Stacks of Israeli shekel notes [Illustrative].
(photo credit: NIR ELIAS / REUTERS)
By the end of the year, the new Bamba production plant, owned by food giant Osem and built on an area of 18,000 square meters (194,000 sq.ft.), will be inaugurated in Kiryat Gat. It will be built next to two other factories in Kiryat Gat – the Tzabar salads plant and the Bonjour pastries factory.
At the same time, the old Bamba factory in the Holon industrial zone, which has been operating for the past 54 years, will be closed, thus completing a giant move Osem has been leading in the last two decades – transferring all the company’s factories from the center of the country to the periphery.
Itzik Saig, 62, will also be present at the inauguration of the new plant, but this time he won’t be wearing an Osem hat, as he has done over the past seven years.
In September, Saig will complete his position as head of the company.
“I see the establishment of the Bamba plant in Kiryat Gat, at an investment of NIS 200 million, as one of my most important and significant business and financial decisions as CEO of Osem. The old plant in Holon is no longer suited to increase the rate of production of Bamba, especially in light of the increase in demand for the snack in major chains in the US such as Costco and Trader Joe, and a quantum leap was needed. Moreover, when the factory was established, the complex was an industrial zone. Today it has become a crowded urban and commercial center that is less suited for industry.”
And this is a complex decision.
“It’s like living in a small apartment and wondering whether to move to a larger and more spacious apartment.... You know that the time has come to make this obvious decision, but the bottom line is that it has to be based on data, numbers and a look forward. We have to constantly examine how this decision can be justified financially, because in the end we are a business that needs to be developed and advanced.”
What alternatives did you have?
“We had a number of options, one of which was to set up the plant near our logistics center in the Hevel Modi’in industrial zone, near Shoham.
“If we were to set up the plant next to the logistics center, we would have significantly saved transportation costs. We put a lot of thought into choosing the right alternative.”
And yet you chose Kiryat Gat.
“In the end, we said, we will go with the heart and with Zionism to the periphery, but it is important to note that the decision to move to Kiryat Gat has several significant advantages.”
“For example, in the future, it will enable us to synergize our three production plants – Tzabar, Bonjour and Osem – and save some of the operating expenses.
“In addition, we will build our new visitors’ center in Kiryat Gat. Our intention is to bring between 30,000 and 40,000 visitors a year, and it will please the mayor and the residents of the city.”
What would you recommend to a young CEO who’s building a new manufacturing plant?
“The establishment of a new plant is not only a serious physical and economic step, but also a technological one. If you decide to double the production capacity of a particular product, you need the right knowledge and equipment to do it. I place great importance on the business plan of this move, so that you will know how to make optimal use of the production capacity you have increased – which is a big challenge. In the case of Bamba, there is also the concern for the workers in the veteran factory that will close, which is an issue that really concerns us.”
In the new plant, we intend to employ 150 workers, of whom 50 are new and 100 are from the factory in Holon. That is, a 50% increase in the number of employees.”
What is your central insight into the decisions you made as CEO?
“My main insight from the establishment of the Bamba plant is that in such decisions you have to go with your gut feeling, but to base yourself on a clear work plan based on data from numbers with at least 10 years of vision.
“After making the decision, you have to roll up your sleeves and work hard to set up the plant, and at the same time ensure that you have good utilization of the production capacity from day one.”This article was written in cooperation with Bank Hapoalim.
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