eight years ago, with less than ideal results. “We learned from that,” admits Palczewski. “Now we’re simply coating the cake, not finishing it, and productivity is way up.”
Upstream processes provide a stark contrast to decorating. The continuous freezers with dual discharge pumps and variable-speed dashers that turn mix into ice cream are the most advanced systems available, according to Herb Fish, sales manager in Gram Equipment’s Tampa, FL, office. A signature feature of Carvel cakes is the crunch layer sandwiched between two layers of ice cream. Dispensing the crunch requires precise temperature control, and Celebration commissioned WCB to engineer a crunch filler, then had Gram’s team integrate it with the ice cream fillers. The system can output multiple cake formats, placing a lid on the filled molds before conveying them to a cryogenic freezer. Once tapped out of the mold, the lid serves as the cake’s base.
At 75 ft. in length and more than 6 ft. wide, a new nitrogen tunnel is the longest unit ever produced by CES, according to Palczewski. The bottom-mounted spray nozzles and four times as many wind-producing fans create freezing efficiencies that reduce the amount of nitrogen consumed by 30% per unit compared to Celebration’s older tunnel. Throughput is 150% greater, he adds.
Slice-mmms, a cylindrical ice cream roll, is a recent hit for Celebration, particularly a variation with Cinnabon inclusions. The rolls are set in tubes, but a new continuous extruder should eliminate a lot of the associated labor. As with other production changes, managers are approaching change cautiously, adopting automation only if there is no compromise on product quality.
Poised for improvementQuality improvement is data dependent, and Celebration now has a wealth of data. Five control panels are on the production floor, though tying them together with manufacturing software will come later. “We just need to harvest the information to take us to the next level,” Palczewski says.
Production tracking already has improved markedly, notes CFO Thomas Gilday, who oversees the company’s IT group. Real-time monitoring of the amount of ice-cream mix pumped and other ingredients used is being done, and automatic counts of throughput at various checkpoints are helping increase process control. By responding more quickly to production problems, the company slashed waste to half previous levels.
“This project was about analyzing where the chokepoints were, explaining them to our owners, and articulating the most cost-effective way of addressing them,” Gilday adds. As more production reporting is done, he expects greater value from the MAS 500 ERP system from Sage Software that oversees sales data from DSD handhelds and other business systems.
Several automation projects are on the horizon. Automated cake-mold washing and return is in the final stages of development, and space for mix storage silos to replace the 220-gallon totes currently used would deliver significant material-handling advantages. Custom engineering would be required for projects such as delivering crunch to the casting area at the optimum temperature and flow rate. “There are good ideas but no proven technologies for some of the improvements we want to make,” summarizes Palczewski. “When you’re blazing a trail, you have to tread carefully.”
The new facility is generating significant returns as is. Cake blank production used to be outsourced; now it’s done in house. Cold storage costs were cut in half with the new freezer. Transportation costs for raw materials and finished goods are down sharply. Most importantly, the company now can meet growing demand. Five years of compounded growth of 9.2% had pushed capacity to the brink.
The addition of a third production line would boost cake-making capacity to 17 million. Transport of raw materials and finished goods has been streamlined. The new plant also unleashed a burst of manufacturing creativity. M&M and Snickers brand cakes have been produced under license from Masterfoods for several years, and now Celebration’s R&D department is free to create new products to tap other cobranding opportunities. And while loyal Carvel customers expect the cake in the supermarket freezer to taste exactly like the one from a Carvel shop, the Celebration brand has the freedom to develop its own identity in the market.
Celebration Foods is more than Carvel, and the organization proclaimed it to the world when the New Britain plant started up. “We look at Carvel as a brand we make, but Carvel is not who we are,” Shanley emphasizes. “We are Celebration.”
Generations of Northeasterners have grown up with ice cream cakes, and the frozen desserts gradually are expanding nationwide. Dairy Queen and other shops are emphasizing the treats, and major manufacturers such as Kroger and Wells Dairy have ramped up production to supply blanks and private-label cakes. Celebration has an edge with its network of 113 DSD routes and third-party distributors that help it get product into 9,500 retail outlets. Now, the new manufacturing facility may be an even bigger advantage-an asset Celebration will use to secure its hold on the premium ice-cream cake business.
For more information:
Michelle Comerford, Austin Consulting, 440-544-2682, email@example.com
Gary Cardinali, Brighton Engineering Inc., 818-262-4056
Herb Fish, Gram Equipment, 813-248-1978
Stuart Kendig, TranSystems, 717-854-3861, firstname.lastname@example.org
David Potts, Whiting-Turner, 410-337-2062, email@example.com
Outsourced plant ownershipAdd the building itself to the list of capital assets that food companies are turning over to outside investors to lighten the balance sheet and allow their organizations to focus available cash on core operations.
Anaerobic digesters, CHP generators, solar-panel arrays and other big-ticket expenditures often are being built and financed by third parties that negotiate a mutually favorable agreement with food companies hosting the systems. The manufacturer secures energy at below-market prices, eliminates waste or addresses a problem, and doesn’t have funds tied up in non-core activities.
In recent years, food companies have extended the concept to include new facilities, with Celebration Foods one of the latest examples. “It’s financial engineering,” shrugs Tim Shanley, Celebration’s president.
Celebration teamed with Centerplan Development Corp., a commercial real estate firm founded in 2006 in nearby Hartford, CT, by signing a long-term lease for the Centerplan-owned facility. While Celebration dictated design and infrastructure details, Centerplan paid the bills and took ownership of the building.
Job fairs' last round-upEven before the job market shriveled and the economy tanked, employers could expect thousands of people to turn out for job fairs as they prepared to start up production at a new plant. Aside from a story in the local newspaper or a sound bite on the evening news, those events are yielding diminishing returns.
“You just don’t have enough time to interview all the applicants at the old-fashioned job fair,” laments Sandra Spencer, Celebration’s director of human resources. Fifty staff members volunteered to help when the company hosted a fair a few weeks before opening its New Britain plant in February 2008. They managed to interview 700 of the 2,000 hopefuls who gathered at New Britain High School.
A network of community groups was much more effective. Social service organizations such as Catholic Charities prescreened some applicants and helped those workers secure housing, transportation and other support services. Most of Celebration’s workforce is female.
Hispanics are a growing segment of the New Britain community, but a variety of other ethnicities are represented, including Burmese, Poles and Armenians. Spencer counts seven languages spoken on the floor, and many employees are not conversant in English. Late afternoon classes in English as a second language are provided, and human resources has made extensive use of video as a training tool for the cake decorators.