Japanese Firm Makes Big Dough for U.S. Bakeries : Pastry: Rheon’s Irvine unit markets specialized machinery for some of the biggest U.S. producers of cakes, cookies and rolls.

Rheon Automatic Machinery Co. would like to be known as the company that brought the croissant to the American masses.

The Japanese firm’s machines can take dough, knead and roll it with efficiency, and puff masses of croissants at the speed of 20,000 an hour. Its customers include Sarah Lee, Nabisco, Pepperidge Farm and Entenmann’s.

But despite its growing visibility in the market, executives in Rheon’s U.S. operation in Irvine, Rheon USA, which markets the machines, claim that for competitive reasons, the company wants to keep a low profile.

It may not be easy. This month, the company started construction of a warehouse the size of three football fields along Irvine’s eastern corridor. This structure, built at a cost of at least $1.5 million, will be used as a warehouse until 1993, when the company plans to convert it into an assembly plant, its first outside Japan.

Part of the plant will be used by the company’s engineers to test new baking technology, executives said.

The company hopes that by moving assembly to the United States, it will reduce transportation costs and speed up the delivery of equipment to customers.

Last year, the company sold more than $30 million in equipment and food products to the U.S. baking industry. This is about 10% of the parent company’s annual sales. Rheon USA President Makoto Nakagawa said 1990 sales will likely double last year’s figure.

“So far, sales have been much higher than we expected,” he said. But he expects that Asia will remain the company’s largest market for the rest of the decade.

Part of Rheon’s success is its ability to come up with one-of-a-kind machines that a baking company’s competitor is unlikely to duplicate, according to customers and industry sources. For instance, Nabisco Brands Inc. and Keebler Co., the Elmhurst, Ill., cookie-making subsidiary of United Biscuits PLC, said their Rheon machines were jointly developed by Rheon engineers and their technicians.

“Rheon is willing to share its technology with us when we developed the automatic rolling machine” that can roll and assemble a cake with cream and chocolate at one go, said Stan Walulek, director of technical services for Drake Bakeries Inc., the Wayne, N.J., affiliate of Ralston Purina International Inc. Other alternatives are more costly and complicated because several machines are used in the process, he said.

“The key to staying ahead in this industry is creativity and innovativeness,” said Stuart Greenblatt, a Keebler spokesman. Keebler’s chocolate-filled Magic Middle cookies are among the products that use Rheon technology.

Competition among baking machine tool makers is very tough, and small-scale bakers replace their equipment once every few decades, said Teresa Ahrenholtz of Baking Buyer, the Kansas City-based monthly tabloid that features new baking products.

“But the Sarah Lees of the baking industry will need new and unique equipment to make those new products, and Rheon has that technology to offer,” she said.

A large chunk of Rheon’s annual budget goes to research and development of new machines, said Kiyo Kamiyama, Rheon USA’s manager. Since 1988, Rheon has established three research facilities in West Germany, France and the United States as part of Chairman Torahiko Hayashi’s plan to revolutionize the food-processing technology.

Rheon, derived from the word rheology--the study of changes in the form and deformation of matter--started in 1963, when Hayashi started marketing his new invention--the encrusting machine. Hayashi’s machine can make dough and inject fillings into it in a single process, unlike its predecessors.

Although the machine promised to lower labor costs, U.S. food processors were slow to adopt it when it was introduced in the 1970s. The machine was ahead of its time, said Don Osborne, marketing and research director at Rheon USA.

Rheon equipment did not play an important part in the U.S. baking industry’s assembly line until the early 1980s, when the race for market share among the giant food manufacturers heated up. It was then that companies turned to more innovative baked goodies, such as stuffed cookies, to stay ahead.

“The trend is toward computerization and full-system integration--that is, having a minimal number of people involved in production and freeing people up to do other processes,” Osborne said.

A number of the nation’s major baking concerns use Rheon’s dough-sheeting machines to make croissants and danish pastries, and a majority of U.S. companies use its encrusting equipment.

“The large American and European cookie makers use our encrusting machines to stuff cookies with chocolates, cream, peanut butter and jam,” said Rheon USA manager, Kiyo Kamiyama.

In fact, Rheon’s encrusting machines are widely used among ethnic food manufacturers. Until its encrusting machines were introduced, Mexican tamales (which stuff corn dough with beef or pork), Chinese steamed buns and the Jewish knish (which is dough filled with potatoes) were all made by hand.

For a company that operates three plants in California and North Carolina and a maintenance center in Pompton Plain, N.J., Rheon looks pretty lean. It has only 120 employees, yet most of the strudels on the market today are made by Rheon machines from Rheon frozen dough, Osborne said.

Through another Irvine subsidiary, Orange Bakery Inc., the Japanese company supplies frozen dough to the bakeries of major supermarkets and other food service markets, including Lucky’s and Ralphs on the West Coast. This wholesale bakery operates two production facilities in Irvine and another in Huntsville, N.C.

“About eight years ago, we were the first company that allowed the baking industry to mass-produce croissants in the United States,” Nakagawa said. “We plan to go into a new, pioneering area in the baking business and that is the focus of Orange Bakery, which has been testing the market.”