New Mills? Location, Transport And Other Considerations
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Digital Re-print - November | December 2009 Feature title: New mills? - Location, transport and other considerations
Grain & Feed Milling Technology is published six times a year by Perendale Publishers Ltd of the United Kingdom. All data is published in good faith, based on information received, and while every care is taken to prevent inaccuracies, the publishers accept no liability for any errors or omissions or for the consequences of action taken on the basis of information published. ©Copyright 2009 Perendale Publishers Ltd. All rights reserved. No part of this publication may be reproduced in any form or by any means without prior permission of the copyright owner. Printed by Perendale Publishers Ltd. ISSN: 1466-3872
www.gfmt.co.uk
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New Mills
Feature
New mills? Location, transport and other considerations
The costs of operating a flour distribution system efficiently may well determine where to build and what capacity to construct when it comes to replacing a flour mill. Feature writer Jonathan Bradshaw explores the options and responsibilities company board members have in considering the location of a new mill.
by Jonathan Bradshaw
I
t is not that often that we see complete new mills being built in the UK these days, although there are several under construction at the moment, which is rather unusual.
Our European counterparts, however, are much more active and are constantly indulging in new construction work.
from engineers, both civil and mechanical, are extremely attractive. Certainly, it is not a time to be putting one’s head in the sand and then simply complaining about the lack of competitiveness in the industry.
Cost-effective footprint New technology has led to the introduction of modular sifters and two high rollermills that give for a much more costeffective footprint than we have ever been able to consider before and it is relatively easy to introduce additional capacity into quite a small space. With fossil fuel costs still relatively high, the cost of moving wheat into the mill, distributing flour out and minimising the cost of wheatfeed and bran disposal, there are significant incentives available to relocate, although in many cases in Europe local trade links have developed between miller and baker over the years that optimise transport routes and make the existing location of many mills still the ideal choice. However, there are some fairly aggressive bakers out there who are constantly examining their trade routes and costs of distribution and we see many new bakeries being
“I can well see a time coming where we see the Chinese manufacturers making the vast majority of flour milling equipment that is sold in Europe and the European engineers specializing in pure design work” And perhaps there are good reasons for considering new building work at the moment, for the offers that are forthcoming 14 | november-december 2009
built throughout Europe almost constantly. The concept in England of utilising central storage for grain is not new, although it does seem to have taken on a new lease of life in certain quarters and the costs of moving grain from grain store to mill have been kept to a minimum in many cases. I welcome this incentive of central grain storage since there now arises the opportunity to provide the miller with mycotoxinfree (or greatly reduced) wheat of a constant protein and hagberg level, all year round. It also allows for a greater degree of planning in of raw material supply and reduces the involvement at the mill for wheat cleaning equipment since a great deal of cleaning can be done before grain is stored at harvest time after drying.
Replacing capital equipment There is a great deal to be said for replacing capital equipment on a regular basis irrespective of what industry we operate in, but there is a distinct benefit for replacing flour milling equipment regularly as this helps maintain milling performance and yields and reduces power consumption. Having said this, it does not appear to have escaped the attention of some millers that current offerings of rollermills, in particular onto the European milling market, are over engineered in terms of life span and several millers have bought rollermills from China and the Far East in order to keep costs down to a minimum. Neither has it escaped the wit of several European milling engineers that they can have their designs manufactured in China for a significant cost discount in comparison
&feed millinG technoloGy
Grain
Feature
New Mills
to their own manufacture in England or mainland Europe. The cost of developing new machinery is high and once a model is established, engineers naturally seek to maximise sales from that design before spending time and effort in designing, manufacturing, testing and finally tooling up a plant to manufacture an individual machine. I can well see a time coming where we see the Chinese manufacturers making the vast majority of flour milling equipment that is sold in Europe and the European engineers specializing in pure design work. This is happening to some extent on smaller machines although rollermills and sifters are still the preserve of their original designers and are more or less made ‘in house’ albeit that the in house facility may well be based in China, but is completely controlled by the designers and principal milling engineer. Some ancillary items, pneumatic systems, gravity spouting, blowlines, etc are made in the country where they will be fitted as this minimises transport costs to the final mill location. This too is the case for items such as conveyors and elevators in some cases although the major engineers prefer their own manufacture to bought in equipment and I support their view, often because their own equipment is far superior in design, power consumption and durability. It often suits regulations better from a dust suppression point of view. There have been many cases throughout the world where colour sorters have found their way into the screenrooms of mills. Indeed, if we were building new mills it is hard to imagine a screenroom without a colour sorter being used. The effect this equipment has on building size, overall machinery content and general layout is quite impressive. In one small organic plant I came across recently the only piece of equipment in the screenroom was simply a colour sorter, nothing else. Granted, capacity was low at around one tonne per hour but, nevertheless, it shows what can be done and perhaps more importantly where we are going in terms of mill machinery inclusion.
