STATEMENT OF THE AMERICAN BAKERS ASSOCIATION PREPARED FOR THE ECONOMIC MATTERS COMMITTEE MARYLAND HOUSE OF DELEGATES MARYLAND GENERAL ASSEMBLY

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1 STATEMENT OF THE AMERICAN BAKERS ASSOCIATION PREPARED FOR THE ECONOMIC MATTERS COMMITTEE MARYLAND HOUSE OF DELEGATES MARYLAND GENERAL ASSEMBLY March 12, 2013 Tray Loss in the Baking Industry American Bakers Association The Voice of the Baking Industry Since I Street, NW Suite 700 Washington, D.C (202)

2 ROBB MACKIE Robb MacKie serves as President and CEO of the American Bakers Association (ABA). He previously served for 11 years as Vice President of Government Relations. The ABA is a trade association representing the interests of the $70 billion wholesale baking industry in Washington, D.C. Mr. MacKie oversees all aspects of the administration and operations of ABA and serves as the baking industry s chief advocate and spokesperson. Mr. MacKie has appeared on CNBC s Closing Bell and Power Lunch, on Fox Business News, on CNN s The Glenn Beck Show; and on numerous local news programs in Washington, D.C. and in Baltimore. He has also been interviewed by Radio Hall of Fame broadcaster Orin Samuelson for This Week in Agri-Business. Mr. MacKie is recognized as a leader in the Washington business community. He previously served on the steering committees of several issue-oriented coalitions including cochairing the National Coalition on Ergonomics and the Food Industry Coalition on Hours of Service Regulations. Before joining ABA, Mr. MacKie worked for Congressman Jim Kolbe of Arizona with a primary responsibility for domestic spending bills. He also worked for the American Subcontractors Association and the Associated General Contractors representing the construction industry's interests before the Congress. Mr. MacKie provides strategic guidance as a member of the Kansas State University Grain Sciences Program Advisory Committee. In addition, he serves on the Board of Directors of BIPAC's Prosperity Fund and the US Chamber of Commerce's prestigious Committee of 100. From 2004 to 2008, Mr. MacKie served on the Judicial Nominating Commission for Howard County, Maryland by appointment of Maryland Governor Robert Ehrlich. The term was one of the most active in recent history with 4 judicial vacancies to fill. He remains very involved in local community and political activities. Mr. MacKie is a graduate of Frostburg State University with a degree in Political Science. He and his wife Barbara have two children. 2

3 Good afternoon. My name is Robb MacKie and I am President and CEO of the American Bakers Association. ABA is the Washington D.C.-based voice of the wholesale baking industry. ABA advocates on behalf of more than 700 baking facilities and baking company suppliers. ABA members produce bread, rolls, crackers, bagels, sweet goods, tortillas and many other wholesome, nutritious, baked products for America s families. The baking industry generates more than $102 billion in economic activity annually and employs more than 633,000 highly-skilled people across the country. In Maryland, the baking industry contributes 19,790 jobs earning $1.1 billion in wages and with an economic value of $3.4 billion or 1.16% of Maryland s total economic activity. ABA appreciates this opportunity to provide these comments today on the ongoing issue of bakery tray loss to the wholesale baking industry. Let me be very clear at the outset. ABA s concern is regarding the epidemic of organized theft of plastic bakery containers. While we do not condone the activity, we are not here advocating for stricter sanctions for the one-off theft of bakery equipment by homeless people, college students, etc. The theft of plastic delivery containers is as old as the invention of the containers themselves. The wholesale baking, soft drink and dairy industries have struggled with this problem in a variety of venues. Recently, however, we have seen a sudden surge in the loss of plastic delivery and storage containers, in some cases as high as 60% loss in major metro areas, including those in Maryland. This has resulted in excess of $100 million of lost equipment and countless operational disruptions over the past few years. 3

4 It is our great pleasure to be with you this afternoon to offer our unqualified support for H.B We applaud Delegates Niemann and Vaughn for their long-standing leadership on this significant problem for Maryland bakers. Should this legislation become law, it would put Maryland at the forefront of the nation on this important issue and be a model for other states to follow. The baking industry continues to lose tens of millions of dollars annually because of loss, theft and misuse of bakery trays and containers. On average, a wholesale baker spends $8 - $9 per tray. During one year, the average baker will spend close to $500,000 on emergency replacement trays alone. Ultimately, the cost of stolen trays is paid for by customers who are already paying high prices for a loaf of sandwich bread because of record high commodity prices. As the above numbers illustrate, this bakery tray theft goes beyond individuals first reaction: that college students use them in their dorm rooms. This issue includes street vendors taking trays from stores and using them as carrying trays outside sporting events. This issue also includes organized retail crime rings stealing truckloads of the pricey high-density plastic resin trays, taking them into warehouses where they are put through grinders and then melting those chips into molds where they are made into other items. At the end of the day, these trays are stolen items, and that loss affects wholesale baking companies and ultimately consumers. Since January 2009, bakers have noticed a dramatic increase in bakery tray theft (in some cases over $10 million) and as a result companies are instituting new policies, including prosecution of bakery tray theft. On July 24, 2010, the Wall Street Journal spotlighted the tremendous issue of tray loss, noting the baking industry loses at least $75 million a year to tray theft, which between 1995 and 2010 had tripled. At least $75 million a year in losses to an 4

5 industry that is critical to everyday health, wellness and nutrition. At least $75 million a year of which a portion must be passed onto the consumer because current enforcement mechanisms are lax. These tray owners should be afforded the opportunity under law to pursue just action against those people or groups that steal or damage their property, cause operational disruptions and, eventually, increase the consumer cost of goods. ABA requests the positive consideration of Maryland House Bill While the cost of buying a single tray is not exorbitant, the accrued cost of buying over a quarter million trays is, and this legislation presents an opportunity to incentivize law enforcement, to provide bakers with the means to recoup a portion of those staggering annual loses through civil proceedings, and most importantly to dis-incentivize criminals from carrying out tray thefts. House Bill 1088 discourages tray theft by increasing criminal penalties and civil action by up to ten times current levels for violations on registered returnable containers, including theft of and damage to such containers. Companies are doing their part to educate and inform sales force and customers on the importance of returning trays, but tougher laws are needed to compliment these efforts and to provide law enforcement with the seamless legal framework to deter and prosecute this complex and serious criminal activity. Again, the losses represented are significant. Historically, this issue has been overlooked, but because of the rising and unpredictable cost of commodities and petroleum, this legislation is timely and addresses an important concern. ABA appreciates this opportunity to provide input to the Economic Matters Committee on the issue of tray loss, which is of substantial importance to the baking and other food industries. I am happy to answer any questions you may have. Thank you. 5

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