General Mills will lay off more than 600 workers as it shuts down factories in the Chicago area and Joplin, Mo., bringing to six the number of plant closings the company has announced in the past year.
Between blue-collar layoffs across the country and several hundred white-collar job cuts in the Twin Cities, General Mills has disclosed plans to shed about 2,500 jobs. The Golden Valley-based company, like other packaged food makers, is grappling with weak sales.
General Mills said Thursday it will cut 500 jobs by closing its 56-year-old West Chicago plant, which makes cereal, Hamburger Helper and Bugles salty snacks. Cereal, General Mills' largest business, has been stagnant, and the venerable Hamburger Helper brand has seen sales sag.
The plant in Joplin employs 120 and makes snacks under the Annie's brand. Annie's bought the Joplin plant from Safeway in early 2014, just months before General Mills bought Annie's for $820 million.
General Mills, like many packaged food companies, has struggled as consumers have begun gravitating away from processed foods and changing their eating habits. The result is rounds of cost-cutting.
"You are seeing companies across the consumer products landscape take a hard look across their cost structure," said Erin Lash, a stock analyst at Morningstar Inc.
But proceeds from some cuts at General Mills and other companies should help boost growth in promising brands, she said.
"We think the savings will be partly used to fund future brand investments, which are essential given the competitive nature of the [packaged food] space," she said.
The latest General Mills plant closings are part of "Project Century," a cost-cutting program launched in 2014 that is aimed at the company's North American supply chain. The company has already announced factory closures in California, Massachusetts, Indiana and Ontario, Canada — plants which together employed about 1,075. Those closings are set to take place this year and next year.
The West Chicago factory, which General Mills has operated since 1959, constitutes the largest plant closing in Project Century by employee count. It will close midyear 2017.
"For 34 years, it was a good place to work," said Frank Mager, an employee at the plant and former president of the union representing workers there, Local 316 G of the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM). "But it's all about money now."
Mager said that, historically, the West Chicago plant and four other large General Mills factories were the "big five" that bargained a master labor contract with the BCTGM. West Chicago will be the third of those five plants to close in Project Century, he said, along with a cereal factory in Lodi, Calif., and a refrigerated dough plant in New Albany, Ind.
General Mills also cut 700 to 800 white-collar jobs as part of "Project Catalyst," which is aimed at lowering its administrative and overhead costs. Much of that workforce reduction took place in the Twin Cities, where Mills employs about 5,000 people.
Last month, General Mills announced another cost-cutting campaign, "Project Compass," aimed at its international division and involving 675 to 725 job cuts over the next year. That process will include 20 associated jobs in Minnesota.
The closings in West Chicago and Joplin are expected to lead to charges of $81 million during the company's current fiscal year for severance expenses and asset write-offs.