USA- General Mills has announced plans to close down the Blue Buffalo pet food manufacturing plant in Independence, Iowa, by the end of this year, potentially putting more than 200 jobs in jeopardy.
According to the recent press release, the milling giant acknowledged that it was a difficult decision and insisted that the changes were in direct support of its pet supply chain strategy, which supports the long-term growth of the business.
“We recognize that this announcement is difficult news for the Independence Buffs. Throughout this transition, we will focus on care and concern for our employees, as well as a smooth and seamless transition for the business and our partners,” company leaders said.
General Mills, which bought the plant as part of the US$1.2 billion acquisition of Nudges and Top Chews products from Tyson Foods in July 2021, did not promise to retain the employees at the plant.
However, Mollie Wulff, a spokesperson at General Mills, said the impacted employees will receive “career services and benefits support” and are encouraged to explore career opportunities “across our network.”
While it is unclear how many people are currently employed at the plant, the plant employs about 250 people when fully staffed.
This decision is seemingly sudden because, in October last year, the plant was pushing to hire about 30 people, according to reputable sources.
Moreover, the business registered sales growth at a 15% compound annual rate between 2018 and 2022, justifying an acquisition some players thought to be relatively expensive.
However, there have been speculations about the Blue Buffalo business performing below expectations in the recent past.
According to the fiscal second quarter results released in January this year, the company’s pet food business, largely composed of the Blue Buffalo brand, saw flat organic sales and a 34% decline in segment operating profit.
This lamentable performance offset the overall organic sales for General Mills as it recorded an 11% increase in organic sales.
In an earnings call, General Mills CEO Jeff Harmening said pet sales were hampered by “an unexpected headwind… in the form of inventory reductions at some key retailers,” as well as capacity and customer service challenges that had carried over from the first fiscal quarter.
“As a result, while our all-channel retail sales grew at a high-single-digit rate in the quarter, our net sales were essentially flat,” Harmening explained.
However, all is not lost for the pet food business at General Mills.
On March 23, Blue Buffalo broke ground on an expansion of its pet food facility in Richmond, Indiana, where the company plans to invest US$200 million over the next two years to add 169,000 square feet of processing operations and warehouse capacity to the plant.
The expansion will create around 60 new jobs by the end of 2024.