Dara Walter’s boss invited her to a windowless conference room early one morning to break the news.
General Mills was slogging through another quarter of shrinking profits and had announced a few weeks earlier that it would lay off 850 people in a cost-cutting initiative dubbed “Project Refuel.”
Walter’s boss tearfully read from a script that said the veteran food scientist’s job would be eliminated.
“I just remember thinking to myself, ‘listen very carefully, and don’t cry,’ ” Walter said. “It’s not necessarily about me personally. It’s about business, I guess.”
General Mills’ struggles to adjust to changes in American eating habits have led the company to lay off about 1,500 employees over the past 30 months — about half the cuts in the Twin Cities. The latest round ended in February.
Analysts have cheered the company for striving to reinvent itself, as consumers turn away from the kinds of packaged food staples the Golden Valley-based company has been known for.
But the job cuts have upended the lives of hundreds of Minnesota families. The turmoil also has caused soul-searching among employees, some of whom doubt General Mills can change fast enough to meet shifting consumer tastes.
The company sometimes struggles to keep up as new competitors emerge, such as Chobani in yogurt. General Mills is huge and complex, one employee said, with layers of structure that can slow decisions and action.
‘Restructuring is hard’
“That’s why the smaller companies are winning,” said the employee, who declined to be named because she still works at the company.
Many of Minnesota’s blue chip companies have cut jobs in tough times. Just last week, Target announced that it will cut “several thousand” positions in a two-year reorganization.
But the cuts at General Mills are striking because the company has long had a reputation for offering talented people a stable, long-term career.
Leaders at General Mills say its most recent structural change will enable it to act more like its smaller competitors, making better decisions faster.
“General Mills has been an admired employer in this community for nearly 150 years, and we plan to be for 150 more, but restructuring is hard,” said Tom Forsythe, spokesman for the company. “It’s difficult to see talented and committed employees impacted by change, even when the need for change is clear.”
General Mills announced a second round of restructuring, called “Project Catalyst,” in September and rolled it out slowly, cutting jobs from October through February.
Some people got word they’d learn their fate just days before Christmas, when they were planning to travel and visit family.
To some employees, the second wave of layoffs was especially discouraging “Some people thought, why didn’t you just do this in 2012? Did you not get it right?” said one woman who lost her job. “Why couldn’t you have just done it once and gotten it over with?”
One reason the layoffs in 2014 and early 2015 took much longer than the ones in 2012 is that the company wanted to be thoughtful and deliberate about changing its structure.
“Refuel and Catalyst were executed very differently,” Forsythe said. “Refuel we did it all at once and made all of our decisions as soon as we made the announcement. In Catalyst we were looking at structural changes.”
The goals of Catalyst are to make the company more agile and nimble, clarify people’s roles and eliminate duplication. The restructuring reduces layers of management and combines divisions. Next is the harder part — changing the way people actually work.
“Returning to growth will require change from everyone at General Mills, not just leadership,” said Michael Lenahan, who voluntarily left the company in January to be closer to friends and family in Southern California. “It’ll have to be a collective effort — everyone from the top all the way down. It’s going to take flexibility and a different way of thinking.”
Lenahan, who spent more than nine years at General Mills, and several others agreed the culture is an obstacle, as at many big companies. Lenahan said General Mills is historically process-oriented and top-down and that two rounds of layoffs in three years have discouraged risk-taking.
“All of the change is going to create a bit of a challenge in the short-term, but everyone at Mills is extremely talented,” Lenahan said. “They’ll get there. It will just take time.”
General Mills offers better severance packages than many companies do. But to get one, workers must sign a document that takes away the right to sue General Mills and forbids “expressions that are derogatory or cast aspersions” on the company or how it does business.
Most workers sign. Of 16 who lost their jobs in the latest layoffs that the Star Tribune attempted to contact, none would speak on the record.
Dara Walter, 54, could have received almost six months of pay and benefits after her last day at General Mills. She chose not to sign the agreement.
Based on figures about the layoffs she received from the company, she believed she and others were discriminated against because of their age. She wanted to keep her legal options open.
Almost three weeks ago, 14 workers who were also laid off in 2012 filed a federal lawsuit against the company, alleging age discrimination. General Mills says it stands by its employment decisions and “sees no merit to these claims.”
Walter has not joined that lawsuit. Her charge of age discrimination has been before the Equal Employment Opportunity Commission for nearly two years now.
“I felt like General Mills was trying to take away rights that Congress had preserved for me, and that’s what it boils down to,” she said.
Many big food companies are cutting costs and trying to adjust to changing tastes.
“I can’t think of one company that I cover that isn’t facing the same challenges,” said Erin Lash, an analyst who covers consumer packaged goods for Morningstar.
Since 2013, Kellogg Co. has shed more than 2,000 positions. Heinz has laid off 2,200 and Coca-Cola has laid off 3,900, according to Bloomberg. PepsiCo laid off 8,700 in 2012.
It’s not just rank-and-file workers who face job insecurity. The CEO of Kraft resigned abruptly in December. ConAgra announced in February that its new CEO will start sooner than originally planned. The head of General Mills’ U.S. business, Ian Friendly, stepped down in 2014, just before the latest round of layoffs.
Lash praised General Mills’ leadership for making smart acquisitions like natural foods maker Annie’s and said the firm is still investing in new products and marketing, both good signs.
Some employees are skeptical, though, in part because eating habits are changing inside General Mills too.
Brands like Hamburger Helper, Bisquick and canned vegetables that were mainstays in last generation’s pantries are now “dinosaurs,” said one man who lost his job after more than 15 years at General Mills.
“I can’t tell you how many people would say, ‘I don’t eat any of our brands,’ ” this former employee said.
Dara Walter grew up in the food industry. Her parents were line workers at Kellogg Co. in Battle Creek, Mich. She studied chemistry at the University of Michigan, started her career at Kellogg and landed at General Mills in 1993.
She worked on what are known as the Big G brands — cereals like Chex, Cinnamon Toast Crunch, Lucky Charms, Kix, Wheaties, Total and Cheerios. She left for a time to run a scuba diving business on an island off Venezuela, then take care of family. She returned to General Mills in 2006 and was working to launch a product that she was proud of — Ancient Grains granola — when she was laid off in 2012.
“When you get let go, you go through a whole range of emotions, including shame and humiliation,” she said.
It took her 15 months to find a new job — in California. Eventually she got back to Minnesota, landing at Flagstone Foods in St. Paul. She got no severance, so she cashed out her 401(k) to pay off debt and cover bills. She ate a lot of squash from her garden and now finds only dark humor in the words “Project Refuel.”
“I certainly didn’t feel like I was refueled,” she said. “I was on the exhaust end of that equation.”