Major food processors have been battling the effects of inflation, rising interest rates and changes in consumer demand over the last couple of years that has led some to close manufacturing plants to reduce costs and avoid bankruptcy.
Del Monte Foods in April 2024 closed its Toppenish, Wash., and Markesan, Wis., fruit and vegetable canning plants to align and streamline operational capacity with consumer demand, the company said in a statement at the time.
Related: Popular food brand files unexpected Chapter 11 bankruptcy
The company said that labelling and distribution activities would continue at the plants until fall 2024.
Tyson Foods (TSN) in 2023 closed eight poultry plants located in Arkansas, Florida, Indiana, Missouri, South Carolina and Virginia. The company said it was “reallocating resources to operate as efficiently as possible, while maintaining ample capacity to serve our customers.”
Krispy Kreme (DNUT) also in 2023 closed a manufacturing facility in North Carolina and laid off 102 workers, while Hershey (HSY) closed its Dot’s Pretzels factory in North Dakota to cut costs and laid off 27 workers. Another snack maker Utz (UTZ) closed a manufacturing plant in Pennsylvania and put other plants in Indiana, Louisiana and Alabama up for sale as part of a network downsizing.
More recently, Flowers Foods, which operates huge bakeries Wonder, Tastykake and Mrs. Freshley’s, in July said that it will close its bun making plant in Baton Rouge, La., between Sept. 18 and Oct. 1. The closure will affect 70 workers.
Related: Why are groceries so expensive? A look at post-pandemic food price inflation
The company said it would continue to operate its shipping department at the plant as part of its Louisiana bakery warehouse network.
Another baker, Bimbo Bakeries USA, which produces Entenmann’s and Sara Lee items, also in July said that it will close bakeries in Auburn and Olean, N.Y., and San Antonio, Texas.
Finally, iconic breakfast cereal brand WK Kellogg (KLG) , makers of Kellogg’s Frosted Flakes, Rice Krispies and Froot Loops, is restructuring its operations, which will include a phased reduction of production that will lead to a closing of its Omaha, Neb., manufacturing plant in 2026, the company said in an Aug. 6 statement.
More food:
Ozempic users are being catered to by a new frozen food brandWhole Foods makes major change customers will notice right awayDistressed grocery brand files for Chapter 11 bankruptcy
The company will also scale back production at its Memphis, Tenn., plant beginning in late 2025 that will result in a more focused, streamlined facility.
In addition to the plant closure and reduced production at the Omaha and Memphis facilities, WK Kellogg plans to invest in new infrastructure, equipment, technology, and capabilities at its Battle Creek, Mich.; Belleview, Ontario; and Lancaster, Pa.; plants with plans to increase production at those locations.
The plant closure and reduced production will result in the elimination of about 550 jobs, including any headcount additions at plants where production would increase, the statement said.
The company plans to spend $450 million to $500 million on its supply chain modernization efforts, which includes capital expenditures of up to $390 million and a one-time cash restructuring and non-restructuring costs of about $110 million.
In its second quarter ended June 29, WK Kellogg reported net income of $31 million, a 14.8% increase year-over-year, on $672 million in net sales, which was a 3.9% decline year-over-year.
Related: Veteran fund manager picks favorite stocks for 2024