Short-term economics For many years in Europe we have bought mills with a view to running them for many years, even decades and we have evaluated machinery on its expected serviceable life. There is now becoming a greater awareness of short-term economics and with true life costings being adopted more and more in the accounts department when evaluating capital projects we are seeing mills being built very much ‘to a price’ and there is a greater range of engineers labels to be seen around the countries of Europe.
&feed millinG technoloGy
Grain
So why would anyone want to build a new mill in today’s economic environment when finances are tight and returns uncertain, as the press would have us all believe. The simple answer is that there is more margin to be made than hitherto and investment to either improve performance or reduce expense is easily possible. Performance enhancement can be achieved by improved yield and there is greater use of debranning and peeling technology than we have seen before to add credence to that belief. With the use of colour sorters and the range of cleaning equipment currently available then screening removal is much more selective and Screenroom losses are no longer as prohibitive as they were even a few years back. When it comes to cost reduction we really see technology come to the fore with fully automated mills operating without any staff, other than perhaps a day miller.
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Power consumption is monitored and adjusted accordingly when plant is running and with the introduction of such items as self balancing pneumatic control valves (Buhler) the last great power consumption are is being addressed.
Logistics But perhaps the biggest saving to be made and the main reason why mills are being built are the logistical costs of moving goods around the country.
november-december 2009 | 15
New Mills
Long gone are the days when drivers simply appeared each day and delivered goods into a certain area despite whatever quantity was wanted overall by the bakers. Now we monitor consumption by each of our customers and we perhaps know more about their operations than they do themselves, certainly when it comes to inventory control we know more than anyone what rate of consumption take place through the week. We can deliver flour at the drop of a hat but we are better organised than that and we know well in advance when a baker
There comes a time when limits are reached however and the only efficiency left to be made is by moving either the mill nearer to the raw material or nearer to the final destination for the flour. In-group mill situations where multiple facilities are operated in any one country I am told that mills should be placed at 108 miles apart to maximise efficiency. Precisely why 108 and not 100 I am not sure, probably because the mathematics at the fuel rate on the day worked out to that figure. However, the point being is that there is a given consumption of flour per capita and in order to satisfy that consumption then bakeries have been built to optimise delivery costs to the relevant supermarket networks so that again, distribution costs are minimised. In many countries throughout Europe however the consumption of flour is greatest as very refined baked goods rather than the plant bakery type sandwich bread we produce in the UK. This leads to the general number of bakeries being greater yet the output smaller at higher margins. In the Far East we see most flour being sold in small cotton bags although there is sufficient consumption within a small distance from the mill due to the high population density as to make it possible to sustain large mill outputs with mills very close to each other. In the UK we consume a large proportion of our flour through fast food outlets, either used directly at the sale point or in large quantities of items such as burger buns. This concentrates the main consumption to city centres and fast food outlets dominate the retail trade. Obviously, much of the trade in flour is tied trade and as well as the plant bakery trade there is a bespoke element of flour consumption which is used in specialist plant facilities where an array of ready meals, pies, rolls and similar items are produced. This is the trade, which was at one time ‘free trade’ which we all competed for, and which now has been taken in hand by the
“How do we decide when the time is right to rebuild or relocate? It should be a subject up for discussion at every board meeting and something which we should be constantly discussing as it keeps us aware of what our aims are and what our objectives should be. We are not here to be kind and gentle, traditional millers we are in business to make a profit. Let us not forget that”
will need replacement deliveries. With large plant bakeries we have a steady stream of tankers to-ing and fro-ing between mill and bakery, and it is this which influences where we locate our mills. The cost per tonne for delivery has now reached a point where the capital costs of building or relocating fall far short of the ever-multiplying costs of fuel that it takes to deliver flour. With the use of vehicle tracking to optimise routing of vehicles and all the various other sophisticated aids that both driver and transport manager have available to them there is no reason why we should not optimise the delivery procedure to the same high level of efficiency as we have done with the milling process.
