With a revved-up management team, Just Born has positioned itself as an aggressive racer within the sugar and chocolate categories. And while the Peepster automobile may bring smiles to customers and consumers, it means to leave competitors in the dust.

It went beyond irony. Slightly more than two weeks after Candy Industry’s visit to Bethlehem, Pa.-based Just Born in early January, there was Ford Motor Co.’s chairman and ceo, Bill Ford, telling his employees and the world that “we’re going to be a big company that thinks like a small company.”

After interviewing co-ceos Ross Born and David Shaffer, as well as other key members of Just Born’s executive team, it was clear that the nationally known producer of Peeps, Mike & Ike, Hot Tamales, Peanut Chews and Zours was espousing quite another philosophy: the mantra in Bethlehem — think like a big company.  

However, unlike Ford Motor Co., Just Born was not laying off 25,000-30,000 employees or shutting down 14 plants. Rather, one of the United States’ top 10 confectionery companies was in the process of driving double-digit sales growth, looking at acquisition opportunities, gearing up for a string of new product introductions as well as pursuing new global initiatives.

Well-respected and admired throughout the close-knit domestic confectionery industry, cousins Born and Shaffer have worked together at Just Born for the past 28 years. They’ve led it for the past 23 years.

Both understand the dynamics of running a family business. They’ve watched and learned under their respective fathers, Bob Born and Jack Shaffer, along with their uncle, Irv Shaffer, and have helped established the company’s reputation and success well beyond founder Sam Born’s dream.

“Our goal has always been to grow the business,” says David. “Merely maintaining the status quo will get you into trouble.”

Translating those goals into reality, however, has never been as easy. As hands-on family owners, both Ross and David realized that the demands of running a successful operation often left little time for long-term strategic planning, planning that was necessary to vault the company beyond national recognition and into national prominence.

Both had discussed the need for a “professional manager” to oversee day-to-day operations during the past several years, an individual who could instill a more “process-oriented” philosophy that would segue the company into world-class status.

As David explains, “We were not looking for a candy expert. We were willing to hire someone outside of the candy business. Nevertheless, it had to be someone who had a similar value system.”

Enter Sam Torrence, a former auto industry executive (more irony) with GM Bridgestone Tires and Mack Trucks. Having opted out of again relocating his family following the acquisition of Mack Trucks by Volvo in 2001, Torrence sought a local eastern Pennsylvania employer.

As often happens in life, fate intervened, leading him to Just Born. Torrence, together with his wife, Betsy, happened to be co-chairing a United Way drive that year. Part of their volunteer efforts involved meeting with senior management. One day, they visited Just Born. That meeting eventually led to Torrence’s hire as executive vice president and chief operating officer in February 2002. Last January he was promoted to president and coo.

For someone who “didn’t know what Just Born was,” Torrence, today, is more than just familiar with the company, its employees, products and, more importantly, potential.

He understands Just Born’s mission, which embraces aggressive growth and above-average profitability through superior leadership. He shares Ross’s and David’s values, values that go beyond lip-synching platitudes about being a company that cares to one that lives and demonstrates its concerns about employees, the community and the industry.

He also understands that his marching orders are to take the company “to another level.”

As Torrence acknowledges, Just Born already had several things going for it when he joined the company: strong brands, excellent operating processes, good people. Consequently, his charge “from the 30,000-ft. level, was to focus on people and strategy. This allows me to empower them, enable them to do what they’re supposed to be doing.”

Since his hire, Torrence, working with Ross and David, has supercharged the Just Born organization to better position the company into taking on whatever curves it encounters at full speed.

For openers, the company has become a “market-driven” company, and not a “marketing-driven” entity.

“We thought we were a market-driven company,” explains Ross. “But, in fact, we were marketing-driven. As a result, we made changes at how we looked at the consumer. We understand the market better, part of that coming from better market intelligence.”

Improved market intelligence leads to producing the “right product at the right price with the right packaging,” he adds. “It’s about delivering great value to customers and consumers. Our customers want to make easy money. For them to do so, we need to deliver our products on time, ensure they move off the shelf and help support those brands however we can.”

