Sector News

General Mills Plans to Close Two Plants

January 9, 2015
Food & Drink
General Mills Inc. said it plans to eliminate another 500 jobs with the closures of two Pillsbury dough factories, adding to the roughly 1,400 job cuts it announced last year as it tries to improve profitability amid lackluster industry sales.
 
General Mills said in news releases on Thursday it expects the latest layoffs—which include 400 jobs from its New Albany, Ind., plant and 100 in Midland, Ontario in Canada—will be completed next year. The decision on the New Albany plant is pending negotiations with a labor union. The company has operated the Midland plant since 1952, and the New Albany one since 1959.
 
The maker of Wheaties breakfast cereal and Yoplait yogurt has struggled with Americans’ growing aversion to many packaged foods. In June, General Mills announced a multiyear cost-cutting effort that it warned would involve reducing its production capacity for slower-growth foods, like cereal and cake mix.
 
General Mills expects to record restructuring charges of $109 million total for the latest plant closures, which are part of its broader plan to save $100 million annually by the end of fiscal 2017.
 
The Minneapolis-based company said last month its revenue fell 3.4% to $4.7 billion in the latest quarter, which it attributed to weak food-industry trends in the U.S. and slowing growth in its key emerging markets abroad.
 
General Mills, which employees 43,000 people world-wide, is trying to boost sales by tapping into trendier areas like natural and organic foods with the recent acquisition Annie’s Inc., and adding things like protein and “ancient grains” to Cheerios.
 
General Mills isn’t alone in its struggles—established food-and-beverage industry peers such as Kellogg Co. and Coca-Cola Co. are grappling with lagging demand for their shelf-stable foods and sugary drinks, as people favor healthier, fresher options. Kellogg intends to close a snack factory in Columbus, Georgia by the end of this year, and Coke said Thursday it will eliminate 1,600 to 1,800 nonfactory jobs in coming months, including 500 at its Atlanta headquarters, in response to sluggish soda sales.
 
General Mills announced in September that it intended to close a cereal plant in Lodi., Calif., and a yogurt factory in Methuen, Mass., knocking out about 680 jobs.
 
As part of a separate effort to reduce overhead costs, General Mills also said in September it would eliminate 700 to 800 salaried jobs by the end of February. It expects that project to result in annual savings of $125 million to $150 million beginning in fiscal 2016.
 
By Annie Gasparro and Josh Beckerman 
 

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