IBC closes Buffalo bakery

- Last updated on GMT

Related tags: Baker

Interstate Bakeries Corporation (IBC) has continued its
cost-cutting programme with the closure of yet another bakery, in
Buffalo, New York. The closure, which will take place in October,
will see the loss of 200 jobs but will help the company reduce its
high fixed cost base as it struggles to adapt to the demands of the
changing bakery market.

The Buffalo facility primarily makes bread and rolls, sold under various brand names, including Wonder, Home Pride and Beefsteak, as well as donuts sold under the Hostess brand name. Production will be transferred to other IBC bakeries, including facilities in Ohio, Maine, Pennsylvania and elsewhere in New York state.

The company stressed that the bakery closing would not affect distribution of IBC products to food stores in upstate New York and other markets.

"The decision to close the Buffalo bakery was made after considerable evaluation and deliberation,"​ said James R. Elsesser, IBC's chief executive. "However, we are consolidating operations company-wide and seeking production efficiencies. The Buffalo bakery, which was built in 1923, is not as efficient as some of our other facilities. As a result, we concluded that economically it was best for the company to close the facility."

The closure is part of a wider cost-cutting initiative by IBC and follows hot on the heels of another closure, at Monroe in Louisiana, for similar reasons. That plant - which will cease production in September, transferring output to another Louisiana facility, employed 50 people.

While the long-term aim of the restructuring is to reduce the cost base - and therefore increase margins - the initial effect will be a one-off charge of $7.7-9.6 million to cover the cost of the two closures.

As we reported​ last week, IBC has dropped into the red this year as it "had not adjusted quickly enough"​ to the changing marketplace, according to Elsesser. Lumbered with an ageing and inefficient plant portfolio, IBC was unable to cope with the sudden decline in bread and baked goods sales caused by high ingredient prices and the low-carb diet trend, prompting the introduction of restructuring programme designed to get the group back on track by 2006. IBC is the largest baker and distributor of fresh baked bread and sweet goods in the US.

Related topics: Markets

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