And while Just Born’s reputation with customers and consumers has always been a good one, the increasingly competitive climate — be it from multinationals or lower-cost foreign companies – coupled with changes within the retailing community brought on by consolidation and consumer segmentation, necessitated a “ratcheting up” of skill sets, from marketing and manufacturing to logistics and human resources.

Slowly, but determinedly, the organization underwent its transformation.  This wasn’t going to be a quick pit stop for some new tires. Nor was it a simple revamping that made Just Born bring products faster to market. The restructuring, which involved functions and departments throughout, was designed to fashion a company that would become “better to market.”  

As Matt Petronio, vice president, customer and brand development, points out, it was necessary to ask basic questions to ensure everyone in the company understood what the task at hand involved.

“What is market-driven? What does that really mean?” he says. “From our perspective, it’s meeting the needs of our customers and consumers better than the competition. Based on our research, we know consumers prefer power brands. Also, it’s in our best interests to be the preferred supplier to our customers.

“Consequently, we started with the brands,” he continues. “That’s something everyone in our organization can embrace. Everyone within Just Born has contact with the consumer, and/or contact with the product, and/or contact with the customer. So instead of managers and employees being internally focused, they need to be outward looking. That’s an important transition.”

To drive home the point, Torrence and Petronio merged the company’s classic sales and marketing teams into a customer and brand development organization. The move, which some might critique as simply one of semantics and organizational structure, went well beyond superficial change; it brought together two critical components for growth.

“It helped us leverage customer and consumer insights,” Petronio adds. He cites several examples to drive home the benefits from the merger.

“We all knew the dollar-store category was thriving, but until the two groups came together, we didn’t have any SKUs dedicated to that segment,” he says. “So we took our traditional box and created a 6-oz. box at a dollar price point.” In the same vein, to meet demands for larger sizes in other segments, such as theaters, the company began producing a 9.5-oz box.

Then, last year, in response to research showing consumer receptability to pouch packaging – “teenagers like the pouch better because they can put it in their pants pocket” — Just Born began offering Mike & Ike in 2.12-oz. pouches.

“We reduced the piece size, added fruit juice, and added a strawberry flavor to our five original flavors,” says Petronio.  The size reduction, combined with the fruit juice addition, helped improve flavor delivery, he explains. Combined with the shift to bag packaging, the tweaking helped extend the shelf life of the candies, another plus to both consumers and customers.

The aftereffect? Sales jumped 20% last year for Mike & Ike.

“And growth is continuing,” he adds. “We’re still enjoying double-digit sales growth, partly because of repositioning it as an improved product, and partly because of a more focused message.”

Petronio wasn’t shy in sharing other examples of how customer and consumer insights were helping boost sales of the company’s brands. For example, research revealed how families used marshmallows, one of which involved crafts and decorating. That, in turn, led to the company developing an Easter decorating kit involving Peeps marshmallows. Its success prompted the company to develop kits for the coming Halloween and Christmas seasons.

Then there’s the case of the classic brand extension, Peeps in a chocolate egg. When launched last Easter, the product immediately sparked the question, “What took you so long?” Such consumer acceptance made the item an immediate seasonal hit for Just Born.

“It was the third top-selling new item for Easter,” says Petronio. Its success has prompted the company to launch a new variety, a chocolate crispy version for this Easter. Given that seasonal sales comprise between 25-30% of the company’s total revenue, Petronio recognizes that it’s critical for the company to focus on stimulating that sector with new and innovative concepts.

In some cases, however, it is important to retain the heritage of a brand while addressing marketplace realities. Take, for instance, the company’s most recent acquisition, Goldenberg Candy Co., which was purchased in 2003.

That move not only brought chocolate back into the company’s stable of products — when Just Born was founded in 1923, the company produced chocolates and did so until 1969 – it set the stage for entering a potentially explosive growth category.

With Goldenberg’s Peanut Chews brand, Just Born inherited a powerful local icon. Its challenge involved taking the product line beyond the Eastern Seaboard.

