Issue Iss1 2009
A needed change
Following a major footprint reorganisation at one of Premier Foods’ sites, Tim Gregory highlights the benefits this has brought
In 1999 Hicks, Muse, Tate and Furst first acquired Hillsdown Holdings, which was subsequently renamed Premier Foods. This was followed by a string of acquisitions through the next seven years that has spelled Premier Foods’ reputation as one of the country’s leading food manufacturers.
The latest piece of the jigsaw fell into place in March 2007 when Premier Foods completed the acquisition of RHM along with many of the UK’s best-known food brands including Hovis, Sharwoods, Cadbury cakes, Bisto and Mr Kipling. Around 98 per cent of all UK households consume at least one of these products, and its top ten brands alone have a retail value of over £1 billion.
Premier Foods’ offers the most comprehensive range of products, employing almost 20,000 people on more than 60 sites throughout the UK. The company acquired one of these sites, Ashford, in 2007 and Tim Gregory, the factory manager of the Ashford site, explains: “We have always produced a range of dry powder foods and our original operation was based on the production of Cup-A-Soup. However, following the recent addition and changes to Premier Foods’ portfolio, we are now also the major manufacturing site for Bisto powder and Paxo stuffing as well as being big on the foodservice front with dry mixes to make various products including scones, sponges and chocolate crumble where we’re supplying schools, hospitals, prisons and institutions.”
The food retail market is highly competitive, demanding consistent product quality and reliable supply while constantly seeking more competitive pricing and innovative new products. Premier Foods continuously looks to generate economies of scale to reduce production costs in order to support promotional activity, investment in building brand awareness with the consumer and new product development.
Following the acquisition of RHM in 2007, there was a major footprint reorganisation and refurbishment of the Ashford factory. “There were a lot of synergies between the two businesses, and Premier Foods had identified potential cost savings of £85 million a year from integrating both the companies,” states Tim. “We had a large empty building that needed to be refurbished and so the first half of 2008 saw the refurbishment of this building, while the second half was all about transferring all of RHM’s volume to Ashford. We have, in that time, trebled in size because the volume in Ashford has grown from 15,000 to 50,000 tonnes. This has obviously made us much more competitive because in 2001, it was costing the site £1000 to produce a tonne but now it only costs £300 for every tonne.”
He adds: “Most of the machineries were transferred from RHM’s original factory though Premier Foods still injected a fair amount of investment in new kit where it was deemed appropriate or necessary, given the age and condition of the original machinery or depending on the changes that we wanted to make in terms of product formats. Out of the £24 million invested, about half of that was dedicated to the refurbishment of the building while the other half was injected into new and upgraded machineries.”
Moving on, Tim discusses the current condition of the market: “The food market tends to be recession-proof, and most of our products fit nicely into what supermarkets label as value brands. There seems to be a lot of potential for growth within the company and we believe the business is still very healthy.
“Because we are in every British kitchen and on every British table, we do take a very responsible view on ensuring we are catering to the health conscious consumer. All of our products go through continual reinvestment and appraisal to ensure we are addressing any aspect of the products that could be altered or modified for the better – we even have a salt reduction programme in place because we are aware that this is one of the biggest ongoing concerns in the healthy eating market.”
Prior to being acquired by Premier Foods, the Ashford factory had scooped up two awards in 2005 – the best household and general products factory award and the best factory for people management. “We are very proud of our achievements,” states Tim. “In light of the redundancies we had to carry out following the integration of the RHM factories and Ashford, the latter award proves to our employees that they are definitely working for a good company that cares about its people and that they make a difference to the success of the business.”
Looking to the future of the Ashford factory, Tim concludes: “This is by far one of the biggest forms of reorganisation that has taken place in Premier Foods for years and so we are dedicating all our efforts to tidying this project, which could take up to another year at least. After bedding this project, we will be getting back to the continuous improvement programme and driven to building the volume of production at this site.”