Project K: Kellogg to shut US cookie plant

Kellogg's Project K should save the company between $425-475m by 2018, it says

The Kellogg Company will close a cookie plant in Charlotte, North Carolina as part of its global cost-cutting plan Project K.

The four-year plan, announced in November last year, will see 7% of the Kellogg’s workforce axed by the end of 2017. Kellogg said the plan would make an estimated $425-475m in savings by 2018. The aim of the scheme, it added, was to optimize supply-chain infrastructure, consolidate common processes or business services across multiple regions and functions and create a new global focus.

The latest closure will see plant operations at the cookie factory shut down by the end of 2014. Kellogg said it would also withdraw two snack lines from a separate snacks plant in Cincinnati by the end of the year.

“We have a compelling business need to better align our assets with marketplace trends and customer requirements,” said Kellogg president and CEO John Bryant.

“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,” he said.

Bryant said that Kellogg’s Project K involved “difficult decisions” as the closures and restructuring directly impacted people but said the company would work with employees during their transitions.

Mass global restructuring

The latest closure announcement comes after several restructuring moves were announced back in December, 2013. Kellogg said it would close a snacks plant in Australia and its RTE cereal plant in Canada as well as expand its cereal and snacks plant in Thailand.

Both closures would be completed by the end of 2014, it said, and the Thailand expansion by early 2015.

More recently, the company announced the planned closure of its UK breakfast cereal plant earlier this year, impacting 140 jobs and revealed plans to build a new Pringles plant in Malaysia to increase its snacks capacity across Asia Pacific. The build will cost around $130m and create at least 300 jobs locally, the company said. The plant should be completed by mid-2015.

Back when Project K was launched, Bryant told analysts in the company’s Q3 earning call: “This is a difficult process, but Project K is a pragmatic program designed to be a catalyst for future growth, and it’s the right thing to do for the company over the long term.”

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