New World Pasta, Brave New World

Manufacturing in Action, Source : The Manufacturer US

Like the legendary phoenix, New World Pasta has emerged from the ashes of bankruptcy to soar to new heights. Company executives share the good news with Cynthia Garber

Headquartered in Harrisburg, PA, New World Pasta is the leading manufacturer of branded dry pasta in the US and Canada. The company, which makes such well-known brands as Healthy Harvest, Ronzoni, Creamette, Prince, American Beauty, San Giorgio, and Skinner, has manufacturing plants in Winchester, VA, St. Louis, MO, Fresno, CA, and Montreal, Quebec.

The company was formed when the private equity company JLL Partners acquired the pasta businesses of Hershey Foods and Borden. But it was a rocky beginning for New World Pasta.

“Several years ago,” explained Scott Greenwood, CEO, “the company was facing a series of challenges, including a high debt level, lower consumer consumption due to a low-carbohydrate fad, and difficult operational constraints.” In 2004, New World voluntarily filed for a Chapter 11 reorganization. A restructuring firm was engaged to help turn the company around. “We exited unprofitable business channels and focused on our core competency of marketing our strong legacy brands where we could make money,” said Blair Hawley, vice president of supply chain for North America.

There were other changes as well. New World outsourced its IT system, rationalized SKUs, strengthened strategic sourcing, and reorganized its manufacturing and distribution network in a determined and successful effort to better satisfy its customers and reduce its costs. Lean manufacturing techniques were introduced with a focus on continuous improvement. The company downsized from 1,200 employees to its current workforce of about 700. New senior management was recruited as well, including Greenwood and Hawley.

These efforts paid off. In December 2005, New World emerged from Chapter 11 and was shortly thereafter acquired by Ebro Puleva, S.A., a strong Spanish multinational company with pasta as one of its core business units. This acquisition has de-leveraged New World Pasta (it is now debt free) and provided additional and significant resources.

“As part of a global multinational, we can now capitalize on our increased scale and take advantage of opportunities and resources we have not had available to us over the last several years,” said Greenwood.

Under the Ebro Puleva corporate banner, New World has a strong sister company, Riviana Foods in Houston, TX, and a significant pasta partner in Europe with Panzani, a leading pasta manufacturer and marketer based in France. “We are now able to collaborate with these companies in sharing manufacturing, milling, and procurement best practices, capturing transportation and procurement synergies, and capitalizing on a much broader research and development competency,” said Greenwood.

Both Hawley and Greenwood see this as a win-win synergy for New World Pasta. Moreover, the focus on lean manufacturing has already had positive results.

“We’ve embraced a continuous improvement mentality, utilizing strong key performance indicators to become more efficient, reduce waste, and increase earnings,” said Hawley, who pointed out that the company had 30 operational and supply chain initiatives in 2006, which drove over $5 million in cost savings to the bottom line. This same focus on manufacturing efficiency and cost reduction continues, with scores of new operational and supply chain initiatives planned for 2007 and beyond.

New World is also working with its key partners, such as equipment manufacturers, to develop action plans aimed at further improving production line efficiencies. Efforts such as these have led the company’s Winchester plant to its highest level of operational efficiency in 13 years.

In addition to manufacturing, supply chain has been another area of focus. Installing a new radio frequency inventory tracking system has improved primary freight loading over 15 percent at several of the company’s plants. Working with key customers to improve order consolidation has proven a productive cost-saving measure for both customers and the company.

New World Pasta eagerly looks to the future. “Our efforts to become more efficient and cost-effective have been extremely productive,” said Greenwood, “and these efforts will continue going forward. Now, however, the company is entering a new phase. Without losing our emphasis on continuous improvement in our supply chain, we are focused on strong and profitable growth. With our resources as a company, and as part of the Ebro Puleva group, we are reinvigorating our base brands and investing in new products and opportunities. The model of a successful food company today requires a balance of innovation, new products, core competencies, and tight, efficient operations. That’s our model as well.”

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