World Grain exclusive interview: Urs Buhler

by Teresa Acklin
Share This:

Heightened demand for flour quality and consistency will encourage different focus for millers and their suppliers.

By Morton I. Sosland, Editor-in-Chief

   In looking for confirmation of the “feeling” that flour mill construction and modernization around the world have expanded to record-setting levels, there is no better check than a conversation with the man who heads the company that is widely recognized as the global leader in mill engineering and building. Urs Buhler, president and chief executive of Buhler Ltd. of Uzwil, Switzerland, not just affirmed that belief in a recent interview, but reflected an enthusiasm about the current state of flour milling around the world that could not help but make this interviewer — and everyone in grain-based foods who becomes aware of his views — look upon this industry as one of the most promising of food processing.

   “There's no question but that the current period marks an all-time high in investing in flour milling,” Mr. Buhler declared. “And I am happy to say that our Milling Division has enjoyed and still enjoys remarkable growth.”

   As the chief executive of his family-owned group, Mr. Buhler, 54, brings a lifelong awareness of flour mill engineering and equipment design to his perspective of the industry. He was at the Buhler Corp. office in Minneapolis, Minnesota, U.S., when the interview was conducted, on a trip that was only a part of a highly demanding global travel schedule that literally took him into every corner of the world where milling-related and other projects of interest to his company were under way or in prospect.

   Like so many globe-trotting executives, Mr. Buhler noted that every time he's traveling, he becomes aware of the importance of visiting customers and associates wherever they are. Yet, when he's at headquarters in Switzerland, he must face the responsibilities he has as the head of one of the world's largest food equipment manufacturing and engineering groups.

   Asked to discuss the major factors accounting for the rising level of global activity in flour milling, Mr. Buhler divided how he looks on this business into three different sorts of national markets: (1) developing countries where demand for food is rising as their economies expand; (2) the former centrally-controlled parts of the world, mainly the former Soviet Union and even China, where new openness and years of neglect of the capital infrastructure have combined to prompt a surge in demand for new flour milling capacity; and (3) the developed nations, where the need to modernize and to build new mills not only reflects the evolution and real growth of those markets but also an appreciation for the fact that new equipment and new plants offer “more efficient and more productive milling.”

   From a global perspective, he emphasized the differences in how milling has developed in the recent period in various countries and continents.

   “In the Third World, the main priority has been to establish the capacity required to supply minimal food needs, whereas in the developed markets, flour millers have had to face a number of new and increasing challenges in view of changes in perceptions of what accounts for flour quality, consistency in production and a widening of flour specifications,” he said. “Mills built some years ago in developing nations were mostly designed to mill flour, the whiter the better.”

   This preference for whiteness, though, changes as incomes rise and people become more sophisticated about what they eat. For the first time, he said, emerging nations are talking about flour mixing plants as evidence of how their markets are changing.

   He also pointed to the likelihood that wheat supplies in the future may be of a quality different from the past, and these changes require modifications of mill wheat cleaning systems. Part of this change in wheat, for instance in central and eastern Europe, occurs as mills grind increasing quantities of domestically-grown grain.

   And even though there has been considerable mill building and remodeling in developing nations, Mr. Buhler said that “in most countries with growing populations, investments in flour milling have not been sufficient to keep up with and to satisfy rising demand.”

   In looking at the former Soviet Bloc as well as other parts of the world where central control of industries like flour milling have given way to privatization and entrepreneurial managers, Mr. Buhler said the emphasis has been on replacing old and inefficient flour mills. In many of these nations, mill locations in the past were often chosen at the whimsy of bureaucrats, meaning that plants sometimes were put in the wrong place, without regard either for flour demand or the sorts of wheat required.

   These nations already have experienced enough improvement in their economic well-being that consumers are becoming much more quality conscious and demanding. He specifically noted that these trends frequently lead to consumer demand for higher extraction flours and for so-called wheat breads, and that this will more often than not require a different sort of mill flow.

   He acknowledged that China may have the greatest potential to become the leading center of activity in mill building and modernization, but that currently fewer than 300 of China's flour milling plants — out of an estimated total of 6,000 units grinding wheat into flour — have the financial resources and the authority to buy modern milling equipment.

   But even as he discussed the amazing potential of China, he pointed to India as a great market for new investment in flour milling.

