Cereal giant Kellanova has announced plans to close two factories, marking an effort to drive efficiency and increase productivity in its operations. The company has plans to close one plant in North America and one in Europe. In particular, the Kellogg’s brand owner aims to shut down its North America facility by the end of 2024, stating that it wants to reorganize its frozen supply chain network to improve market productivity.
The company predicts that the cost savings from the move will start contributing to gross margin improvements in 2024 and reach full-run rate in 2025. Kellanova will shift production to facilities across the Americas frozen network to meet volume requirements.
Simultaneously, Kellanova has also proposed to close a UK factory by the end of 2026, triggering formal discussions with employees and union representatives about the Greater Manchester plant’s closure. However, the consultation period is expected to last “around 90 days,” during which the facility’s 360 jobs will possibly be at risk.
The UK plant produces popular products such as Corn Flakes, Rice Krispies, and Coco Pops for retailers in the country and in Ireland. The facility’s workers are represented by Usdaw, the union, which has pledged to provide support, advice, and representation to its members at this difficult time.
In addition, 520 jobs will stay in Greater Manchester as the company recommits to its MediaCity office in Salford. The company’s business’ cereal factory in Wrexham in Wales and its distribution center in St Helens in England are not affected by the proposed move.
This plan follows the announcement of Kellanova’s 2023 financial results. The move is attributed to the “age of the almost 90-year-old facility” and the “redundant space in its buildings.” The company’s UK managing director stated that the factory’s layout was outdated and “investment required to maintain the factory is simply not viable.”
“This plan falls in line with the company’s overall strategy to ensure long-term viability and efficiency in its operations. By streamlining its production processes and realigning its network, Kellanova aims to drive growth and continue serving its customers effectively,” said the Managing Director.
Kellanova is making this strategic decision in response to the food and beverage industry trends and consumer preferences. By embracing change, the company is positioning itself to remain competitive in the food and drink business. Through such initiatives, Kellanova is demonstrating a commitment to adapting to evolving consumer trends and ensuring continued success in the industry.