16 | november-december 2009
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Feature
major millers and is now fully integrated. Obviously, having the mill close to such high usage factories and plant facilities influences the efficiencies of the overall integrated operation, hence we see these organisations rebuilding more regularly, purely from a logistical viewpoint.
Smaller mills in Europe Our size of mill in Europe is generally smaller than the rest of the world, especially where grain shipments are made by sea and are generally of a larger size than we normally handle in the UK. Storage of grain in Europe is kept to the minimum, often down to just a few days, whereas with mills in the Far East where US and Australian wheat is the preferred choice, we see shipments of at least one month being adopted and storage obviously corresponds to allow for effective movements of vessels. In Africa we see a mixture of shipments and we see a variety of mill sizes. Those mills with port facilities will utilise them to the maximum and we see some vary large installations on the North East and the West Coasts. In the hinterland mills try to use as much locally grown wheat as possible although the vagaries of supply because of drought, availability of central, organised, grain storage make this a difficult pursuit. The interference in market logistics by governments demonstrates a woeful tale and there is a series of disasters, which we should have learnt from by now. Suffice to say that Africa could be self sufficient in flour and almost independent in animal feed production if it were organised, but there are many redundant and dilapidated mills ripe for being rebuilt throughout Africa. Sad to say they will probably remain that way for many years.
Summary However, to summarise the main points of this article, what influences the location of new mills today? Customer location, costs of labour, power, raw materials, labour, maintenance costs. Is it the costs of operating a flour distribution system efficiently and well enough to compete with other millers, yet still leaving a margin? And how do we decide when the time is right to rebuild or relocate? It should be a subject up for discussion at every board meeting and something which we should be constantly discussing as it keeps us aware of what our aims are and what our objectives should be. We are not here to be kind and gentle, traditional millers we are in business to make a profit. Let us not forget that.
&feed millinG technoloGy
Grain
LINKS
This digital Re-print is part of the November | December 2009 edition of Grain & Feed Milling Technology magazine. Content from the magazine is available to view free-of-charge, both as a full online magazine on our website, and as an archive of individual features on the docstoc website. Please click here to view our other publications on www.docstoc.com.
December
• See the full issue
2009
• New mills? Location, transport & other considerations
• Water freight fights back
• African feed
industry - a snap shot
In this issue: •
Smarter ingredient evaluation
•
FOCUS: The Middle East & Africa
•
Company profiles 2009-10
•
Visit the GFMT website
•
Contact the GFMT Team
•
Subscribe to GFMT
A subscription magazine for the global flour & feed milling industries - first published in 1891
To purchase a paper copy of the magazine, or to subscribe to the paper edition please contact our Circulation and Subscriptions Manager on the link adove.
