WK Kellogg Co. is closing a cereal factory within the U.S. and downsizing one other as a part of a plan to consolidate its operations at newer facilities.
The company announced Tuesday that it would close its plant in Omaha, Nebraska, by the tip of 2026. It also plans to cut back production at its plant in Memphis, Tennessee, starting next yr.
WK Kellogg announced plans to extend production and put money into latest infrastructure, equipment and technology at its plants in Battle Creek, Michigan; Lancaster, Pennsylvania; and Belleville, Ontario. The company plans to speculate $390 million in latest technology and infrastructure and can incur one-time restructuring costs of $110 million.
Battle Creek-based WK Kellogg said the plan would lead to a net lack of 550 jobs, including latest hires at its plants to extend production. The company didn’t immediately respond Tuesday to an issue about what number of staff in Omaha and Memphis will lose their jobs.
In a press release, Omaha Mayor Jean Stothert said she only learned of the planned closure on Tuesday morning.
“I am obviously disappointed that Kellogg’s is making such a significant announcement in this manner,” Stothert said. “After more than 75 years in Omaha, Kellogg’s will leave a huge void.”
WK Kellogg’s Omaha plant was the Epicenter of a strike against the corporate in 2021, when staff went on strike for 2 months to protest a two-tier wage structure and other issues. Kellogg sues its unionand said striking staff had blocked the entrances to the Omaha plant.
The Strike ended at the tip of 2021 when the corporate agreed to salary increases and other advantages.
The restructuring comes against the backdrop of a decline in U.S. demand for cereal. During the pandemic, when families were at home and eating breakfast together, cereal sales boomed. But since then, they’ve struggled. According to market research firm Nielsen IQ, unit sales of cereal fell 4.2 percent last yr and three.6 percent the yr before.
WK Kellogg Co. was founded last yr when former parent company Kellogg Co., founded in 1906, split into two firms. W.K. Kellogg retained the cereal business, including brands resembling Frosted Flakes, Fruit Loops, Rice Krispies and Raisin Bran. Chicago-based Kellanova makes most of the company’s best-sellers, including Pop-Tarts, Pringles, Eggo Waffles and Cheez-Its.
WK Kellogg said Tuesday its net sales fell 4% to $672 million within the April-June period. While the corporate benefited from higher prices and rising sales of premium products resembling Special K Zero, overall sales fell 4.8% and the corporate said it felt some pressure from private label cereal as customers searched for higher deals.
WK Kellogg shares fell greater than 7% on Tuesday.