“We didn’t change the original dark compound coating for Peanut Chews,” says Petronio. “Still, our research indicated that the texture within Peanut Chews was a bit too chewy. What we discovered was that there was too much variability in the cooking process. As a result, we invested in a cooking system, which delivers a higher quality texture.”

The decision to improve product quality dovetailed with the company’s commitment to expand distribution nationally. And while distribution challenges remain – Peanut Chews are now in all 50 states – the improvements in quality and manufacturing efficiency are on schedule.

But then, here, too, there’s been a change in thinking and organization. Until recently, Kevin McElvain held the title vice president of manufacturing. Today, it’s vice president of supply chain.

A mere name change? Not quite, McElvain explains; it’s more of a reality check than anything else. To consistently provide customers and consumers products they want, when they want it and at the price they are willing to pay for it, demands a closed-loop approach from procurement, through manufacturing and packaging, and onto storage and distribution.

Moreover, internally, every element of the supply chain can impact one or more other elements.

“Say purchasing wants to trim costs and does so by buying cheaper corrugated, saving $700,000,” he explains. “Well, that’s great, but then the warehousing group spends as much or more dealing with boxes that have reduced corrugated strength and are breaking apart.”

Noting that a company’s capital assets need to be directed toward three areas: growth (marketing), essential (cost of keeping existing assets operational) and cost savings (investments to take costs out of the supply chain), McElvain recognized immediately upon joining Just Born in 2004 that there were plenty of “low hanging fruit” opportunities for cost reductions and efficiency improvements.

Not that Just Born hasn’t committed itself to automation. During the past 14 years, the company spent $100 million on automation and new processing technologies. Since Candy Industry’s last visit six years ago, the company’s invested in a new Haas-Mondomix marshmallow production system, a Schubert robotic pick ‘n place line, a TC&C cooking unit and an NID super mogul line, to name a few of the big-ticket investments in the Bethlehem facility.

Just last year, the company spent $2 million on a Kline Processing cooking line in the Peanut Chews’ Philadelphia facility and is in the process of installing two new Lloveras enrobing lines this quarter.

But it’s not just about new equipment, although timely and appropriate investments are necessary. Sometimes, it’s all about tweaking the engine, getting it into the high-performance range.

Like Petronio, McElvain has plenty of examples. He notes that the company’s line speeds for the plant’s baggers receiving Mike & Ike products  have increased by more than 25% while downtime has decreased.    

On the company’s recently purchased NID super mogul, electrical engineer George Gollas led a group of operators, maintenance crew and support personnel to bump up the unit’s production speed from 27 to 30 boards per minute.

As McElvain points out, the uptick translated into nearly 11% more centers being produced during the same period of time, about 1,000 to 1,250 lbs. of more centers each hour.

Then there was the challenge of robotizing marshmallow production. As McElvain explains, initially the Schubert Co. was a bit cautious about becoming involved with such a soft and sticky product. Working together with the supplier, the engineering crew was able to resolve the issue, a matter of manipulating marshmallow temperature and texture prior to packaging.  By extending ambient cooling, essentially running a conveyor belt longer than initially planned, the marshmallows reached the pick ‘n place point in a ready state.

Even then, a potential problem surfaced, such as sugar buildup on the suction heads. One of the operators, Melody Klotz, suggested putting a cheesecloth on the suction head, thereby preventing buildup on the heads themselves. During coffee and lunch breaks, the cheesecloths are changed out, thereby significantly eliminating downtime.

This year, McElvain notes, one additional improvement was made on the Schubert line. Initially installed with a vision system, the Schubert robotic line could only handle Just Born’s Marshmallow Peeps Bunnies. Jesse Tigar, maintenance mechanic, reviewed the existing software program and determined that with some modifications, the line could – with the addition of Schubert scanners – identify a host of other shapes, such as pumpkins, ghosts, etc. As a result, production of those items was shifted from a less automated marshmallow line to the robotic line, boosting efficiency and freeing up 20 seasonal packaging positions.

