USA—Mexico-headquartered bread and snack giant Grupo Bimbo has announced plans to close two of its US baked goods facilities in New York State.
The closures, which will affect a total of 131 workers, are due to “reduced capacity in the manufacturing network,” according to a Worker Adjustment and Retraining Notification (WARN) notice.
The Auburn facility is set to close on September 6, while the Olean plant will shut its doors on November 2. Both sites are operated by Bimbo’s subsidiary, Bimbo Bakeries USA.
Just Food has reached out to Grupo Bimbo to understand how these closures will impact the production of its popular bakery brands in the US, which include Sara Lee breads, Lender’s bagels, and Little Bites cakes.
Earlier in May, Bimbo closed another US bakery in Bellevue, Nebraska, which resulted in the loss of 172 jobs.
The company stated that the decision followed a “recent assessment” of the site, which concluded that the bakery did not align with Bimbo’s growth plans.
Marco Espinoza, Senior Director of Regional Operations, mentioned that the Bellevue facility lacked the infrastructure and manufacturing capability to remain competitive.
Grupo Bimbo’s decision comes as the company faces a challenging market environment in North America.
In the second quarter of the year, the company reported a 6.6% drop in North American net sales compared to the previous year, bringing in 45.3 billion pesos (US$2.3 billion). Excluding the impact of foreign exchange, the decrease was 3.4%.
Total net sales for the quarter were down 1.9% year on year, standing at 98 billion pesos (US$1.67B), with a slight increase of 0.5% when excluding FX effects. North America’s gross profits dropped 4.6% to 24.2 billion pesos (US$414M), although the gross margin improved by 1.1 percentage points to 53.4%.
In a statement, the company attributed the North American performance dip to “an industry-wide challenging consumption environment” in the US and strategic exits from some non-branded businesses.
Despite the downturn in North America, Grupo Bimbo’s overall gross profits rose 0.4% to 51.3 billion pesos, with a gross margin increase of 1.2 percentage points to 52.3%.
Regulatory Challenges
In addition to market challenges, Bimbo Bakeries USA recently received a warning from the US Food and Drug Administration (FDA) regarding the mislabeling of allergens on its products.
FDA inspectors found that several Bimbo brands, including Sara Lee, Oroweat, Thomas’, Entenmann’s, and Ball Park buns and rolls, incorrectly listed allergens such as sesame or tree nuts on their labels.
The FDA emphasized that such mislabeling violates federal regulations, rendering the products “misbranded.”
The impact of these changes on the production of its well-known brands remains to be seen, as the company seeks to adapt to evolving market conditions and consumer demands.
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