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Flour and grain company is expanding next door to add more warehouse and distribution bays as business booms

COURTESY PHOTO: BOB'S RED MILL - Seeing a surge in demand and a need to automate, Bob's Red Mill has leased 404,000
square feet of the former Unified Grocers and Supervalu distribution space at 6433 S.E. Lake Road, Milwaukie.

Bob's Red Mill, based in Milwaukie, Oregon, is having a good 2021.

That's because it has a good 2020. When COVID-threatened Americans turned to baking sourdough bread and eating their feelings with gluten-free cookies, Bob's Red Mill doubled down on its staff. Instead of laying them off for the usually quiet summer, they cross-trained them and built up reserves of shelf-stable products. It was the same in 2021, according to Trey Winthrop, the firm's Chief Financial Officer of 16 years, who is set to become CEO in January 2022.

Bob's Red Mill, which became employee-owned in 2010, has held on to its staff this summer in preparation for the coming holiday baking surge. Slightly west of its headquarters, the company has recently leased 404,000 square feet of the former Unified Grocers and Supervalu distribution space at 6433 S.E. Lake Rd., Milwaukie.

The Business Tribune talked to CEO-in-waiting Trey Winthrop about Bob's Red Mill, how it started and how it's going.

COURTESY PHOTO: BOB'S RED MILL - America went bonkers for single serve pots of oatmeal during the pandemic and Bob's Red Mill cashed in. The other best seller was gluten free flour.

BUSINESS TRIBUNE: What were your best sellers during the pandemic?

TREY WINTHROP: Thick oats and almond flour. We have this amazing gluten-free baking flour that we could not keep in stock.

BT: How did you survive the pandemic?

TW: We're very fortunate. Luck favors the prepared, and we decided last fall to get ahead of this and to use our balance sheet. It was an investment in people.

COURTESY PHOTO: BOB'S RED MILL - Long time CFO Trey Winthrop takes over as CEO of Bob's Red Mill in January 2022.

BT: How has it been hiring in this economy where unskilled blue-collar jobs are hard to fill?

TW: We made a conscious decision to pay people more last fall and then to keep all of our employees because our business is fairly cyclical. People are not baking as much or eating oatmeal during the summer. We have (usually) removed labor in the summer and then brought it back on in the fall. Management decided last year to keep everybody at current or higher wages in order to not have to do hiring. And hopefully, we're a fun, great place to work. We did have to be creative to keep everybody busy. We're at 100 percent capacity right now.

PMG PHOTO: JAIME VALDEZ - Seeing a surge in demand and a need to automate, Bob's Red Mill has leased 404,000 square feet of the former Unified Grocers and Supervalu distribution space at 6433 S.E. Lake Road, Milwaukie.

BT: What's with Bob's Red Mill's westward expansion into the former Unified Grocers distribution center?

TW: That facility is over a million square feet. Specht bought the entire facility and upgraded it with seismic retrofits and a bunch of current practices, and we leased 404,000 square feet of it. We will be able to be in that space for at least 20 years. We're going to use half of it for raw material storage (because) we get a lot of grains that come in. The other half is a pick-pack ship. We have pallets of finished goods that we're shipping to our customers across the United States and the world. It has about 70 dock doors, so we're going to be able to meet all the growing demands of our customers.

PMG PHOTO: JAIME VALDEZ - Seeing a surge in demand and a need to automate, Bob's Red Mill has leased 404,000 square feet of the former Unified Grocers and Supervalu distribution space at 6433 S.E. Lake Road, Milwaukie.

BT: BRM does everything: selling direct to the public online, selling to grocery chains like Costco and Walmart, and selling to distributors. Is this new hub to serve just one channel?

TW: No. The local New Seasons, they don't buy their products directly from the manufacturer. They buy it from a distributor who consolidates everything. And then we also have a pretty strong international presence where we have business in Canada, Mexico, Australia, the Middle East, Southeast Asia. And all of that is done here in Portland, Oregon.

COURTESY PHOTO: BOB'S RED MILL - Bob's Red Mill kept production staff on during the 2020 and 2021 slow summer seasons and cross trained them to avoid the headache of rehiring. Seeing a surge in demand and a need to automate, Bob's Red Mill has leased 404,000 square feet of the former Unified Grocers and Supervalu distribution space at 6433 S.E. Lake Road, Milwaukie.

BT: Do you have any geographical presence on the East Coast? Or the Midwest?

TW: We do not. We do use third-party warehouses to consolidate our products.

BT: Say someone in Manhattan bought some gluten-free pancake mix online. Would you fulfill it here in Milwaukie and ship it?

TW: Yes, we call that a small package fulfillment, and we have that is all done here in Portland, Oregon. There it's broken up into individual bags of our products instead of cases. We don't have any forklifts. It's everybody walking around with a shopping cart. Our new warehouse, it's 404,000 square feet, and 55,000 square feet of that is going to be separate shelving that has everything you would think you would need for small packages. We're not doing 500 pallets a day of e-commerce. We fill up two UPS trucks a day (with SPF). There's a lot of people who really enjoy getting our products delivered to their home, not just from our own website, which is very popular, but also through our friends at Amazon and iHerb and Vitacost and all the other many other ways you can go online and get our products.

BT: So how does the order come in?

