Amy’s Kitchen to expand Oregon facility

WHITE CITY, Ore. — Spurred by rapidly increasing demand for its organic food products, Amy’s Kitchen has responded with a two-phase expansion at its plant off of Antelope Road.

The first phase of the $30 million project involves reworking existing space to begin gluten-free burrito production now done in Santa Rosa, Calif., near its Petaluma headquarters.

Executive Vice President for Manufacturing Operations Kevin Haslebacher said that phase should be done by the end of the year and create 80 jobs. Construction on the 120,000-square-foot second phase will begin this fall and is anticipated to be completed in mid-2015, adding an additional 120 positions.

“Our sales are outpacing our production, so right now it makes sense to expand where we are,” Haslebacher said. “That will bring us pretty close to 1,000 (workers) in Medford, and pretty much in balance with what we have here (in Santa Rosa).”

Presently, Amy’s Kitchen production is limited to its two West Coast plants. An announced production site in Goshen, N.Y., is still two years out, and the Corby plant in Northamptonshire, England, which opened in 2011, has been mothballed, Haslebacher said. Access to organic produce stopped plans for a Greenville, S.C., plant shortly after the company acquired property the same year. Last month, Amy’s said it has leased a 60,000-square-foot, former food-processing plant in Santa Rosa, which will modestly expand its capacity to 350,000 square feet in the North Bay Area. However, it is far less ambitious than a $50 million project proposed in March 2013 that succumbed to a $34 million municipal waste water connection charge.

Founder Amy Berliner told the Santa Rosa Press Democrat the company was on course to finish 2014 with revenue of between $430 million and $450 million. Amy’s has also exceeded its growth forecast of 12 to 15 percent, coming in closer to 23 percent. The kicker is Amy’s possibly could have increased sales by 30 percent given greater capacity.

To that end, Amy’s Kitchen is adding capacity in the Rogue Valley as quickly as practical. Next year, Haslebacher said, Amy’s will have a footprint of 450,000 square feet here.

At the moment, there are two frozen entree production lines, a frozen pizza line and a canning line for soup, chili and refried beans. By the start of 2015, the company’s gluten-free line will be kicking out burritos and the new construction will open a sixth line.

“We’ve been working on this eight or nine months, in terms of planning,” Haslebacher said.

“The company is growing pretty substantially,” Haslebacher said. “We need to add more capacity to the system for what we make now and then whatever comes down the pike.”

Plant Manager George Pelch said construction on the east side of the existing plant by Jacksonville, Fla.-based engineering and building firm Stellar will begin this fall.

Nikki Jones, who runs Express Employment in Medford, said it could be a challenge to fill an additional 200 positions, given the nature of the business.

“What we’re seeing in the local labor market today is that if an employer is trying to grow significantly and the wages and benefits they offer are not keeping pace with the market, it’s going to be a big challenge,” Jones said. “Right now it’s an employee’s market and employers are having a hard time filling jobs, even though they don’t want to admit it.”

The sheer number of employees that larger companies have on their payroll makes it difficult to raise wages.

“When you’re talking about that many people, that can make a huge difference,” she said. “Whenever you raise entry-level wages, you have to raise other wages as well and that’s where you run into wage compression.”

About 60 percent of Amy’s sales are in the eastern U.S. The quandary in the East and abroad, however, is sourcing organic raw materials near production sites.

Transportation, one of the major reasons Amy’s pursued facilities east of the Mississippi River, continues to be a hurdle, although Haslebacher said expansion is the company’s primary focus right now. Trucks with trailers capable of being transferred to rail remain the primary shipping option.

“Once we get our full production network up and running, we’ll be able to reassess logistics needed and that will help us understand the best mode for us,” he said.