General Mills said Thursday it would close, sell or scale back five manufacturing plants, the biggest cut to operations this year as it continues adapting to changing consumer tastes.
The move puts 1,400 jobs at stake at company facilities in New Jersey, Ohio, Brazil and China.
It comes just three weeks after Golden Valley-based General Mills publicly revealed for the first time the two categories executives use for prioritizing products. The U.S. plants that are targeted for change make products in the low-growth category where leaders said they would limit large investment.
That includes a Vineland, N.J., soup-making facility that was the original plant for the Progresso soup brand that General Mills picked up in its 2001 acquisition of Pillsbury. About 370 people could lose their jobs with the closing of the plant.
For $18 million, the company is selling a plant in Martel, Ohio, that makes baking mixes to Mennel Milling Co., which would then become a supplier to General Mills. The facility employs 180 and a spokeswoman for General Mills said Mennel has expressed interest in interviewing most of those workers.
Both moves are subject to union negotiations before they become final.
General Mills also said it will close or scale back three international plants, which will result in 420 jobs lost in Brazil and 440 jobs in China.
The latest move comes after two sweeping cost-saving initiatives that, since 2014, have cut approximately 3,400 positions globally.
General Mills has been adapting its vast portfolio of products to consumer demand for less gluten and sugar and more organic foods. When executives for the first time publicly disclosed high-growth and low-growth products, investors were tipped to areas for future cost cuts.
But the company’s divestments in Brazil and China are in response to localized demand issues.
In China, the company’s snack division has been limping along, which led General Mills to sharply scale back its Nanjing plant operations. That effectively ends its fruit-snack business and Trix cereal manufacturing in China. General Mills will continue making Bugles snacks in Nanjing.
“Market conditions, brand position and the relatively low priority of snacks in our China portfolio have all played a role,” company spokeswoman Kelsey Roemhildt said in an e-mail.
General Mills pushed hard into Brazil, buying local snack, soup and seasoning maker Yoki Alimentos S.A. in 2012 for nearly $1 billion. The two plants it is closing in Marília and São Bernardo do Campo, Brazil, were acquired in that deal. General Mills said it will shift those snacks and meals manufacturing functions to its other Brazilian plants.
“These announcements do not change our plans for the brand. Brazil continues to play a critical role in the Latin America region as well as the overall General Mills business,” Roemhildt said.
The international restructuring, forecast to be completed over the next year, is expected to cost the company $7 million in cash and add $42 million of related charges, according to a filing with stock regulators.
General Mills expects the Martel deal to close in the next 12 months, according to the filing. The company reported to regulators it expects to pay $18 million in severance packages to its employees at the Vineland plant. The Vineland plant is expected to close by 2019 and cost about $67 million, $20 million of which will be cash.
General Mills shares, which reached an all-time high on Tuesday, were down about a half-percent Thursday.