THE COST OF OPERATING A CONFECTIONERY MANUFACTURING PLANT DETAILED IN NEW BOYD BIZCOSTS STUDY

Size: px

Start display at page:

Download "THE COST OF OPERATING A CONFECTIONERY MANUFACTURING PLANT DETAILED IN NEW BOYD BIZCOSTS STUDY"

Annabel Brooks
6 years ago
Views:

1 Princeton, NJ Prepared by: October 1, 2004 THE COST OF OPERATING A CONFECTIONERY MANUFACTURING PLANT DETAILED IN NEW BOYD BIZCOSTS STUDY A recently completed corporate site selection study compares the cost of operating a typical confectionery products plant in 42 different U.S, Canadian, and Mexican locations., based in Princeton, NJ, advises major corporations where to locate new plants and offices. Total annual operating costs in the study range from an average of $26,141,675, in the three most costly U.S. locations (San Francisco, Boston, and Philadelphia), to a low of $22,877,957 in the three least costly U.S. sites (Chattanooga, Salt Lake City, and Dallas). The six surveyed Canadian locations average $19.0 million annually, 21 percent lower then the median cost U.S. location of Minneapolis/St. Paul. Annual savings projected for Mexico versus the U.S. median exceed 50 percent.

2 2 Comparative Confectionery Plant Site Locations For purposes of comparative economic analysis, major geographicallyvariable operating costs projected by Boyd for a series of 42 manufacturing sites in the U.S., Canada, and Mexico. The comparative plant sites in the Boyd analysis all house regional concentrations of confectionery products manufacturing. Major North American benchmark cost centers such as Boston, Chicago, Dallas, Toronto, and Los Angeles are included as are a series of smaller market hubs of North American confectionery manufacturing activity. A total of six Pennsylvania locations were included. The state houses one of the largest concentrations of confectionary industry operations in the nation led by Hershey Foods in Hershey. The 42 comparative locations included in the Boyd analysis are detailed on the following pages by region. Northeast Region Boston, Massachusetts Springfield, Massachusetts Burlington/St. Albans, Vermont Rochester, New York Hackettstown/Phillipsburg, New Jersey Pennsauken/Camden, New Jersey

3 3 Pennsylvania Region Hershey/Lebanon, Pennsylvania Lancaster/Lititz, Pennsylvania Philadelphia, Pennsylvania Allentown/East Greenville, Pennsylvania York, Pennsylvania Scranton/Duryea, Pennsylvania Southeast and South Central Region Richmond, Virginia Atlanta, Georgia Charlotte, North Carolina Chattanooga/Cleveland, Tennessee St. Louis, Missouri Dallas, Texas Upper Midwest Region Chicago, Illinois Omaha, Nebraska Milwaukee/New Berlin, Wisconsin Minneapolis/St. Paul, Minnesota Grand Rapids/Holland, Michigan Kansas City, Missouri

4 4 Western Region Las Vegas/Henderson, Nevada Phoenix/Mesa, Arizona Salt Lake City, Utah Denver/Boulder, Colorado Portland, Oregon Seattle/Bellevue, California Region Los Angeles/Glendale, California San Francisco/Burlingame, California Stockton, California Fresno, California Riverside/San Bernardino, California San Diego, California Canada and Mexico Region Toronto, Ontario Montreal, Quebec Vancouver, British Columbia Winnipeg, Manitoba Halifax, Nova Scotia Maquiladora, Mexico

5 5 Annual operating costs in the Boyd study are scaled to a representative 175,000 sq. ft. confectionery manufacturing plant employing 300 hourly workers, and shipping to major North American market cities. The study analyses all major geographically-variable operating costs critical to the confectionery industry site selection process, including labor, utilities, industrial lease rates, construction, transportation, and others. Comparative costs of securing key ingredient, sugar, in the U.S. and in the two alternate North American sites. The Boyd Company, founded in 1975, provides independent location counsel to leading U.S. and overseas corporations such as: PepsiCo.; JP Morgan Chase; PNC Bank; United Technologies; Philips; Hewlett-Packard; Hercules; Rhone-Poulenc; Michael Foods; TD Canada Trust: and many others. The Boyd Company is a recognized source for comparative cost-of-doing business studies. In today s softened U.S. economy, comparative economics are ruling the site selection process. Boyd clients are concluding that often the only way to improve the bottom line is on the cost side of the ledger, not the revenue side. Operating cost differentials between an acceptable location and an optimum confectionery plant site can be very substantial, often running into millions of

6 6 dollars per year. Itemized factor-to-factor annual operating cost comparisons between the highest, lowest, and a mid-range cost location in the Boyd study (Hershey/Lebanon, PA) are detailed in the following table. What It Costs To Operate A U.S. Confectionery Plant: The Highs and Lows of It (1) Hershey/ Highest Cost U.S. Lebanon Lowest Cost U.S. Locations (2) PA Locations (3) Nonexempt Labor Weighted Average Hourly Earnings $18.72 $18.19 $14.96 Annual Base Payroll Costs $10,692,864 $10,390,128 $8,545,152 Fringe Benefits $4,063,288 $3,948,249 $3,247,158 Total Annual Labor Costs $14,756,152 $14,338,377 $11,792,310 Electric Power Costs $670,372 $454,668 $315,129 Industrial Lease Costs $856,333 $603,750 $508,667 Construction Amortization Costs $346,228 $283,600 $264,575 Heating & Air Conditioning Costs $339,833 $298,528 $182,050 Outbound Shipping Costs $4,476,142 $3,922,264 $5,359,103 Sugar and Other Costs $4,696,615 $4,720,974 $4,456,123 Total Annual Geographically- Variable Operating Costs $26,141,675 $24,622,161 $22,877,957 NOTES: (1) Includes all major geographically-variable operating costs for a typical 300-worker confectionary plant. (2) Reflects average costs for highest three U.S. locations. (3) Reflects average costs for lowest three U.S. locations.

7 7 Boyd s independent analysis has been structured to be a useful and authoritative tool for a broad segment of the confectionery and food processing industry group. Geographic differentials in operating costs could be expected to be consistent with a variety of confectionery products manufacturing operations. These would include, e.g., production of both chocolate and non-chocolate confectionery items such as: candy bars and candy novelties; chewing gum; cough drops, mints, and non-pharmaceutical lozenges; granola and cookie bar products; marshmallows; candied and glazed fruit products; and various other confectionery and snack food items. The other food processing and beverage industry companies which rely on sugar as a key ingredient will also find the comparative operating cost analysis useful. Additional information on the study, including a free executive summary, can be found on the Boyd Company s website:

TABLE 3c: Congressional Districts with Number and Percent of Hispanics* Living in Hard-to-Count (HTC) Census Tracts**

TABLE 3c: Congressional Districts with Number and Percent of Hispanics* Living in Hard-to-Count (HTC) Census Tracts** living Alaska 00 47,808 21,213 44.4 Alabama 01 20,661 3,288 15.9 Alabama 02 23,949 6,614 27.6 Alabama 03 20,225 3,247 16.1 Alabama 04 41,412 7,933 19.2 Alabama 05 34,388 11,863 34.5 Alabama 06 34,849 4,074