INFORMATION FOR ADVERTISERS - CLICK HERE
www.gfmt.co.uk
PREVIOUS PAGE
Grain & Feed Milling Technology is published six times a year by Perendale Publishers Ltd of the United Kingdom. All data is published in good faith, based on information received, and while every care is taken to prevent inaccuracies, the publishers accept no liability for any errors or omissions or for the consequences of action taken on the basis of information published. ©Copyright 2009 Perendale Publishers Ltd. All rights reserved. No part of this publication may be reproduced in any form or by any means without prior permission of the copyright owner. Printed by Perendale Publishers Ltd. ISSN: 1466-3872
www.gfmt.co.uk
NEXT PAGE
New Mills
Feature
New mills? Location, transport and other considerations
The costs of operating a flour distribution system efficiently may well determine where to build and what capacity to construct when it comes to replacing a flour mill. Feature writer Jonathan Bradshaw explores the options and responsibilities company board members have in considering the location of a new mill.
by Jonathan Bradshaw
I
t is not that often that we see complete new mills being built in the UK these days, although there are several under construction at the moment, which is rather unusual.
Our European counterparts, however, are much more active and are constantly indulging in new construction work.
from engineers, both civil and mechanical, are extremely attractive. Certainly, it is not a time to be putting one’s head in the sand and then simply complaining about the lack of competitiveness in the industry.
Cost-effective footprint New technology has led to the introduction of modular sifters and two high rollermills that give for a much more costeffective footprint than we have ever been able to consider before and it is relatively easy to introduce additional capacity into quite a small space. With fossil fuel costs still relatively high, the cost of moving wheat into the mill, distributing flour out and minimising the cost of wheatfeed and bran disposal, there are significant incentives available to relocate, although in many cases in Europe local trade links have developed between miller and baker over the years that optimise transport routes and make the existing location of many mills still the ideal choice. However, there are some fairly aggressive bakers out there who are constantly examining their trade routes and costs of distribution and we see many new bakeries being
“I can well see a time coming where we see the Chinese manufacturers making the vast majority of flour milling equipment that is sold in Europe and the European engineers specializing in pure design work” And perhaps there are good reasons for considering new building work at the moment, for the offers that are forthcoming 14 | november-december 2009
built throughout Europe almost constantly. The concept in England of utilising central storage for grain is not new, although it does seem to have taken on a new lease of life in certain quarters and the costs of moving grain from grain store to mill have been kept to a minimum in many cases. I welcome this incentive of central grain storage since there now arises the opportunity to provide the miller with mycotoxinfree (or greatly reduced) wheat of a constant protein and hagberg level, all year round. It also allows for a greater degree of planning in of raw material supply and reduces the involvement at the mill for wheat cleaning equipment since a great deal of cleaning can be done before grain is stored at harvest time after drying.
Replacing capital equipment There is a great deal to be said for replacing capital equipment on a regular basis irrespective of what industry we operate in, but there is a distinct benefit for replacing flour milling equipment regularly as this helps maintain milling performance and yields and reduces power consumption. Having said this, it does not appear to have escaped the attention of some millers that current offerings of rollermills, in particular onto the European milling market, are over engineered in terms of life span and several millers have bought rollermills from China and the Far East in order to keep costs down to a minimum. Neither has it escaped the wit of several European milling engineers that they can have their designs manufactured in China for a significant cost discount in comparison
&feed millinG technoloGy
Grain
Feature
New Mills
to their own manufacture in England or mainland Europe. The cost of developing new machinery is high and once a model is established, engineers naturally seek to maximise sales from that design before spending time and effort in designing, manufacturing, testing and finally tooling up a plant to manufacture an individual machine. I can well see a time coming where we see the Chinese manufacturers making the vast majority of flour milling equipment that is sold in Europe and the European engineers specializing in pure design work. This is happening to some extent on smaller machines although rollermills and sifters are still the preserve of their original designers and are more or less made ‘in house’ albeit that the in house facility may well be based in China, but is completely controlled by the designers and principal milling engineer. Some ancillary items, pneumatic systems, gravity spouting, blowlines, etc are made in the country where they will be fitted as this minimises transport costs to the final mill location. This too is the case for items such as conveyors and elevators in some cases although the major engineers prefer their own manufacture to bought in equipment and I support their view, often because their own equipment is far superior in design, power consumption and durability. It often suits regulations better from a dust suppression point of view. There have been many cases throughout the world where colour sorters have found their way into the screenrooms of mills. Indeed, if we were building new mills it is hard to imagine a screenroom without a colour sorter being used. The effect this equipment has on building size, overall machinery content and general layout is quite impressive. In one small organic plant I came across recently the only piece of equipment in the screenroom was simply a colour sorter, nothing else. Granted, capacity was low at around one tonne per hour but, nevertheless, it shows what can be done and perhaps more importantly where we are going in terms of mill machinery inclusion.
