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December 11, 2013

GLOBAL: Kellogg to close plants in Australia, Canada

Kellogg is to close plants in Australia and Canada as it embarks on lowering costs and improving efficiency across its business.

By Dean Best

Kellogg is to close plants in Australia and Canada as it embarks to lower costs and improve efficiency across its business.

The company said yesterday (10 December) it will shut a snacks facility in the Australian town of Charmhaven in New South Wales and close a breakfast cereal factory in the Canadian city of London. The Charmhaven plant is expected to close by late 2014. The London facility is set to shut by the end of next year.

Kellogg did not disclose the number of employees working at either site. However, the measures come weeks after Kellogg announced plans to “generate a significant amount of savings”, which includes moves to cut 7% of its workforce worldwide by 2017. Kellogg had about 31,000 employees globally at the end of 2012.

Kellogg has seen cereal sales come under pressure, especially in North America and parts of Europe, and wants to divert more resources to boost that side of its business, as well as invest in emerging markets.

“We have a compelling business need to better align our assets with marketplace trends and customer requirements,” president and CEO John Bryant said. “To that end, we are taking action to ensure our manufacturing network is operating the right number of plants and production lines – in the right locations – to better meet current and future production needs and the evolving needs of our customers.”

Kellogg hopes the cost-saving programme will lead to annual cash savings of US$425-475m in 2018. Announcing the plans last month, Kellogg said it would then spend more on “key strategic areas of focus”.

“As we go along, we’ll determine the best place to make those reinvestments. But at this stage, the primary focus of our reinvestment is to stabilise and rebuild momentum in our core businesses. We believe we do that through brand building, innovation, nutrition over time,” Bryant said last month.

Alongside the announcement of plant closures, Kellogg said it would expand a cereal and snacks plant in Thailand. The extensions to the site in Rayong, a city in eastern Thailand, will be “fully operational” by early 2015.

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