Little Debbie finds a home in the Valley
McKee Foods expands Stuarts Draft plant but is wary of toll prospects

by Ruth S. Intress
for Virginia Business
November 2006

Local folks make up for the jumble of signs along Route 340 in Stuarts Draft by giving visitors clear directions: turn left at the statue of the "big cow," pass the church and the cemetery and head toward the Blue Ridge Mountains looming ahead.

There amid lush pastures, farm smells subside as wafts of vanilla cakes baking in huge ovens fill the air. Welcome to McKee Foods Corp. — the privately held snack foods manufacturer of Sunbelt trail mixes, granola cereals and the signature Little Debbie line of sweet cakes.

The Shenandoah Valley’s beauty and hospitality influenced the 72-year-old com­­pany’s decision to open its fourth manufacturing plant in Virginia in 1990. But it was the town’s access to Interstates 64 and 81 — combined with the area’s stable and eager work force — that ­ clinched the deal, says Ray Murphy, vice president and plant manager of the Stuarts Draft operation since 2001. "In the food industry, you’ve got to have good transportation links and good customer service links," he says of the plant’s distribution network that stretches from Canada south to the Carolinas and west as far as Ohio. "We sell products with a relatively short shelf life. It’s important to get products made and to the customer fast. Transportation is key, especially since we distribute by truck."

Unlike other Virginia manufacturing plants that have downsized or shut down in recent years, Tennessee-based McKee Foods continues to expand as the country’s top producer, by volume, of snack cakes. In 2001, the company decided to invest $44.8 million in the Stuarts Draft plant to add two new bake lines and create 200 jobs. That expansion is continuing and is expected to be completed next year. The fact that food industry jobs cannot be moved easily abroad helps boost its growth in the United States, says Murphy.

McKee’s founding principles of innovation, productivity and employee appreciation also play major roles in the success of the family-owned company. "We’ve had very good leadership," Murphy says of the three generations of family officers. Indeed, Food Processing magazine ranks McKee Foods as the 68th largest food processing company in the United States with annual sales of about $1.1 billion — bigger than McCormick spices, Lance crackers and Sargento cheeses. "Our company takes a conservative approach. We’ve added capacity as needed so we’ve been able to control our growth and ride the [consumer trends] rollercoaster easier," says Murphy, who joined McKee after years at Keebler, Kellogg’s and Pepperidge Farm.

Virginia’s pro-business approach at­­tracted the com­pany, he adds, as did the warm reception extended by the Augusta County com­mu­nity. McKee’s multi­­million dollar pay­­­roll and purchases of goods from area suppliers boosted the local economy by $48.5 million in fiscal 2006.

Such corporate contributions, how­ever, rely on Virginia maintaining its transportation network and relatively favorable tax structure. "Virginia’s approach has been successful … but it is very important that Virginia continue to support its infrastructure," says Murphy. "The I-81 expansion is important," referring to efforts to relieve traffic congestion on the highway. "If they were to put tolls on it (as discussed), that would be a problem for our transportation needs."

In fact, McKee Foods has told the Virginia Department of Transportation that tolls on I-81 could add $500,000 a year to the cost of operating its trucks. Also, suppliers making deliveries to the plant likely would pass along their higher shipping costs, according to McKee Foods. Murphy says it’s premature to speculate what the company might do if tolls were imposed.

Nurturing Virginia’s work force also is vital. "One thing Virginia has going for it is a great work force," says Murphy. "It’s very conducive for manufacturing and has been good for us. Here in the Valley, the work standard — the work ethic — of employees is terrific. I can’t say enough about the dedication of our employees. They are a very stable group with generations of family in the area. This creates a loyal work force."

At McKee Foods, loyalty is rewarded every fall through a profit-sharing plan covering all employees. Workers’ contributions have been recognized by the business since it was started during the Great Depression by the late O.D. McKee, an entrepreneur with an impatient personality, and his wife, Ruth, a cautious businesswoman who managed the bakery’s finances and people.

The 1,200 employees who keep the Stuarts Draft plant running round-the-clock Mondays through Fridays recently received cash bonuses of more than $2.8 million. An additional $1.8 million went into their retirement accounts, according to company officials. McKee, with plants in Collegedale, Tenn., and Gentry, Ark., also gives workers weekends off for family time.

McKee Foods’ "Guiding Values" are twinned with its founding mantra that all employees "find a better way" to improve and more efficiently produce its 90-variety Little Debbie brand and its 18-item Sunbelt line.

With many of those snacks made in Stuarts Draft, Murphy says the plant has repeatedly expanded automation efforts and production capacity by buying additional equipment and recently upgrading its wastewater facility. "One of the things that makes the food industry exciting is customers’ needs change," he says. "To meet those demands, we’re constantly tweaking what we do."

For instance, the company recognizes today’s healthy food trends. Most of its products are free of trans-fats and primarily are packaged in single servings. While healthful, some of McKee’s treats are more indulgent than others. Murphy, a self-described Little Debbie Swiss roll devotee, says, "We consider our products fun ones. They unwrap a smile."