The Hovis bakery in Leicester is to close by next January with the loss of 204 jobs.
The closure was part of plans to streamline breadmaking operations, said Hovis Limited – a joint venture between Premier Foods and the US Gores Group.
A spokeswoman told FoodManufacture.co.uk: “The proposal is part of the simplification and transformation of the company’s bread manufacturing operations which aims to improve efficiency, quality and customer service.”
Hovis bread will continue to be produced in the firm’s nine other UK bakeries, she added. A consultation period with 204 employees affected by the planned closure at the Thurmaston site has already begun.
No one should be surprised
But no one should be surprised by the job losses , a key industry insider told FoodManufacture.co.uk. It was yet another example of Premier Foods retiring surplus capacity to the ultimate benefit of its rivals, Allied Bakeries and Warburtons, the source claimed.
The Bakers, Food and Allied Workers Union is due to meet management soon to discuss the closure.
Premier Foods launched a £87.5M joint venture to run its troubled Hovis bread and flour business in January.
Under the terms of the deal with Gores Group, Premier Foods retained a 49% stake in the business, which is operating as a stand-alone joint venture.
The partnership was predicted to generate a short-term cash to Premier Foods of about £28M, which will be invested in its grocery business.
Commenting at the launch of the new business, Premier said the joint venture was the best way to maximise value in the bread business through “securing new investment and retaining the opportunity to share in the expected future gains from this investment, as the business continues its return to profitable growth”.
Premier said the deal will allow the manufacturer to strengthen its position in the ambient grocery market through focusing attention and resources on growing category-leading brands.
Fernando Goni, md at The Gores Group, highlighted “the significant untapped potential in such a well-loved, household name …”.
An £80M cash boost
Hovis Limited is led by Bob Spooner as ceo. Spooner was formerly md bread and group supply chain director.
Meanwhile, in May Hovis received an £80M cash boost from commercial lender GE to improve the efficiency of its operational infrastructure, reinvigorate the bread brand and develop its product range.
Hovis employs 3,800 people at 10 bakeries (including Leicester), six flour mills and two regional distribution centres across the UK.
The company also makes Mothers Pride, Ormo and own-label bakery products, as well as supplying flour to a range of customers under its Rank Hovis, Fleming Howden and Holgran trading platforms.
Earlier this week Premier Foods reported sales down by 6.1% due to “challenging market conditions” in half-year results to June 30. Trading profit climbed by 2.1% to reach £48.1M for the period.