Tasty Baking Company, Philadelphia, USA

The Tasty Baking Company is a US icon having produced TastyKake snack cakes for the last 86 years in their six-storey Philadelphia facility on Hunting Park Avenue. The products are best known along the Eastern seaboard and westward to Cleveland.

The 585,000ft² facility has 15 lines, produces around 4.8 million cakes and doughnuts a day and has been at its current location since 1922 (Peanut Butter KandyKakes are one of the favourites).

There are three cupcake lines, two doughnut lines, a cookie line, two KandyKake lines, one Kreamie line, two pie lines, three Krimpet lines and a junior line. The factory uses state-of-the-art equipment but has a dated and inefficient layout and requires major modernisation to give a new more efficient and green facility.

The company in its present form had no new product flexibility although it held 200 different stock keeping units, there are dedicated ovens for dedicated products, and it only focused on what it could sell most profitably instead of what the consumer required.

Company sales in 2007 were over $250m but the management had realised that for future success they needed a new production facility. One of the first actions of the management after a strategic review of the company in May 2006 was the implementation of an enterprise resource programme (ERP) from SAP for the current facility.

On 20 April 2009, the company announced its decision to relocate its Philadelphia operations to The Navy Yard, a local commercial and industrial development centre.

New Tasty Baking facility

As part of the relocation, a new Tasty Baking Co facility is being constructed on a 25-acre site at The Navy Yard, Philadelphia by Liberty Property / Synterra Ltd under a 26-year lease agreement (announced in May 2007). The construction work began on the 345,000ft² single-storey facility on 1 April 2008. The facility will be fully operational by mid- June 2010. It will include manufacturing, distribution and warehousing space.

The project involves a totally new start with new bakery equipment, packaging equipment and also a logistics and distribution centre. There will now be seven production lines instead of the previous 15 and production schedules will be more streamlined and quicker. There will also be more scope for product development.

The lease approach for the building was taken because it was difficult to finance the building and the equipping at the same time. The same site also accommodates a new 35,000ft² company headquarters (part of a 95,000ft² complex constructed by Synterra) that was opened on 20 April 2009. The building is located at Three Crescent Drive, within the Philadelphia Navy Yard.

The new bakery will have a mezzanine floor for public tours to see actual production in process. The company has asked Fluor to assist with the engineering and installation logistics of the new bakery project.

Sustainability

Tasty Baking is approaching its design with sustainability and environmental awareness in mind. The new building is being built under LEED (leadership in energy and environmental design) principles, platinum LEED for the office building and base level LEED certification for the bakery. Five of the cake lines will have thermal oil heating, which is reusable.

The bakery and HQ will have efficient HVAC, water conservation, use recycled building materials, and implement day-light harvesting, among many possible environmentally efficient features.

Funding

The project will use a combination of state and city funding as well as low interest loans. The capital investment for the baking equipment and other areas of the project are expected to be around $75m. The project will be funded through the combination of a multi-bank loans led by the Citizens Bank, as well as $32m in low-interest development loans provided in part by the Commonwealth of Pennsylvania and the Philadelphia Industrial Development Corporation (PIDC). In addition, Tasty Baking Company has been awarded a $600,000 Opportunity Grant by the Commonwealth of Pennsylvania.

The new facility will be located in a Keystone Opportunity Investment Zone, which will provide tax abatement through to the year 2018. The new bakery will save the company $13m to $15m and there will be 215 fewer jobs.