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Kellogg to cut 250 jobs from North American workforce

January 19, 2017
Consumer Packaged Goods

Kellogg Co. plans to cut 250 jobs from its North American operations as a part of the company’s cost-cutting program, the chief executive of Battle Creek’s economic-development partnership said Wednesday.

Kellogg – which makes Eggo frozen waffles, Kashi products, Keebler cookies and crackers, MorningStar Farms meatless foods, Pop-Tarts and Pringles in addition to its cereals — confirmed the report in a statement Wednesday but did not provide details.

Kellogg is “focused on eliminating work that doesn’t drive the highest returns” and becoming more efficient by removing a duplication of work within the company, Chief Executive Joe Sobieralski of Battle Creek Unlimited — a partnership with the city, chamber of commerce and tourism officials — informed his board of directors via email. He said jobs will be reduced as the company puts these changes in place.

Its stock was trading Wednesday within about $3 of its 52-week low, closing at $71.98, 5 cents below Tuesday’s close.

The layoffs are part of the 111-year-old company’s cost-savings program called Project K, announced in late 2013. The goal of the four-year plan is to generate $425 million to $475 million in annual savings by 2018, the company told investors on its website.

It is unclear exactly how many employees will be affected at its headquarters here and in its North American Global Business Services operation in Grand Rapids, Mich.

“The majority of the impacted employees work at our headquarters in Battle Creek, and changes are taking place across most functions in the organization,” the company told the Enquirer. “As you would expect from Kellogg, we’ll help our impacted people through these transitions, including offering severance benefits and outplacement services.”

Kellogg has cereal manufacturing plants in Battle Creek; Lancaster, Pa.; Memphis; and Omaha, Neb.; Belleville, Ontario, in Canada; and Mexicali, Querétaro and Toluca in Mexico. A dozen other plants in the U.S. and one in Mexico make snacks, five plants make frozen foods, and four make what the company calls noncereal items, according to its website.

Its Canadian headquarters is in Mississauga, Ontario, and its Latin American headquarters is in Querétaro City in the state of Querétaro in central Mexico.

Kellogg, which has manufacturing operations in 18 countries, closed a London, Ontario, cereal plant in December 2014, putting 500 employees out of work, according to CBC News | Windsor.

More recently, it confirmed these closures and layoffs that amounted to almost 1,000 jobs, not listed among its investor news releases:

• Charlotte, N.C. A Kellogg cookie factory whose brands included Famous Amos and Iced Animals closed at the end of 2014, and 195 people were left jobless, The Charlotte (N.C.) Observer reported.

• Clearfield, Utah. It also closed a plant that made the Gardenburger and other frozen vegetarian food in November 2015, putting 200 people out of work, (Ogden, Utah) Standard-Examiner reported.

• Columbus, Ga. Kellogg closed its plant that made Cheez-Its and other snack foods at the end of 2015, eliminating about 250 jobs, the (Columbus, Ga.) Ledger-Enquirer reported.

• Rossville, Tenn. After an upgrade of its Eggo frozen waffle plant, Kellogg announced it would eliminate 155 jobs, more than a third of the workforce, because of production efficiencies. The facility will be trimmed to about 250 workers when the cuts are complete at the end of this year, The (Memphis) Commercial Appeal reported.

• Seelyville, Ind. Kellogg begins its shutdown of a snack plant that makes Cheez-Its and other Keebler crackers next month, and 150 jobs will be lost by the time the closing is completed in September, the (Terre Haute, Ind.) Tribune-Star reported.

In 2015, Kellogg was concerned with struggling cereal sales and had threatened to close another cereal plant if union workers didn’t reconsider contract changes that they had rejected previously. It opened a cereal cafe on July 4 in Manhattan’s Times Square area to promote cereal as a food that’s not just for breakfast but also a snack and nighttime treat.

On Wednesday, the company confirmed Sobieralski’s layoff report but did not say which departments will be affected, how it determined which jobs are being reduced or how many Battle Creek employees could lose jobs.

Worldwide, the company said it had 33,577 employees as of Jan. 2, 2016. It did not release numbers for North America or the United States.

Officials plan to release fourth-quarter and 2016 financial results Feb. 9.

Its third-quarter sales exceeded expectations, up 2.2% to $3.3 billion worldwide but down 4.5% to $9.9 billion from January to Oct. 3, said John Bryant, Kellogg’s chairman and chief executive. Third-quarter profits jumped 22.9% to $334 million, in part because of some lower one-time costs; that contributed to a 14.8% increase in year-to-date profits to $1.3 billion.

“As we see the announcement of 250 North American colleagues, obviously, Battle Creek is headquartered here, so we don’t know the full impact of the jobs affected here in Battle Creek, if any at all,” Sobieralski said. “This is No. 3 of the (losses in) cereal industries in Battle Creek, and it really speaks to the industry as a whole. It isn’t just a Battle Creek issue, but it hits more home because we’re Cereal City USA.”

In November, TreeHouse Foods here said it was cutting 100 jobs from its ready-to-eat cereal plant. Those cuts, knocking out 63% of the factory’s workforce, are expected to begin this year and take place over 15 month.

The following month, Post Consumer Brands said it planned to shift some of its Battle Creek’s cereal production to other facilities. Post declined to share the number of job cuts expected there, but the number is believed to be between 70 and 80 positions, according to Battle Creek city officials.

Chris Walden, Michigan Works! southwest director of talent solutions, said the agency has been working with Battle Creek Unlimited in regard to Kellogg’s decision as well as other reductions at area cereal plants.

“We are committed to helping the afflicted workers transition into new opportunities,” Walden said.

By Wayne Risher

Source: USA Today

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