Short-term economics For many years in Europe we have bought mills with a view to running them for many years, even decades and we have evaluated machinery on its expected serviceable life. There is now becoming a greater awareness of short-term economics and with true life costings being adopted more and more in the accounts department when evaluating capital projects we are seeing mills being built very much ‘to a price’ and there is a greater range of engineers labels to be seen around the countries of Europe.
&feed millinG technoloGy
Grain
So why would anyone want to build a new mill in today’s economic environment when finances are tight and returns uncertain, as the press would have us all believe. The simple answer is that there is more margin to be made than hitherto and investment to either improve performance or reduce expense is easily possible. Performance enhancement can be achieved by improved yield and there is greater use of debranning and peeling technology than we have seen before to add credence to that belief. With the use of colour sorters and the range of cleaning equipment currently available then screening removal is much more selective and Screenroom losses are no longer as prohibitive as they were even a few years back. When it comes to cost reduction we really see technology come to the fore with fully automated mills operating without any staff, other than perhaps a day miller.
PREVIOUS PAGE
NEXT PAGE
Power consumption is monitored and adjusted accordingly when plant is running and with the introduction of such items as self balancing pneumatic control valves (Buhler) the last great power consumption are is being addressed.
Logistics But perhaps the biggest saving to be made and the main reason why mills are being built are the logistical costs of moving goods around the country.
november-december 2009 | 15
New Mills
Long gone are the days when drivers simply appeared each day and delivered goods into a certain area despite whatever quantity was wanted overall by the bakers. Now we monitor consumption by each of our customers and we perhaps know more about their operations than they do themselves, certainly when it comes to inventory control we know more than anyone what rate of consumption take place through the week. We can deliver flour at the drop of a hat but we are better organised than that and we know well in advance when a baker
There comes a time when limits are reached however and the only efficiency left to be made is by moving either the mill nearer to the raw material or nearer to the final destination for the flour. In-group mill situations where multiple facilities are operated in any one country I am told that mills should be placed at 108 miles apart to maximise efficiency. Precisely why 108 and not 100 I am not sure, probably because the mathematics at the fuel rate on the day worked out to that figure. However, the point being is that there is a given consumption of flour per capita and in order to satisfy that consumption then bakeries have been built to optimise delivery costs to the relevant supermarket networks so that again, distribution costs are minimised. In many countries throughout Europe however the consumption of flour is greatest as very refined baked goods rather than the plant bakery type sandwich bread we produce in the UK. This leads to the general number of bakeries being greater yet the output smaller at higher margins. In the Far East we see most flour being sold in small cotton bags although there is sufficient consumption within a small distance from the mill due to the high population density as to make it possible to sustain large mill outputs with mills very close to each other. In the UK we consume a large proportion of our flour through fast food outlets, either used directly at the sale point or in large quantities of items such as burger buns. This concentrates the main consumption to city centres and fast food outlets dominate the retail trade. Obviously, much of the trade in flour is tied trade and as well as the plant bakery trade there is a bespoke element of flour consumption which is used in specialist plant facilities where an array of ready meals, pies, rolls and similar items are produced. This is the trade, which was at one time ‘free trade’ which we all competed for, and which now has been taken in hand by the
“How do we decide when the time is right to rebuild or relocate? It should be a subject up for discussion at every board meeting and something which we should be constantly discussing as it keeps us aware of what our aims are and what our objectives should be. We are not here to be kind and gentle, traditional millers we are in business to make a profit. Let us not forget that”
will need replacement deliveries. With large plant bakeries we have a steady stream of tankers to-ing and fro-ing between mill and bakery, and it is this which influences where we locate our mills. The cost per tonne for delivery has now reached a point where the capital costs of building or relocating fall far short of the ever-multiplying costs of fuel that it takes to deliver flour. With the use of vehicle tracking to optimise routing of vehicles and all the various other sophisticated aids that both driver and transport manager have available to them there is no reason why we should not optimise the delivery procedure to the same high level of efficiency as we have done with the milling process.