   “Indeed, the whole of the Far East is very important in our estimation, and you can't neglect the many opportunities that are also appearing in South America,” he said.

   Mr. Buhler gave considerable credit to changes in baking as a powerful force in mill engineering and new construction. Declaring that the flour market share accounted for by industrial, or plant, bakers is increasing on a worldwide basis, he said that such a trend places demands on millers. The need for consistency in flour quality comes very much to the forefront, he explained, along with demands for increasing service levels for baking customers.

   “The miller of the future will have to acquire a vast know-how about baking and its processes in order to understand what his customers want,” Mr. Buhler stated. “This will cause a shift of priority for millers. The milling plant itself will become a tool allowing him to produce reliably with less supervision whatever his customers may want. The miller of the future will have to concentrate on the customers rather than on adjusting milling machines.”

   Along this line, Mr. Buhler pointed out that national laws and cultural attitudes are changing in many countries so as to make the ultimate consumer increasingly powerful. These new rules and regulations more often than not are meant to protect the customer, not the supplier, he said.

   “Therefore,” he observed, “mill systems and equipment will not only have to be absolutely reliable, but also will have to offer ways to meet flour purity and safety requirements through on-line control of quality. Mill automation will, of course, continue to be very important as a way of having efficient operations at the lowest possible cost, including reduced manpower requirements. These same controls, though, are increasingly important in the context of quality and food safety.”

   Turning specifically to the United States, where mill building and modernization are the most active in modern history, Mr. Buhler said, with a smile, “We always knew there would some day be an explosion in mill building in America. But I also will admit that there were times when we wondered if this expectation was right. There is quite a lot of satisfaction in seeing how this is unfolding.”

   Of course, Mr. Buhler gives credit for the rising level of activity in U.S. milling, where Buhler is playing a major role, to the growth in flour consumption. He also pointed to rapid expansion in the food service business as well as consumer and baker needs for an increasing array of flour-based products, which in turn create pressure on flour millers as suppliers.

   But he also gives a large measure of credit to what he considers to be a “different approach” to flour milling management in America, which has gradually come to recognize the problems caused by trying to operate with more old equipment than any other milling industry in the developed nations of the world. He singled out the current American inclination toward professional acceptance of milling equipment and engineering advances as part of a fundamental structural change in the ownership and management of U.S. flour milling. He said this was starkly different from the “old days” when millers voiced pride about using second-, third- and even fourth-hand equipment, when plants often “were held together with baling wire,” and when the idea of buying a brand new piece of equipment, much less of building an entirely new mill, was dismissed out of hand.

   Being told that a new mill will produce flour at an extraction rate of at least 78% provides a powerful inducement, getting the miller's attention and also making the new generation of milling executives aware of the advantages of full-scale modernization.

   He said the high standards that bakers demanded of their suppliers had an important effect on the decisions of U.S. millers to modernize and to consider building new mills. He said that it was the policy of Buhler engineers, when invited by a miller to discuss various options, to seek out the lowest-cost way of dealing with a specific problem. He noted that the old plants in America often presented special difficulties, especially when the solution to one problem more often than not exposed a bottleneck in another part of the mill.

      Advances from Research

   Of course, the advances achieved in flour milling performance are also attracting more and more attention, and Mr. Buhler emphasized that the cost of mill modernization and of building new mills is not much higher today than it was 10 years ago. He attributed this to the efficiencies that Buhler has introduced into its own manufacturing, assembly and design, as well as to modifications in the milling flow sheet that have allowed for savings in the face of inflationary pressures of the past decade. Similarly, he cited the savings made possible by systems like Buhler's double-high rollermill, which he said makes possible the simplification of the milling flow sheet by effecting savings not just in mill building by reducing the number of passes to produce flour, but also in operations by cutting back on energy consumption.

   “The goal we aimed for and have achieved was to increase capacity at a lower cost than previously,” he said.

   Buhler, he said, invests about 6% of its annual turnover in research and development, which relates to an outlay of SFr90 million (U.S.$65 million). While the group's research work extends across the broad range of products and customers served, flour milling, as the core operation, receives a large share of this effort.