All told, McElvain estimates that nearly $4 million in cost savings were realized last year. He expects to reach another $3 million this year.

None of these savings, however, have come at the expense of quality, he notes. Pointing out that the basics, such as Good Manufacturing Practices (GMPs), Hazard Analysis of Critical Control Points (HACCP) and food safety programs, were already in place, McElvain initiated Statistical Process Controls (SPCs) as yet another process-oriented method of ensuring quality and further reducing costs.

“It’s important to note that at the same time we were taking costs out, we also achieved a Superior Rating from AIB [American Institute of Baking] and improved our total frequency severity rate to below industry standard,” he says.

“Good quality results in good costs,” McElvain asserts. And good quality means the product weighs, looks and tastes right.

Weights, of course, can play a large role in cost reductions, McElvain says.  Overweighing to ensure consumers get more than a fair share, while commendable, can result in significant losses.  

By measuring and charting variations, operators can better control depositing and packing to minimize variability. “It’s simple; we save money by reducing variations,” he explains. The program, just begun, has already realized $640,000 in savings.

And while it’s appropriate to minimize variations in processing, that’s not the case in human resources. Here, too, the company is breaking new ground by encouraging its employees to grow within the company.

“We want to give opportunities to those employees who want to advance further,” Ross says. “It’s important for all of us to understand that we can’t stay where we are.”

As a result, every employee (they are called associates at Just Born) “who wants to advance has a mechanism to do so, via training,” adds David.

Most importantly, the company has established “safety nets,” so those that take chances to be better and who don’t succeed, do not have a stigma of failure.

“It’s a means of enhancing our skills base, making all of our associates more valuable in the company, allowing them to move within the company and broaden their horizons,” David says.

And similar to supply chain, there are process controls to accomplish this, says Mark McLaughlin, vice president – human resources and corporate services. McLaughlin, who also comes from the automotive industry (the irony continues), has engaged the company’s human resources team to take a proactive approach to the company’s most critical asset, people. In fact, human resource specialists are working together with managers as business partners, attending meetings to better understand workplace dynamics and direction.

Instead of sitting in offices waiting for forms, the five specialists “are learning about latent needs” that exist within the company.

“They are finding out about problems within the organization and working to fix them,” he says. “It’s our job to make our people better.”

That process of self-improvement, of course, requires buy-in. As Ross and David say, “We want our associates to get on the bus [Editor’s note: Perhaps Peepster would be more appropriate.],” in order to help drive the company toward its vision.

That vision sees a wide-open track for the company. Petronio ticks off several areas of opportunity, such as continued expansion of the company’s core brands (national distribution hovers between 65-70%), further development of the marshmallow category, licensing of its brands into various non-candy segments, ongoing expansion of the seasonal business and possible entry into premium chocolate range.

Moreover, Just Born isn’t limited to driving growth domestically; the company’s vision encompasses international ambitions. Currently, international sales account for less than 10% of Just Born’s total revenues. During the next three years, the company wants to double that business, says Petronio.

“In the past, we looked at the international marketplace as export business,” he says. “Essentially, export implies, we make it, we ship it anywhere. Today, we’re transitioned from exports to international market development. Now we will target a market, understand what the consumer wants in that market, and then match our brand with those wants, be it in Canada – where we are doing well – or Mexico, where we’ve just introduced Peanut Chews, or Asia or Europe.”

In reflecting on the company’s goals for the remainder of this decade, both Ross and David remain committed to “building a great people organization that can sustain just about anything.”

Of course, in Just Born’s case, it’s all about confections, confections that deliver fun. A quick look at the Peepster automobile underscores that. But don’t be deceived. There’s a hell of an engine powering that chick these days.  

Management: Ross Born, co-ceo; David Shaffer, co-ceo; Sam Torrence, president and coo; Matt Petronio, v.p. – customer & brand development; Kevin McElvain, v.p. – supply chain; Mark McLaughlin, v.p. – human resources & corporate services; Ron Izewski, cfo; and Paul Oliver, director – information technology.

 

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