December Newsletter

VOLUME 28, NO. 12

Traditionally, the year ending Gem Memo has served as a Christmas greeting with comments on the company’s progress during the year. 2009 has been a good year for Gem Equipment. Most of this company’s business comes from 3 segments of the food processing industry: North American french fry potato processors, french fry processors in the rest of the world and food processors and manufacturers in the Pacific Northwestern United States. Since Gem Equipment was established over 40 years ago, it can almost be stated that this company grew up with the Pacific Northwest french fry industry. By 1969, the industry was well established in southern Idaho, where it originated. At that time, french fry processing was spreading into the Columbia Basin. A typical Columbia Basin french fry potato line had a capacity of 10 thousand pounds per hour, used a rotary blancher and had no dryer. It is more reasonable to state that this company grew up with the Columbia Basin french fry potato industry. Over the years Gem developed enough technical expertise with french fry potato blanching, frying and battering to develop business from other parts of the world. 

Gem Equipment’s Pacific Northwest business is much more diverse. Customers include a soft drink bottler, a large package goods bakery, a small pharmaceutical company, seafood, fruit and vegetable processors. Gem’s products for these customers ranges from making repair parts for their existing equipment up to medium sized custom designed systems. (Gem’s systems for French fry potato processors can be over $2 million, while projects for other processors rarely exceed $500 thousand.) One might ask, with these 3 segments of business, why would Gem have a good year when the US economy is so poor? The french fry potato business has the rosiest explanation. Up until the last 2 months, McDonalds has had very solid growth. The fast food industry has consumed a large volume of french fried potatoes, stimulating the processor’s purchase of new and rebuild of existing equipment. A primary reason for a good volume of business from Pacific Northwest food processors and manufacturers is not as positive. The economic upheaval of the last few years has reduced the number of manufacturers in this area that are capable of handling custom designed food processing systems. This results in a smaller number of suppliers dividing up the same amount of business.

A sense of urgency in addressing problems in the field has helped Gem Equipment maintain market share. There are three reasons why a supplier should rapidly address warranty issues. Fast response helps to avoid loosing a customer, reduces the chance of being on the receiving end of legal action and maybe most important, provides information so that the same problem can be avoided in the future. The first requirement for addressing a malfunction is to find the true cause of the problem. Once the true cause is established it is often relatively easy to develop the solution. The fix for a problem in the field often becomes an improvement for the next similar piece of equipment to be manufactured. Properly interpreted, these failures make major contributions to product line improvements. We wish all Memo readers A VERY MERRY CHRISTMAS AND A HAPPY PROSPORUS NEW YEAR.