16 | november-december 2009
PREVIOUS PAGE
NEXT PAGE
Feature
major millers and is now fully integrated. Obviously, having the mill close to such high usage factories and plant facilities influences the efficiencies of the overall integrated operation, hence we see these organisations rebuilding more regularly, purely from a logistical viewpoint.
Smaller mills in Europe Our size of mill in Europe is generally smaller than the rest of the world, especially where grain shipments are made by sea and are generally of a larger size than we normally handle in the UK. Storage of grain in Europe is kept to the minimum, often down to just a few days, whereas with mills in the Far East where US and Australian wheat is the preferred choice, we see shipments of at least one month being adopted and storage obviously corresponds to allow for effective movements of vessels. In Africa we see a mixture of shipments and we see a variety of mill sizes. Those mills with port facilities will utilise them to the maximum and we see some vary large installations on the North East and the West Coasts. In the hinterland mills try to use as much locally grown wheat as possible although the vagaries of supply because of drought, availability of central, organised, grain storage make this a difficult pursuit. The interference in market logistics by governments demonstrates a woeful tale and there is a series of disasters, which we should have learnt from by now. Suffice to say that Africa could be self sufficient in flour and almost independent in animal feed production if it were organised, but there are many redundant and dilapidated mills ripe for being rebuilt throughout Africa. Sad to say they will probably remain that way for many years.
Summary However, to summarise the main points of this article, what influences the location of new mills today? Customer location, costs of labour, power, raw materials, labour, maintenance costs. Is it the costs of operating a flour distribution system efficiently and well enough to compete with other millers, yet still leaving a margin? And how do we decide when the time is right to rebuild or relocate? It should be a subject up for discussion at every board meeting and something which we should be constantly discussing as it keeps us aware of what our aims are and what our objectives should be. We are not here to be kind and gentle, traditional millers we are in business to make a profit. Let us not forget that.
&feed millinG technoloGy
Grain
LINKS
This digital Re-print is part of the November | December 2009 edition of Grain & Feed Milling Technology magazine. Content from the magazine is available to view free-of-charge, both as a full online magazine on our website, and as an archive of individual features on the docstoc website. Please click here to view our other publications on www.docstoc.com.
December
• See the full issue
2009
• New mills? Location, transport & other considerations
• Water freight fights back
• African feed
industry - a snap shot
In this issue: •
Smarter ingredient evaluation
•
FOCUS: The Middle East & Africa
•
Company profiles 2009-10
•
Visit the GFMT website
•
Contact the GFMT Team
•
Subscribe to GFMT
A subscription magazine for the global flour & feed milling industries - first published in 1891
To purchase a paper copy of the magazine, or to subscribe to the paper edition please contact our Circulation and Subscriptions Manager on the link adove.
INFORMATION FOR ADVERTISERS - CLICK HERE
www.gfmt.co.uk
PREVIOUS PAGE
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