Bakery building balloons.

Byline: Randi Bjornstad The Register-Guard

GLENWOOD - The addition of a second "bun line" at its nearly completed plant in Springfield has helped boost the cost of the new Williams' Bakery to $41 million, up $11 million over previous estimates.

Jerry Boness, chief financial officer of Portland-based Franz Family Bakeries, which owns the local Williams' Bakery, notified the city of Springfield last month about the super-sizing of the construction project.

"The main reason for the increase resulted from a change in market conditions," Boness said in an

e-mail message to John Tamulonis, the city's community development manager. "One of our main competitors declared bankruptcy and has since abandoned our marketplace."

About $6.5 million of the increase is for the new bun-production equipment. Other factors - including electrical and steel costs as well as building permit costs and modifications - contributed to the remaining $4.5 million increase, Boness said.

The giant Interstate Bakeries, purveyor of Wonder Bread and Hostess line snacks such as Twinkies and Ding Dongs, filed for Chapter 11 bankruptcy in September 2004.

Bob Albers, chief executive officer at Franz, said Monday that Interstate's bankruptcy spurred Franz, whose corporate name is United States Bakery, to provide for increased production of hamburger and hotdog buns at its new Glenwood facility.

The new equipment will undergo testing in June. The company hopes to have the new bakery operational by July 7, Albers said.

The new facility, which is on Nugget Way in the Glenwood area, will produce about 250,000 loaves of bread and packages of buns daily, Albers said, a 40 percent increase in capacity for buns and 25 percent for bread compared with the existing bakery on Franklin Boulevard in east Eugene. When the new bakery opens, it will be capable of producing $40 million in baked goods annually, with room to grow that could double its capacity, he said.

The addition of a second bun line does not change the "footprint" of the bakery's 166,300 square-foot building, because it was designed to accommodate future expansion, Albers said.

United States Bakery must keep the city of Springfield informed about changes to its new facility because it receives significant property tax breaks under Springfield's enterprise zone program, Tamulonis said.

Following state and local rules for enterprise zones, which are designed to encourage new business growth and job creation, the bakery receives a three-year exemption from property taxes on its new facility. It qualifies for an additional two-year exemption in exchange for paying its employees an average full-time wage that equals or exceeds 150 percent of the average wage in Lane County, which comes to a wage-and-benefits package averaging $45,474 per year.

The agreement also calls for payments to local governments and agencies in lieu of funding they would receive from property taxes. United States Bakery will pay the city of Springfield $269,800 in compensation for the two-year extension of property tax relief, in five installments beginning July 1. Lane County will receive $82,450, also in five annual installments.

The bakery paid the Willamalane Park and Recreation District $30,000 in December for lighting at its soccer facilities on South 32nd Street in Springfield. The Springfield School District received the same amount toward redevelopment of the downtown Wildish Theatre.

The bakery also must increase its work force of about 160 by 10 percent, which Albers said will not be a problem.

"As soon as we open, we plan to transfer a crouton line (to Glenwood), and that will mean about 16 new jobs right there," he said. "Within a year, we will probably have a total of 30 new jobs, and these are very good jobs with good wages, health care and retirement benefits."

The new Williams' Bakery - the first built by United States Bakery from the ground up since 1906 - will be the company's most sophisticated production facility and one of the most modern in the Pacific Northwest, Albers said.

Like the Eugene-based Williams' Bakery that it purchased several years ago, Franz Family Bakeries began as a family business.

In 1897, 15-year-old Engelbert Franz traveled from his native Austria to Portland to live with his uncle and work in his bakery to repay his passage.

Within seven years, the young man had met his obligation and brought two of his brothers to Portland, where the brothers started their own Franz Bakery. In 1908, they bought their uncle's business, the United States Bakery.

A century later, the corporation operates bakeries and baked-goods thrift stores throughout the Northwest - Oregon, Washington, Northern California, Idaho, Montana and Alaska - under the names Franz, Gai's, Williams', Big Loaf, Snyder's and Smith Cookie Company.

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The new Williams' Bakery is on Nugget Way in the Glenwood area.