General Mills to shut and sell US cereal plant

By Kacey Culliney contact

- Last updated on GMT

The cereal plant closure and sale forms part of General Mills' wider $40m cost-cutting program
The cereal plant closure and sale forms part of General Mills' wider $40m cost-cutting program

Related tags: General mills, Cereal

General Mills will shut down and sell its first cereal manufacturing plant under the $40m cost-cutting program announced earlier this year. 

The cereal major announced its decision to shut down its Lodi plant in California early October – a move that will impact around 430 employees - and has now confirmed plans to sell that plant and surrounding land.

Bridget Christenson, external communications manager at General Mills, said the closure was part of a wider review of the company’s North American supply chain network.

“That review led us to this decision. Manufacturing will be consolidated at other facilities within the General Mills supply chain and the land and facility will be sold,”​ she told BakeryandSnacks.com.

$40m cost-cutting initiative

The broader review of General Mills’ North American supply chain network, launched back in June, aimed to pull in savings of $40m for fiscal 2015​ by “streamlining operations and identifying potential capacity reductions”,​ according to company CEO Ken Powell.

The Lodi cereal plant closure formed part of that effort, along with a yogurt plant closure announced in September, impacting 144 employees.

One consultant previously told BakeryandSnacks.com that while such a program couldn’t be faulted, it wasn’t necessarily the ticket to success for General Mills.

Jerry Smiley, partner of business consultancy firm Strategic Growth Partners, said “you have to wonder if cutting costs is the salvation”.

Plunging profits

The restructuring program comes at a time General Mills is struggling to float in a difficult market. Sales for the first quarter of FY 2015 plunged 24.8% on the previous year​.

However, Powell told analysts in a call that he was confident General Mills could innovate out of the drag with new product development, brand renovation and improved marketing efforts.

Earlier this year it launched a protein variant of its flagship cereal Cheerios​ and more recently an ancient grains variety​.

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