   Mr. Buhler cited one particular area of research having to do with the treatment of flour after milling as a replacement for chemical treatment of flour that is utilized in many parts of the world. He said rising demand for non-chemical treatments as well as bans on the use of chemicals in some parts of the world have prompted this research work.

   He noted how the group works with its milling customers and even their baking customers to develop end consumer products that might help expand demand.

   “We understand that the flour miller who does the best job of serving his customer is doing the better overall milling job, and we are eager to help in that regard,” he explained. “This has led us to do considerable research on baking technology and also to experiment with various types of flour and bread.”

   This discussion in turn led to Buhler's engineering and equipment that is made specifically for industrial bakers.

   “We have been an equipment supplier to the baking industry for many years,” he noted.

   The group's interest in the baking business has picked up as it has seen increasing industrialization of baking around the world.

   “The simple fact is that baking a good loaf of bread no longer is viewed as starting at the mixer,” he said. “There is an increasing demand from bakers for superior raw material storage, portioning and systems for additives. These are areas of the baking plant where we have had experience for years.”

   In pasta making, Buhler has done considerable pioneering that has elevated it to a position where it is contesting the leadership in pasta-making equipment with an Italian manufacturer. New concepts in how the pasta press works and a total change in the drying system have resulted in a Buhler pasta production system that has dramatically reduced the time needed to make pasta. These advances in turn relate directly to expanded production capacity from a given line, effecting a major change in pasta manufacturing around the world.

   The Buhler pasta-making system works best with a finer granulation of semolina than normally used, in a range of 300 to 350 microns, compared with semolina that today goes as high as 600 microns. While the Buhler system can be adapted to use any semolina, its yield is best in the lower range.

      Faster Response to Market

   An engineer by training, experience and education, Mr. Buhler brings an engineer's mind and attitude to his leadership. Thus, in the midst of what is an excellent period for his company's business, he has undertaken a major restructuring that is meant, he explained, “to make us faster in responding to the marketplace, to increase our ability to anticipate and to react quickly to what our customers want.”

   He has set very specific goals for the restructuring in terms of improvement in the group's “bottom line.” He believes that most of the significant gains will be reflected in earnings for the 1998 fiscal year, but acknowledges that some will flow through into 1999.

   While the restructuring will affect every part of the entire group, Mr. Buhler explained that areas like flour milling, which have been doing very well, have hardly been affected. Two parts of the business are in the process of being sold, he said. One already disposed of is a unit that was involved in the engineering of pneumatic conveying for the plastics industry. Another unit where disposition will be accomplished over a period of several years is the composting business that involves systems for the disposal of municipal wastes.

   “Our aim by these actions is to strengthen the core business,” he said.

   He also underscored that the group is constantly adjusting “its portfolio of business” in order to assure that all of the businesses are contributing to the aggregate result.

   Also as part of the current restructuring, the group has been “flattened,” with a reduction in the size of the general staff at the Uzwil headquarters.

   “We have given more authority to local decision-makers,” he explained, in emphasizing how much importance he attaches to the concept of strengthening the ability to respond quickly to customers' needs.

   Flour milling is now a part of a newly-established General Food Division. Headed by John Schoch, who formerly headed flour milling, this broad-scale division comprises, besides milling, feed manufacturing, oilseed processing, brewing, rice and shipunloading. It is the largest division, accounting for approximately 50% of total group sales.

   A second newly-created food-related division is Processed Food, which is under the direction of Rene Steiner. Industries served by this division include pasta manufacturing, breakfast cereals, chocolate and extruded snacks and flakes.

   Another major division of Buhler Ltd. is called Pro-Tech, and it includes such businesses as paint manufacturing plants, industrial plastics and special chemicals. The fourth division builds complete die casting factories.

   Asked what titles the people who head these divisions hold, Mr. Buhler responded, “We're not very keen on titles.” Responsibilities are denoted by function. Thus, Mr. Schoch is simply head of the Processed Food Division.

   Similarly, the group has a pragmatic viewpoint as to where the headquarters of the various functions should be located. While flour milling and other core activities are headquartered in Uzwil, the head of the oilseed division is in the United States, and coffee and malting are in Germany.

   The group has a great number of engineers working on a huge array of projects around the world. While these engineers are of a large number of nationalities, most of them have had training at the company's headquarters in Switzerland, returning periodically over their careers with the company.