Tasty Baking to relocate facilities
May 09, 2007
by FoodBusinessNews.net Staff
PHILADELPHIA — Tasty Baking Co. has entered an agreement with Liberty Property/Synterra Limited Partnership to relocate its Philadelphia operations to leased facilities at The Navy Yard — a commercial and industrial development center in Philadelphia.
"We look forward to the opportunities that the new bakery will provide for Tasty Baking Co.," said James E. Ksansnak, chairman of the board of directors. "This relocation plan is the culmination of a significant and comprehensive effort by management with heavy involvement from the entire board. It provides a platform for future investment, growth and increased profitability, helping to improve the long-term financial health of the business."
The relocation plans stem from a comprehensive operational review of strategic manufacturing options, as the company is currently producing most of its products at a six-story manufacturing facility built in 1922. The current facility also uses 15 production lines. With the new facility, the company anticipates reducing the number of production lines to 7, and 215 jobs will be eliminated.
The company has entered a 26-year lease with Liberty/Synterra for a 345,500-square-foot building on 25 acres. The facility will be used for production, a warehouse and a distribution center. Construction is anticipated to be completed in late 2009, and the facility is expected to be fully operation in 2010. The total investment cost for baking equipment and project expenditures is $75 million. New baking equipment also will increase product development flexibility and efficiency.
Tasty Baking also will lease a 35,000-square-foot office area in a new building that will be constructed in The Navy Yard Corporate Center.
"When completed, we anticipate annual pre-tax cash savings of approximately $13 million to $15 million, net of the facility leases and before debt service," said David S. Marberger, executive vice-president and chief financial officer. "The annual cash savings realized will allow us to make meaningful investments to grow the sales and profits of the business."