Future-proofing core baking business: Hovis to slice more than a 100 jobs amid mill closures after posting hefty full-year losses

By Gill Hyslop contact

- Last updated on GMT

Related tags: Hovis, mill closures, retrenchment, Baking, transformation strategy

Hovis Ltd has announced its intention to sell two flourmills and close a third as part of its three-year transformation plan, placing more than 100 jobs under threat.

The bread producer said up to 71 positions will be axed with the mill closure in Southampton, while sites in Manchester and Selby would transfer to rival supplier Whitworth Bros.

It is unclear if any more jobs will be lost during that transfer process, but it said another 29 posts will be cut at the company’s headquarters in High Wycombe.

Hovis posted a £11.7m ($15.1m) pre-tax loss in 2017 – an improvement on losses of £34.2m ($44.3m) in 2016 – as the company reached the end of a three-year transformation plan.

Challenging marketplace

CEO Nish Kankiwala said the company was “showing strong momentum,”​ despite the “very challenging marketplace.”

He noted the company had seen a 6% sales rise by its baking division.

He added the disposal of the mills was “part of the process to future-proof our core baking business.

“'We are committed to our strategy of becoming the best quality brand in baking and will focus our investment on our core baking business.

'As a result, we have taken the decision to exit three milling sites, and to integrate Wellingborough Mill into the Hovis Baking Supply Chain, ensuring the continued delivery of high quality to the Hovis brand,” ​said Kankiwala.

“Whilst we never take decisions such as these lightly, we firmly believe this is the right decision for the business and ensures Hovis will continue to grow and prosper as a great UK brand and bakery manufacturer in a very competitive market place.”

Significantly loss making

The ‘significantly loss-making’ Southampton mill will close at the end of 2018.

The company’s one remaining mill – in Wellingborough – will continue to supply flour to the Hovis brand.

The company also said warehouse and logistics operations in DHL Bawtry, DHL Southampton and DSV Belfast will cease at the end of the year.

Serious concern and dismay

Unite issued a statement expressing ‘serious concern and dismay’ at the level of proposed job losses, noting it ‘could have serious ripple effects that threaten a number of logistics jobs across the UK.’

The union has called for an urgent meeting with the company to examine the business case for shutting the Southampton site, which has been operating since the 1930s.

“One of the points we will be making strongly is that the Southampton site has never had any investment and refurbishment compared with the other Hovis sites across the UK, which have been redeveloped  – this is a very disappointing aspect of today’s announcement,”​ said Unite acting regional secretary for the south east Ian Woodland. 

Hovis was founded in 1886 and employs about 3,500 people at 19 UK sites, producing Hovis, Mothers Pride and other supermarket-branded products.

US investment firm The Gores Group bought a controlling stake in the firm from Premier Foods in 2014.

United has 200 members at DHL Bawtry, 131 members at DHL Southampton and 18 at DSV Belfast.

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