General Mills wants to "consolidate" yoghurt production in US

General Mills wants to "consolidate" yoghurt production in US

General Mills has set out plans to close two plants in the US as the food group, with sales under pressure, looks to reduce costs.

The Yoplait owner said it planned to shut a yoghurt factory in Methuen in Massachussetts. It also announced a "preliminary decision" to close a cereal facility in Lodi in California.

If both sites are closed, around 574 staff will be affected, General Mills said yesterday (18 September).

Earlier this week, the Cheerios manufacturer reported a 25% drop in first-quarter profits. Sales from General Mills' US retail business, which accounts for 60% of annual net sales and three-quarters of EBIT, fell again. Sales from the division slid 5% in the quarter to 24 August, with sales volumes falling 2%.

In June, General Mills announced it had put its manufacturing plants in North America under review in a bid to streamline its operations and reduce capacity.

Alongside its first-quarter results on Wednesday, General Mills gave more details on the expected savings from the review. It forecast it will generate US$100m in annualised cost savings by fiscal 2017. Twenty-four hours later, General Mills named two plants that could close.

The Methuen yoghurt site is expected to close by later summer next year. General Mills said it was "optimising its yogurt manufacturing network, consolidating production at other facilities within the General Mills supply chain".

The company has yet to come to a final decision on the Lodi cereal site, with the closure subject to negotiations with union officials. If General Mills does push ahead with the shutdown, the plant will close "near the end" of next year, it said. Production will move to other plants, the company added.