Baker Interstate Bakeries Corporation has announced plans to consolidate sales and retail operations in its North Central, South Central and Southeast profit centres by standardizing distribution and consolidating delivery routes and bakery outlets.
The company’s 16 bakeries within these regions are currently expected to remain open, it said.
IBC has been undergoing a review of its 10 profit centres, identifying areas in which it can improve operating efficiencies in production, distribution, marketing and sales.
The company expects these consolidations to be completed by mid- to late December, subject to bankruptcy court approval. These consolidations are expected to affect approximately 450 workers. Following these consolidations, IBC will have completed the restructuring of nine of its ten profit centres and closed seven bakeries. IBC had originally anticipated completing its consolidation process by the end of the year. Due in part to the temporary deferral of this process while discussions with union leaders were continuing as previously announced, IBC currently expects to complete the last of its PC consolidations, the one affecting its Upper Midwest PC, in the first quarter of calendar 2006.
The company’s preliminary estimate of charges to be incurred in connection with the consolidations in the North Central, South Central and Southeast profit centres is approximately $3.0m, including approximately $1.0m of severance charges and approximately $2.0m in other charges, with virtually all such charges resulting in future cash expenditures. In addition, the company intends to spend approximately $3.0m in capital expenditures and accrued expenses to implement the consolidation.
IBC also provided information on its planned closing of its bakery in Lakewood, Washington, and the consolidation of routes, depots and bakery outlets in its Northwest profit centre. The company previously announced these actions on October 18, and said that the closing of the Lakewood bakery would affect approximately 200 bakery employees and an undetermined number of additional employees due to the consolidation. The new information reflects that approximately 300 non-bakery production employees will be affected by the consolidation of routes, depots and bakery outlets in the Northwest. The company’s estimate of charges to be incurred in connection with the consolidation of delivery routes and bakery outlets in the Northwest profit centre is approximately $2.0m, including approximately $1.0m of severance charges, approximately $0.5m in asset impairment charges and approximately $0.5min other charges. IBC further estimates that approximately $1.5m of such costs will result in future cash expenditures. In addition, the company intends to spend approximately $2.5m in capital expenditures and accrued expenses to implement the consolidation.