Alva Review-Courier -

At last year's Value Added Products (VAP) Annual Meeting, longtime board member Steve Sterling accepted taking the reins as interim CEO in a cost-saving effort. At the 2023 annual meeting Feb. 11, Sterling told the investors he wanted to be transparent as possible about the state of the aging facility, where it was a year ago and improvements made in the past year.

A manufacturer of frozen dough products, primarily pizza crusts, using flour from hard red winter wheat like is grown in this area, VAP was a creation of area farmers and businessmen. The purpose was to enhance the crop and provide a new business in Alva with substantial local employment, which it has.

Approximately 40-plus attendees, board members and the VAP leadership team attended the annual meeting at Northwest Technology Center in Alva.

Sterling told what he faced as the new CEO last year was being on a cash basis with suppliers; sending employees after needed ingredients in pickup trucks; freezers full of scrap dough and topped pizzas that were about to expire; and a team with more questions than he had answers. The CEO said, "We're in much better shape now than last year." He said the topped pizzas went to area food banks.

He introduced the VAP team leaders and praised their efforts. They are: Operations Consultant Tonja Lewis; Christie Cunningham, procurement; Tricia Coday, accounting; Office Manager/Marketing Taelor Valentiner; Maintenance Manager Tim Smart; Packing Coordinator Tyree Headrick; Warehouse/Logistics Manager Rudy Smith-Dunn; Senior Production Lead Jessica Smith-Dunn; Research and Development Daniel Hinde; Quality Assurance Manager Melody Erhardt. VAP has 33 full-time employees; five part-time who are currently on furlough; and three contracted employees.

Jon McCune of Campbell Shaffer presented the audit. The numbers showed a significant loss for year-end May 31, 2022. However, Sterling said that year-to-date VAP "is showing a slight profit even though volume is disappointing." He added that revenue is up 15 percent due to a necessary price increase but volume remains flat.

"We've still got opportunities but we've got to grow our volume," the CEO said. VAP showed a positive net income through December. "We've had some good months." His goal for the year is to surpass that positive figure about four times "So we've got our work cut out for us."

VAP Prospects and Products, Upgrade Website, find VAP Pizza Crusts at Dollar General

Sterling is encouraged about their current customer, TNT, that was recently purchased by General Mills. He told investors reps from GM visited VAP's plant. "They want our type of crust," Sterling said. "I'm expecting this acquisition to have a positive effect on VAP's volume going forward." He described them as one of VAP's biggest, strongest prospects today. He also mentioned two out-of-state companies that have "huge potential" for the Alva cooperative. His PowerPoint presentation showed a lengthy list of customers and their sales from last year.

One of Sterling's top priorities is rebuilding VAP's website. He explained since they don't have money for a big sales force they are transforming the website into that sales force. VAP's team is working with the Made In Oklahoma (MIO) coalition that is subsidized by the state. This is to make their website totally attractive, accessible and informative so salespeople from various companies can open it and see several photos of the crusts they offer, ingredients, specs and much more.

VAP's new domain is http://www.VAPALVAOK.com

VAP'S team is also working with an OSU marketing class of ag communication majors assigned to them as a special project. "I'm hoping to get their perspective," Sterling said and added that one of the first things students asked was why VAP didn't have their QR Code on the product packages.

Walk into a Dollar General store (closest stores are in Anthony and Medicine Lodge, Kansas) and you'll find "Screamin' Sicilian" pizzas that are made on VAP crusts.

Sterling unveiled VAP's product portfolio for 2023: pizza crusts, dough sheets, bread sticks and focaccia bread. He said they are sticking with making favorite old products and improving the flavor – in some cases adding a kick of jalapeno. They are also making a sweet flat bread.

Rising Expenses, Capital Improvements, Board Members Reelected

He said inflation since Jan. 1 has increased the cost of baking items VAP must use, such as baking powder cost increasing 15.65 percent; dough conditioner rising 28.7 percent, and vital wheat gluten, up 19.4 percent.

"We've cut every cost we can," Sterling said, referring from labor to ingredients.

This last year Sterling said VAP spent about $250,000 on capital improvements such as: getting the compressor going, which was "a big deal;" replacing an air compressor, a new drive chain; dryers, belts, etc. He said the the biggest project of all was replacing the main line panels on the production line. The old ones were original over 20 years ago. "That was a $128,000 project in December. It had to happen," Sterling said.

VAP Management Team – From left: Taelor Valentiner, Tonja Lewis, Tricia Coday, Tyree Headrick, Steve Sterling, Rudy Smith-Dunn, Jessica Smith-Dunn, Daniel Hinde, Melody Erhardt and Tim Smart.

He provided a list that showed purchases of equipment this year and in the future that are absolutely necessary if VAP is going to continue manufacturing dough products. The price tag is in the hundreds of thousands. Because every penny investors made in the beginning of this cooperative venture went into making VAP a reality, their shares have little value. However, the company has put thousands of dollars into the Alva community by providing jobs, tax revenue and more over two decades.

"We've got to reinvest in this company and get it back up to par," Sterling said. "For now we'll stay the course."

The VAP Board of Directors had three positions up for reelection. All three were reelected by acclamation to fill another three-year term: Gregg Glass, Bob Baker and Gordon Karber.

Sterling said IF the board had a cash offer buyer, an opportunity to merge or a joint venture, they would consider it. However, the deal would be contingent that the business and jobs remain in Alva.