McKee Foods bakes up $102 million investment

McKee Foods bakes up $102 million investment

October 22nd, 2015 by Mike Pare in Local Regional News

MCKEE FOODS

› Founded: 1934 by O.D. and Ruth McKee. They bought Jack’s Cookie Co., a small bakery in Chattanooga, and started baking small cakes.

› Locations: Headquartered in Collegedale, Tenn., the company also has manufacturing plants in Gentry, Ark., and Stuarts Draft, Va., and a distribution center in Kingman, Ariz.

› Sales: $1.4 billion annually

› Employees: More than 5,000 companywide; about 3,000 in Collegedale

› Products: Little Debbie is the largest baked-goods brand; Drake’s cakes; Sunbelt Bakery offers granola bars, cereals, other grain-based snacks; Fieldstone Bakery is a brand of cookies, breakfast pastries, snacks; Heartland brands offers granola cereal, other grain-based products, hot cereals

Source: McKee Foods Corp.

Little Debbie is getting bigger.

McKee Foods Corp., the maker of many popular snack cakes, plans to whip up a $102 million investment at its Collegedale production plant for new equipment and office space, according to the company.

Hamilton County's largest manufacturer also is slated to add at least 50 more jobs over five years, putting its head count here at about 3,000 people.

Mike McKee, the company's chief executive, said the manufacturer is "thrilled to be increasing our production capacity."

He said McKee is continuing to support the local economy through the new jobs and investment. The $102 million figure is believed to be one of the biggest single investments the company has made in Collegedale in its long history.

Company spokesman Mike Gloekler said about three-quarters of the total will go into equipment to boost production. He declined to identify particular products, but said company officials are making sure the business has room to grow.

Steel is coming out of the ground to build new office space at McKee Foods Corp. as part of its $102 million expansion in Collegedale. Contributed photo

Steel is coming out of the ground to...

Photo by McKee Foods Corp.

"We're no stranger to trying to future-proof our facilities," Gloekler said.

For the office space, McKee already has begun construction of a three-story, 60,000-square-foot building next to its headquarters at University Drive and Apison Pike.

Gloekler said the company will stop leasing office space off its Collegedale campus when the building is finished. Also, the structure will house a first-floor conference center, he said.

Most of the new jobs will be in production, the McKee official said, with pay averaging about $44,000 a year.

Charles Wood, the Chattanooga Area Chamber of Commerce's vice president of economic development, said McKee is "kind of an anchor" in the area's food processing business sector.

"When they make that kind of investment that bodes well for the future," he said.

Wood said the company will receive a county property tax incentive. Collegedale also is providing tax abatements, Gloekler said.

Josh Sosland, editor of industry publication Milling & Baking News, said McKee Foods made a significant investment in late 2012 when it spent about $27 million for Hostess Brands' Drake's snack line.

"McKee has been long known as a solid operator," he said.

McKee's CEO said about a year after the acquisition of Drake's that it had "10 years worth of growth overnight."

"When [Hostess] shut down, our business jumped tremendously," he said. The company at the time added about 300 jobs.

Gloekler said McKee had "record profits" in its last fiscal year, putting total sales at $1.4 billion.

Hostess has emerged from bankruptcy and McKee Foods has lost some ground since that time, he said.

Snack Food and Wholesale Bakery magazine reported that McKee's bakery snacks sales dropped 4.1 percent in the year ending April 19. But, it said, the company still registered the most sales in the category for the period, hitting $630.7 million.

The magazine said McKee's Little Debbie snack cake portfolio had a 10 percent drop, but it still generated $320.6 million in sales in the period.

Gloekler, however, said the overall business at McKee is still up.

"We continue to find new ways to plow new ground," he said.

Wood said that when a company injects the kind of investment McKee is making, its officials believe it will make the business more efficient. He said it's becoming more common to see large investment dollars and fewer accompanying jobs.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.

McKee Food Corp.'s new office will create about 60,000 square feet of added space for the Collegedale-based snack cake manufacturer. Contributed rendering by River Street Architecture

Photo by Contributed Photo /Times Free Press.
 

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