TW: We're actually in the middle of a large ERP (Enterprise Resource Planning) upgrade. We have homegrown systems right now. We are putting in Microsoft Dynamics 365, for finance and operations, going live with that in Q2 of 2022. So, if you were to ask me that in June 2022, I would say the order comes in automatically, and it goes directly to the order pickers in the facility, our small package facility. We're going to be wireless. They're going to have a touchscreen device where the order comes in, and it will tell them where to go to get the product. And then they will put them on a conveyor, and then as it goes down, it's got a little barcode on it. And then there's order packers and the palletizers. We'll put the products in the tub as it moves down the conveyor, and then that will make it to the packer. They figure out what box it goes in, and UPS or FedEx will take it. We kind of lose visibility at that point. We're not in the trucking business. You can only do three to five things well, and we really want to focus on our employees and the quality in our products.

BT: Most product goes by truck and perhaps train, but rarely by air. Why is that?

TW: Hardly any of our customers need their flour in two days. Most are willing to wait four days that it generally takes, depending on where they live in the United States. And keep in mind, this is just a very small portion of what we do. We're primarily in the truckload business where we're shipping to distributors who are then filling up grocery stores. When they place an order, say, October 22, they want to pick it up on November 3. And then on November 3, usually it's ready November 1, they pick it up and then we invoice it and then we get paid later and then people get our great product.

BT: What's changed in production lately?

TW: We have a tagline that unprocessed is our process. The attention to that has not changed. In order to get faster, we just bring in more people. Columbia Okura is just right across the river in Vancouver, and we've purchased quite a few palletizers from them. A tiny, automated robot takes them off the line and puts them on a pallet. So we're trying to help employees have less lifting. You've got two production lines that are packaging our products in cases. And then it comes to one palletizer which can pick up both and put each on different pallets. So it's really a lot more sophisticated than Laverne and Shirley. We can load a truck much faster.

BT: What type of cross-training did you do?

TW: We have about 32 different production lines, so we prioritize based on where we need product the most. We have two sets of equipment because basically, our facility breaks down into two facilities. We have a dedicated gluten-free, and we have the conventional. And then inside that, we have two different types of products. We have granular products, like have beans and rice, and flour, like our baking flour, or our gluten-free one-to-one flour. That equipment and the way it works is very different. We have to have the smartest, best people to get all that flexibility. You never know when you're going to get an order for 300 truckloads of something, to fulfill over nine months, and have to scramble.

PMG PHOTO: JAIME VALDEZ - Seeing a surge in demand and a need to automate, Bob's Red Mill has leased 404,000 square feet of the former Unified Grocers and Supervalu distribution space at 6433 S.E. Lake Road, Milwaukie.

BT: When hiring is difficult, couldn't you just raise wages to attract new people?

TW: You're asking me where the labor force went, and I don't know where it went. Supply and demand work in the majority of our business where we're doing truckloads, but when you've got someone making a $10 sandwich in our restaurant business, you're going to hit a point where in order to break even, you have to charge $18 for an omelet. And you know, we're not in Palo Alto, California, where you can do that.

COURTESY PHOTO: BOB'S RED MILL - Bob's Red Mill kept production staff on during the 2020 and 2021 slow summer seasons and cross trained them to avoid the headache of rehiring. Oatmeal was its biggest seller during the pandemic.

BT: Is climate change changing anything in your world?

TW: Yes, it is definitely on our radar. The number one driver of crop prices and commodity prices is weather. Myself, and a small team are going to Purchasing Seminar, an annual economic agricultural update, that will have all of the smart things people talking about for 2022 about crops and commodities.

BT: Dave's Killer Bread next door raised a bunch of private equity, while your company seems to be going a different direction with employee ownership. Do you ever look at them and compare business models?

TW: Oh, definitely. We're 100% employee-owned. Bob started us on the journey when he turned 81. Employee-owned companies, according to a rigorous study, are 13% more efficient, so they're more profitable, because employees care more when they have a financial stake in the business.

Now (Dave's Killer Bread) has been acquired by Flowers Foods. We're not going there. We are very dedicated to our employee ownership model, because it's the right thing to do. Most employees and In the United States, they rent their jobs. And our employees actually own their jobs. They get stock every year. And when they hit retirement, that translates into money for them. As the company does better, they're better helping themselves. They're not helping Flowers Foods executives or the stock price.

COURTESY PHOTO: BOB'S RED MILL - Bob's Red Mill founder Bob Moore (right) and a worker in the production plant in Milwaukie, Oregon. Moore, 92, still shows up at work occasionally.

Trey Winthrop will take over fully from Dennis Vaughn, who has retired, once a replacement CFO is named. In the meantime, Robert Agnew is acting CEO and Chairman of the Board of Directors. Winthrop is from San Diego but has been in Oregon since 1989, after attending Oregon State University.

Bob's Red Mill Natural Foods

Maker of whole-grain foods, which are milled on stone at lower temperatures than steel.

Established in 1978 by Bob and Charlee Moore

ADDRESS: 13521 SE Pheasant Ct, Milwaukie, OR 97222

PHONE: 503-654-3215

WEB: https://www.bobsredmill.com/

IG: https://www.instagram.com/bobsredmill/


Joseph Gallivan
Reporter, The Business Tribune
971-204-7874
This email address is being protected from spambots. You need JavaScript enabled to view it.
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