Milling in Europe
April 11, 2006
by Meyer Sosland
European millers tend to spend heavily on capital equipment while employing a small but flexible workforce
by Jonathan Bradshaw
Editor’s note: This is the first in a series of five articles that describes the different approaches to investment in milling technology in the various environments around the world, the varying application of technology and the skills base of those who operate mills in these often complex and diverse environments.
In different parts of the world, milling machinery and equipment is put to different uses. Mill flows vary according to the needs of the miller and the requirements of the baker. From the Northern regions of Pakistan, where wheat is hard and brittle, to the English countryside with its plump, soft wheat, the economics of milling vary, the environments are diverse and the cultures are literally, in some cases, poles apart.
The cultural divide often reflects a technical divide and yet, surprisingly, those with few resources often have some simple solutions and approaches to the problems that millers in the more developed world continually search to find answers to.
Europe is a part of the world that has been relatively stable from a political, economic and social standpoint.
Those who choose to invest in a flour mill or feed mill in that region will have an opportunity to run a successful business and enjoy continuity of ownership, perhaps from one generation to another. Assets are unlikely to be seized, destroyed or otherwise interfered with, allowing for longterm investment.
In Europe, millers tend to invest heavily in plants and machinery. With the number of operational mills decreasing steadily, each miller takes his customer base very seriously and protects it with all the care and attention that a brooding mother would give to her offspring.
CONSOLIDATION The structure of the European milling industry is changing. Take the U.K. milling industry for example. In 1900, there were almost 1,000 mills operating in the British Isles. Today, just more than a century later, there are fewer than 70, and one milling company, Rank Hovis Ltd., controls almost one quarter of the country’s output.
Many of the small bakers have folded in the face of competition from the national bakers, and more foodstuffs, including bread, are being sold through the four or five major retail chains.
The surviving millers are the ones who have continued to invest in capital equipment and automated their mills to minimize their workforce. Similarly, they have trained their staff well and, perhaps more importantly, planned their investments carefully and used their skills to reduce operating costs.
When a mill reduces its costs and runs longer hours, it requires three things:
• Reliable equipment that doesn’t break down;
• A steady supply of good quality wheat in order to secure regularity and continuity of quality for its customers;
• Favorable geographical location to minimize its supply chain and distribution costs.
The cost of fuel in the U.K. and Europe is becoming a significant item on the balance sheet and managing the transport fleet is an exercise in itself. Working closely with suppliers and customers to ensure full vehicle loads entering and leaving the mill is a paramount priority for efficient management of any milling unit.
Most mills that are not part of a major national group have strong ties with local customers, often milling flour to a unique specification dedicated to that one customer. In these cases, the millers and their customers often become very dependent on one another for their business success.
Some millers have broken away from this dependency, branching out into a niche market and cornering a particular technology. Heat-treated flour for soups and coatings is one such area, although the larger companies are beginning to catch up with this technology, courtesy of the milling engineers who are quite happy to sell their technology to anyone with the cash to invest.
One of the most interesting uses of technology and planning is the way in which the national millers structure themselves, positioning their mills close to their customer base and optimizing mill flows to meet customer demand in their particular areas.
The role of the independent miller, while somewhat different from the larger millers, has some fascinating aspects as well. It is generally accepted that mill capacities have increased steadily over the last 50 years. Although the number of mills has declined, the larger mills that remain have tended to increase their capacity as a single unit. The independent millers have added units as circumstances have allowed.
Imagine two scenarios where a large group of mills, operating under one umbrella, seeks to increase its capacity and purchases a stake in a new bakery. It becomes relatively easy for that group to move tonnage around within the group to allow sufficient downtime at one location for that particular mill to refurbish and upgrade its facilities. When that mill comes back on-line, it can take an increased share of the group’s output when needed. That mill, when compared to other older mills in the group, subsequently produces more acceptable and enviable performance statistics and becomes the target for the others to match. Following the same scenario, other mills in the group then upgrade their facilities and so the cycle continues with group mills becoming increasingly efficient and productive.
The independent miller, however, does not have the luxury of shifting tonnage to another mill down the road, unless he has a good relationship with another independent miller. This not generally being the case, the independent miller must keep supplying his customer at all times so he doesn’t lose his trade to someone else. Therefore, he tends to add capacity by building new milling units on the same site to increase his overall output and thus spread his total operating costs over more tonnage.
AUTOMATION Automation in Europe has been a key factor in the massive reduction in mill employees. With automation, there are few limitations as to what is achievable and most millers have made full use of the available technology.
Europeans have the ability to source almost any mechanical and electrical item virtually overnight. While mills still carry spare parts for their major machinery items, the culture of being able to source anything at anytime pervades the European milling fraternity, certainly in the maintenance departments.
Most mills now operate on an eight-week cycle for maintenance, either moving their staff around from site to site or outsourcing a large proportion of their maintenance needs. This assists with cost reduction since it enables maintenance staff to be kept fully utilized at one site or another. The independent millers don’t have the luxury of moving staff from one site to another, so their mill operatives also handle the maintenance duties. Thus, they require a greater level of skill in their employees in order to achieve high levels of competence. This also enables them to quickly resolve any maintenance issues during normal operations.
Heavily dependent on their organizational and planning skills to maintain their position in a fiercely competitive customer environment, European millers have been successful spending large amounts on capital equipment and having a small but flexible workforce. Millers that have not adopted this philosophy are no longer around, a salutary thought for millers in other parts of the world. WG
Jonathan Bradshaw is a consultant to the agribusiness and food processing industries, specializing in project management through his company, J B Bradshaw Ltd. He has extensive experience in flour and feed milling in Africa, the Americas, Europe and the Caribbean. He may be contacted at: firstname.lastname@example.org.
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